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Banks continue to drag their feet on resolution proceedings of stressed power plants and are unlikely to meet their latest deadline of October 15 to take final decisions. The 600 Mw Jhabua power plant of Avantha Power and Prayagraj Power Gen Corp’s 1,980 Mw Bara power plant, both in Madhya Pradesh, look the closest to resolution but are unlikely to achieve the October 15 deadline.
In an all-lenders meet on September 21 in Power Finance Corp’s New Delhi headquarters, the banks gave dissenting lenders time till October mid to take a final decision on a dozen stressed power generation projects.
Sources in the banking industry said no headway has been made in resolution of the projects, except for 1,320 Mw RattanIndia Amravati plant in Maharashtra, 1,370 Mw GMR Chhattisgarh Energy Ltd, and the plants in Jhabua and Prayagraj.
A lesser-known Noida-based firm Worlds Window backed by Exim Industries has submitted a Rs 100-crore bank guarantee for the Jhabua power plant and is required to submit another Rs 115 crore to bag the deal , sources said. The deal is likely to fetch the lenders 60 per cent of the estimated project debt. Lenders have already given letter of intent for Prayagraj Power Gen Co to Resurgent Power, while some more lenders have agreed for resolution plans of GMR Chhattisgarh Energy and RattanIndia Amravati.
Other projects like KSK Mahanadi, Essar Mahan, RKM Powergen and RattanIndia Nashik are also awaiting 100% lenders’ nod to complete resolutions. In most resolution proceedings, banks have finalised the bidders but could not finalise deals due to resistance from 15-20% lenders even as the offers are better than expected, requiring lenders to take a 60% haircut, the sources said.
In the meeting held last month, banks with lesser exposure to the stressed assets in the power sector were asked to come together and decide either to agree with the resolution plan or refer the projects to bankruptcy courts. The meeting was attended by top executives of most banks with exposure to power sector, power secretary Ajay Bhalla and other senior officials of power and finance ministries.
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