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Government panel to study stressed power sector
Why in the news ?
- Government has announced its intention to set up a high-level empowered committee under the Cabinet Secretary to resolve the stress in the thermal power sector.a
Details
- The committee has representatives from the Ministry of Railways, Ministry of Finance, Ministry of Power, Ministry of Coal and the lenders having major exposure to the power sector.
- The Committee would look into the various issues with a view to resolve them and maximise the efficiency of investment.
- It includes changes required to be made in the fuel allocation policy, regulatory framework, mechanisms to facilitate sale of power, ensure timely payments, payment security mechanism, changes required in the provisioning norms/Insolvency and Bankruptcy Code (IBC), Asset Restructuring Company (ARC) Regulations and any other measures proposed for revival of stressed assets so as to avoid such investments becoming NPA.
Power Sector loans
- According to RBI data, the total loans by banks to the power sector stood at Rs 5.18 lakh crore as on April 27, 2018.
- Out of Rs. 5.18 lakh crore, Rs. 37,941 crore was classified as gross non-performing assets (GNPA). Within the GNPA, over 90% are from the power-generation segment, while the rest are from transmission and distribution.
- Around 51 gigawatt (GW) of thermal capacity is stressed because of the non-availability of coal, lack of assured offtake, and huge under-recoveries due to disallowance on account of various factors.
- A further around 23 GW of capacity under construction is also potentially stressed.
- RBI had asked banks, either singly or jointly, to initiate a resolution plan as soon as a corporate default is spotted.
Source
PIB, LiveMint