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Allahabad HC Refuses Leniency To Stressed Power Projects, 30 Of Them To Soon Face Bankruptcy Proceedings
Power grid in India (Indranil Bhoumik/Mint via Getty Images)
The Allahabad High Court refused to afford any leniency to the power sector in terms of the Reserve Bank of India’s (RBI) circular asking lenders to strictly adhere to the 180-day deadline for resolution of stressed accounts. It is expected that almost 30 major power accounts would be referred to the bankruptcy courts in the coming days in what would be a big test for the new insolvency regime.
Power Ministry officials have estimated that 66 projects in the power sector would qualify as stressed and very few among them are under any resolution plan leading to the fear that most of these projects would face insolvency proceedings.
Power projects have typically faced issues ranging from non-availability of fuel to cancellation of coal blocks and lack of adequate Power Purchase Agreements (PPA’s) among other concerns. A High Powered Committee chaired by the Cabinet Secretary P.K. Sinha has been constituted to examine a possible framework for resolving some of the outstanding issues faced by the power sector.
The High Court had directed the committee to submit its report by 29 September, and officials have been quoted as saying that a forward-looking plan would be enacted covering all categories of stressed assets.
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