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Panel on power mulls payment security mechanism for private players

Press Trust of India/New Delhi 12 Sep 18 | 05:00 PM

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A high level panel for power sector is considering payment security mechanism for private sector power generators, which has been the main cause of stress in the sector, an official said.

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The committee's meeting was held on August 31, where detailed deliberations were done on ensuring payment for power supplied by private sector firms, Power Finance Corporation Chairman and MD Rajeev Sharma told reporter addressing a press conference.

He also confirmed that the next meeting of the committee headed by the Cabinet Secretary is scheduled on Friday.

Elaborating further, he said that payments for supplied power to private sector generators has been an issue, which is one of the main reason for their stress as they are not paid for more than six months in some cases.

Sharma was of the view that the state-owned firms, like NTPC, have an advantage as they get the payment well in time but private sector firms have to deal with the delay in the absence of any payment security mechanism.

The state-owned power generators have payment security mechanism with Reserve Bank of India on its board. But there is no such system for private sector generators. Therefore, they often have to face delay in payments by discoms, which add to their stress and result in defaults on loan servicing.

The government decided to set up a High Level Empowered Committee headed by the Cabinet Secretary with 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, with a view to resolve the stress and revive such assets in power sector on July 29, 2018.

The committee is looking into the various issues with a view to resolve them and maximise the efficiency of investment, including 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 (bad loan).

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