Nearly 16,000 MW of thermal power projects with an exposure of Rs. 35,000 crore from various banks face the threat of turning into non performing assets (NPAs) in view of the decision of the Inter-Ministerial Committee (IMC) not to consider them under the price pooling formula of imported and domestic coal.
Interestingly, a majority of these power plants are scheduled to be commissioned during 2014-15 and have been recommended for tapering linkage by the Ministry of Power and Ministry of Coal and scheduled to come up during the 12 th Plan. The fate of these projects, coming under option 4A and 4B of the IMC, hangs in balance as the Cabinet Committee on Investment (CCI) is likely to take a final view on the recommendations of the IMC at its meeting later this month.
Some of the projects which have been recommended for price pooling formula by the IMC will only be commissioned in 2016-16, much later than the large number of projects which have been kept out of the new formula under the price pooling regime. ``A massive investments to the tune of Rs. 80,000 crore have been made in these projects under option 4A and 4B. The bank exposure is around Rs. 35,000 crore and if they are denied coal linkages, they will face the threat of turning into NPAs,’’ a senior Power Ministry official said.
Among the projects denied coal linkages under the IMC regime include the 660 Mw Kawal thermal power project unit-I, 600 MW KSK Mahanadi project, the 1320 MW Koradih power project unit 8&9, 600 MW Mahan thermal power project of Essar Power and 700 Mw Bellary thermal power project to name a few. According to documents, Essar Power has already spent around Rs. 6480 crore on the Madhya Pradesh situated Mahan power project of which Rs. 4395 has been funded by banks and financial institutions in the form of debt. ``The Mahan project has executed PPAs with Madhya Pradesh and Karnataka. It has firm coal block allocation with Stage-I approvals. If it remains idle for two years, it will become a NPA,’’ officials said.
The Cabinet Committee on Economic Affairs (CCEA) had approved that plants commissioned up to March 31, 2009, will continue to get domestic coal supply by Coal India Limited (CIL). In case of plants commissioned during April 1, 2009 and to be commissioned during March 31, 2015, CIL will provide imported coal on cost plus basis.