Illustration: Ajay mohanty
The cabinet secretary-led high-level committee for the power sector is figuring out its moves after the Supreme Court last week transferred all non-performing assets (NPAs) cases related to the sector to itself. This is a dilemma for the panel, headed by P K Sinha, which was supposed to submit its report by September 29.
The committee has met formally only once with all members present since it was constituted by the government in late July, with representatives from the ministries of power, coal, finance, and that of railways along with the bankers who have major exposure to the power sector. While Reserve Bank of India did not attend the meeting, others associated with it now want to wait for a clear direction from the court.
The committee's brief is to explore all options to provide ways for the largely coal-based power generation companies to come back on steam. The urgency to work out a solution is because of a RBI circular issued in February asking for all such projects where banks have a stake to head for the bankruptcy courts.
Promoters of most of these projects had moved various high courts to get a stay on the RBI order. In the basket of the Sinha committee are 34 of 70 large borrowers. The latter cumulatively account for Rs 3.8 trillion of bad debt owed to the banks. The panel cannot decide on the cases either way now. If it is convinced there is a way for a particular project to avoid bankruptcy, it would mean taking the case out of the Supreme Court list. If it is to be liquidated, it, too, could run foul of the court order that has asked for a status quo on the cases till the next hearing in November.
There is another problem facing the committee. It does not have a back-up body, except the warring ministries and RBI to provide expert guidance. While this is not unusual within the government, the need to examine all the cases with complicated legal histories has made the absence of such support a huge challenge.
In the two months since the committee was constituted, it has been inundated with fat files that are impossible to wade through in the short time allowed to it to examine them. Yet, it is supposed to decide on a possible fuel allocation policy, examine the regulatory framework, and provide reasons why a project has to head for bankruptcy, said a member of the committee.
The shortage of qualified personnel to help the committee members to examine the biggest chunk of NPAs in the Indian economy has loomed as the largest handicap so far. The Supreme Court order has made it even more complicated.