According to a report of Parliamentary Standing Committee on Energy tabled in Parliament today, about 66 GW of conventional energy is under various degrees of financial stress, which include 54,805 MW of coal based power (44 assets), 6,831 MW gas based (9 assets) and 4,571 MW of Hydro (13 assets). In addition, certain assets from power sector have already been referred for CIRP (Corporate insolvency resolution process) under the IBC (Insolvency and Bankruptcy Code).
The committee noted that the outcomes of the RBI's revised framework with respect to the electricity sector have been very disappointing, with major lenders to IPPs (independent power producers) displaying significant accretion to NPAs (bad loan) and their slippages have exceeded Rs 1.8 trillion in Q4 FY 2018 (January-March 2018), while slippages of 6 major lenders have exceeded Rs 610 billion.
The panel has recommended, "With a view to ensure power security and also to avoid wastage of collective efforts, a new framework should be put in place which safeguards the transient sagging situation of the Electricity Sector and provides the much needed stimulus".
It also said the RBI framework is ignorant as well as unmindful of prevailing reality of the electricity sector and that is why it addresses only the financial issues, ignoring the whole range of vital issues of the electricity sector.
The panel was of the view that the power sector, being the nucleus for growth of Economy and development of the nation, should be protected from this temporary phase of uncertainty so that these power plants can be put to use at the time of need, which is certain to happen sooner than later.
It found that the nominal principles for resolution are more chimerical than practical as on the one hand, it is acknowledged that reasons for stress are not identical, while on the other hand similar and identical tools are taken recourse to remedy the malady.
The panel has recommend that appropriate, relevant and sector specific measures should be explored to address the issue.
"The committee was not convinced with the reasons given by the government to justify their formula for resolution of stress because different ailments can be cured only with ailment specific remedies and if a single remedy is taken as panacea for all maladies and applied uniformly all across, it is bound to be counter productive and is sure to aggravate the problem," it said.
The committee recommend that instead of adopting a sector agnostic approach for stress resolution, more penetrative and sector friendly measures should be adopted.
It also suggested that in the interest of the economy in general and the electricity sector in particular, the revised guidelines should be harmonized and simplified in the real sense.
It also said, "The government should be sensitive to this vital sector of our economy which acts as a core to shoulder the other engines of the economy and thus the Committee postulate that the specifics and realities of the sector should be taken into account for appropriate modulation of the RBI Guidelines".