The high-level committee for revival of stressed power assets has suggested setting up a mechanism to allow public financial institutions (PFI) like REC and PFC to discount receivables from DISCOMs and make up front payments to generating companies.
Besides, the panel headed by Cabinet Secretary P K Sinha has also recommended that Ministry of Power may engage with the power regulators to ensure that LPS (late payment surcharge) is mandatorily paid in the event of delay in payment by DISCOMs.
According to the Department of Financial Services report, as many as 34 coal-based thermal power projects, mostly private with a total capacity of 40,130 MW, were considered 'stressed' by the Ministry of Power on March 22,2017.
The committee observed that the DISCOMs are unable to make timely payments to the generators because of their poor financial health, and at the same time, most of the generators lack liquidity to withstand the shortfall in cash-flow due to such delays.
It recommended that the Ministry of Power may formulate a proposal for TPA (the tripartite agreement) coverage to PFC/REC for discounting bills of IPPs (Independent Power Producers) for consideration of the competent authority.
The report stated that the PFIs expressed that due to poor financial health of some of the DISCOMs, there was a risk that they may not be able to recover the dues from the DISCOMs and requested that the PFIs providing the bill discounting facility may also be covered by the TPA.
In case of default by the DISCOMs, the RBI may recover the dues from the account of states and make payment to the PFIs.
It also said that banks like SBI can also examine such discounting arrangements through existing FRAC mechanism (Fractional Reserve Banking/Lending Finance) for consideration of the Competent Authority.
Noting that 14,305 MW gas based power plants out of total 24,987 MW in the country are left stranded because of non-availability of domestic gas, it has recommended that Ministry of Power and Ministry of Petroleum and Natural Gas may jointly frame a scheme for revival of gas based power plant on the lines of earlier e-bid RLNG scheme (supported by PSDF).
Under PSDF, the government gave subsidy to buy expensive imported gas to run these plants.
The committee has also recommended that if there is any delay in commissioning of a project for reasons not attributable to the generator, the DISCOMs may be advised not to cancel those PPAs (power purchase agreements).
The PPAs may be kept on hold for a certain period so as to enable removal of impediments in the execution of the project.
It suggested that the upper ceiling for the ACQ/MW (Annual Contracted Quantity) may be prescribed by the Central Electricity Authority, based on efficiency parameters and irrespective of the capacity and actual consumption of that plant and that the coal may be supplied on that basis.
The committee recommends that if there is a shortfall in the supply of coal for reasons attributable to the Ministry of Coal or Railways, such shortfall may not lapse and be carried over to the subsequent months, up to a maximum of three months.
The panel also suggested that the generator should be required to bid only once for the procurement of PPA and linkage should be granted at a notified price without any further bidding to the extent of incremental coal production.
The committee also recommended that timelines be laid down for retirement of old and inefficient capacity.
It also said that Ministry Of Coal may earmark for power sector, at least 60 per cent of e-auction coal, and this should be in addition to regular coal requirement of power sector.
The committee said that the NTPC can act as an aggregator of power, i.e., procure power through transparent competitive bidding process from stressed power plants and offer that power to the DISCOMs against PPAs of NTPC till such time as NTPC's own concerned plants/units are commissioned.
The panel recommended a nodal agency may be designated which may invite bids for procurement of bulk power for medium term for 3 to 5 years in appropriate tranches, against pre declared linkage by Coal India Ltd (CIL).
It also said that a generator should be able to terminate PPA in case of default in payment from the DISCOM with the facility to use linkage coal for short term PPAs for a period of maximum of 2 years or until they find another buyer of power under long/medium term PPA, whichever is earlier.It also suggested that linkage coal may be allowed to be used against short term PPAs and power be sold through Discovery of Efficient Energy Price (DEEP) portal following a transparent bidding process.