The bids are exceptionally low considering the fact that the project has coal and power purchase tie-ups. The bids cover just the land cost and are very close to liquidation cost. Vedanta Resources has offered upfront payment of Rs 660 crore for the 660 MW project of Ind Bharat Group, or Rs 1 crore per megawatt, in the National Company Law Tribunal (NCLT) in a recent bidding round.
JSW Energy, too, has placed an upfront bid of Rs 660 crore but has made a conditional offer of another Rs 220 crore over a period of time.
But an industry insider, speaking on condition of anonymity, said this could be an exceptional case. This is value of the land of the project and is very close to value derived upon a plantâ€™s liquidation.. The lenders may not accept the conditional bids and may look for other options for the project, including banks taking over the plant and engaging a firm on contract to operate it.
A consortium of 15 lenders led by Power Finance Corp had dragged the Ind Bharat project to NCLT last year. The lenders tried to resolve the project outside NCLT and had also asked staterun power generator NTPC to consider acquiring it, the sources said. Last year, lenders had decided at a meeting in Mumbai to fix a benchmark price of Rs 3 crore per megawatt for resolution of commissioned power projects with power purchase agreements (PPAs) and coal.
Tata Power and ICICI Bank Ventures-backed Resurgent Power announced an agreement to acquire 75.01% stake in Jaiprakash Associates 1,980 MW power plant in first of the nearly dozen stressed power plants proposed to be resolved by lenders outside the insolvency court. The acquisition, however, has hit a roadblock with the Uttar Pradesh electricity regulator asking for a lower tariff from the plant.
The total coal-based stressed power plant capacity of 40,130 MW, about 15,725 MW is under construction. There are very few chances of revival of power plants which are not commissioned. The Ind Bharat Utkal project could be an exception but plants that are not commissioned or are closed down are in bad shape on ground.
The Ind Bharat Utkal coal-based power plants in Jharsuguda in Odisha face time and cost overruns due to financial constraints. The project has coal supply and 80% of its total capacity is tied under long-term PPA of 15 years with the Tamil Nadu utility. One unit of the plant has been commissioned while the other is yet to be commissioned. The main plant equipment was sourced from Chinaâ€™s Harbin Power.
Anil Aggarwal's Vedanta Resources and Sajjan Jindal-led JSW EnergyNSE -1.98 % have placed very low bids of about Rs 1 crore per megawatt for an incomplete stressed power project in Odisha, leaving lenders worried over big haircuts for about 15GW of such non-commissioned assets.