Canara Bank-led consortium seeks buyer for 270 MW power plant in Maharashtra
New Delhi: A Canara Bank-led consortium of lenders is scouting for a buyer for a 270 MW power plant in Maharashtra which came under corporate debt restructuring (CDR) plan.
IDBI Capital Markets & Securities Ltd (IDBI Capital) has invited an expression of interest to take over the thermal power project on behalf of the consortium of lenders led by Canara Bank.
“IDBI Capital invites expression of interest from the interested parties, who fulfils the qualification criteria and who may be willing to take over the management and control of the company by acquiring 100% equity of the company,” IDBI Capital has said in the EOI document.
The last date of sending EOIs is 8 August. The company has set up a 270 MW coal based thermal power plant located in Nagpur, Maharashtra. The project has achieved commercial operation during 2013-14, however, due to change in policy on price and distribution of all grades of coal by the coal ministry in 2012.
The new rule allowed coal supply only to those independent power producers who had or have long-term power purchase agreements (PPA) with state power distribution companies (state discoms). “It was a major setback for the power producers including the company, which had already made huge capital investments in the sector. “Considering the financial difficulties faced by the company, the lenders of the company restructured the outstanding indebtedness of the company under corporate debt restructuring mechanism in 2013,” read the EOI document.
The project was initially based on sale of power on a merchant basis and the company had secured a medium-term PPA with one of the state discoms. Due to issue relating to availability of transmission corridor, the offtake of the power could not start as per the PPA terms of the company. This pushed the management of the company to pursue selling of the project to a strategic buyer.
The project currently is non-operational due to non- availability of necessary offtake arrangements. The project is kept under preservation till date with regular trials required to maintain the project are undertaken and hence safeguarding the value and operational efficiency of the project.
CDR is one of the mechanisms enabled by the RBI to resolve the issue of non-performing assets of banks.