Development comes after rescue plan involving the purchase of a majority stake by Brookfield faltered
Tanti says Suzlon Energy can’t disclose the name as it has signed a confidentiality agreement
NEW DELHI :
Suzlon Energy Ltd has found a new suitor even as a rescue plan of Canada’s Brookfield Asset Management Inc. faltered, said Tulsi Tanti, the founder and chairman of the financially-troubled wind turbine maker.
The lenders’ consortium for Suzlon was earlier working on a resolution plan involving the purchase of a majority stake by Toronto-based asset manager Brookfield. Pune-based Suzlon reported a consolidated net term debt of ₹7,761 crore and a working capital debt of ₹3,380 crore as of March 2019.
“We can’t disclose the name as we have signed a confidentiality agreement," Tanti told Mint.
Suzlon’s consortium of lenders initiated work on a resolution plan for the firm and one of the rescue plans could involve Brookfield offering to buy a majority stake in the wind turbine maker, Bloomberg reported on 11 July.
This comes at a time of a crisis in electricity distribution companies (discoms) because of their poor financial health, which has resulted in delayed payment to generation utilities. The discoms owe ₹76,336 crore for the power bought from the generation companies (gencos) at the end of July, according to information available on the union power ministry’s PRAAPTI portal. This comprised ₹56,710 crore as the overdue amount.
Union power minister Raj Kumar Singh is expected to discuss payment security at a two-day conference of state power ministers starting on Friday at Tent City, Narmada, Gujarat.
The payment security issue will deal with “timely payment to generators (solar/wind power) by discoms on first in first out (FIFO) basis" and “opening of LCs (letters of credit) by all discoms/distribution licensees for all independent RE (renewable energy) producers", according to the agenda for discussions reviewed by Mint.
Worried that the growing crisis may add to the stress of non-performing assets in the banking sector, the National Democratic Alliance government at the Centre in its second term made it mandatory for state discoms to offer LC as part of the payment security mechanisms in power purchase agreements (PPAs). This became effective on 1 August and was done to ensure timely payments by states to power generation utilities, according to the government.
The current scenario impacts Suzlon as its outstanding dues can only be cleared once its customers receive payments for their electricity supplies from the discoms.
India has an installed renewable energy capacity of about 82,580MW, with about 31,150MW under execution. The Centre is also trying to step up efforts to supply round-the-clock power to all.
‘Since March 2014, India’s renewable power capacity has increased from 34,000MW to 82,580MW, recording 138% growth. Globally, India stands 5th in solar power, 4th in wind power, and 4th in total renewable power installed capacity," the ministry of new and renewable energy said in a statement on Thursday.
This comes at a time when credit availability for renewable energy firms has tightened with drying up of debt financing. Large lenders such as State Bank of India have been restricting funding to projects that have committed to sell power at less than ₹3 per unit as they are wary of the viability of projects that have agreed to sell power at rock-bottom tariffs.
India has been trying to rejig its energy mix in favour of green energy sources. Also, in an indication of growing appetite for electricity in India, the country’s per capita electricity consumption has reached 1189 kilowatt-hour (kWh) as compared to a global average of 3600 kWh.