1/9
Banks have put applications of
companies that have sought funds on hold, said a senior executive at one of the
private power producers. Some lenders have asked the companies to first get
clarification from the government on the matter as they fear such a cap would
hurt power producers' ability to pay back loans, this executive said. "The
proposed plan will affect lenders' ability to lend," said an official at a
state-run bank. "Banks are careful as the power sector is very
capital-intensive."
Pic Courtesy : BCCL
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2/9
The
development could cripple an industry already hit by an acute shortage of fuel.
Companies had bid aggressively to get coal blocks after a Supreme Court order
last year revoking licences on 200-odd captive mines made their projects with
capacity to produce thousands of megawatts vulnerable.
Pic Courtesy : BCCL
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3/9
Reluctance
on part of banks, which are extra cautious on the power and other
infrastructure industries that account for most of their bad loans, could
further delay the efforts of power producers to revive projects on hold and expand
production.
Pic Courtesy : BCCL
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4/9
The
companies had agreed to forgo the mining cost they were allowed to pass on and
instead pay the government, in what is called negative bidding. The government
is worried that they may now use some other cost heads to pass on the expenses
to consumers and the proposed cap is to prevent any rise in tariffs because of
such moves.
Pic Courtesy : BCCL
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5/9
Last week, Mandakini Exploration
and Mining, a joint venture of Jindal India Thermal Power and Monnet Power Co,
moved the Delhi High Court, alleging that capping the fixed cost after the
auction was completed "amounts to ex post facto", or retroactive,
change in bid ding conditions. Because of this, it said, its project won't be
able to service debt.
Pic Courtesy : BCCL
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