Banks may be asked to revive power projects

Aiming to boost power generation, the government is considering instructing banks to fund dormant power projects that have been classified as non-performing assets (NPAs).

“The Finance Ministry is working on a proposal to ask banks to fund identified revivable stressed project and fund to re-energise them,” sources told Deccan Herald.

The funds may go to projects which are stuck due to economic slowdown or shortage of raw material, sources added.

The proposal not only helps to review the stuck projects, but also to ease NPAs in the banking sector, said an official in the Ministry of Finance.

The ministry is likely to prepare a detailed note in consultation with the Power Ministry and send it to the Cabinet seeking its approval, sources added.

A committee headed by Santosh B Nayar, chairman of India Infrastructure Finance Company Ltd, submitted a report on restructuring of stressed assets to the Finance Minister. It emphasised that there is an urgent need of revival of all viable projects, irrespective of the asset classification status to prevent growing NPAs.

Finance Minister Arun Jaitley had met the chairmen of public sector banks on November 20 to take stock of bad loans and discussed steps to bring down NPAs. Aiming to revive the ailing power projects, Power Minister Piyush Goyal also requested the Finance Ministry to ask the RBI to extend the repayment schedule to 25 years from 10 to power projects and reduce interest rates to be base level or even less.

The government is trying to increase the power generation by reviving stranded projects, including gas-based plants which have been suffering due to non-availability of domestic gas. The draft energy security blue print prepared by the Ministry of Power recently has several features, including augment generation, address peak load shortages, strengthening the grid and creating reserve energy to prevent repeat of 2012 grid collapse, reschedule loans to power firms and make fuel available at affordable prices.

The Cabinet recently approved two major projects worth Rs 75, 645 crore in the power sector-Integrated Power Development Scheme.

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