RBI's norms will deepen power sector crisis: Parliamentary panel
New Delhi : A Parliamentary panel on Tuesday said RBI's new guidelines on default will worsen the crisis in the power sector and suggested changes.
"The new guidelines of the RBI will only deepen the crisis of the electricity sector as its leitmotif is distinct, peculiar and sector specific without any generic underpinning with other sectors of the economy," the Standing Committee on Energy said in its report.
The high rate of non-performing assets (NPA) in Indian banks is sector specific with major concentration in sectors like infrastructure, power, iron, steel and textile. Total NPA in power sector has exceeded Rs 1.8 lakh crore.
The panel noted that the definition of default has been revised and the same has been aligned to the definition of default given in Insolvency and Bankruptcy Code (IBC).
The committee, headed by Lok Sabha MP Kambhampati Haribabu, said the reasons of stress in different sectors are separate and varying, and thus needs a closer look.
For the power sector, factors like coal linkage, delay in implementation, non-availability of fuel, delay in land/environment clearances and need of extra funds have aggravated the problem and weak financial health of distribution companies have impacted their liquidity position, it said.
"The committee postulates that the specifics and realities of the sector should be taken into account for appropriate modulation of the RBI Guidelines," the report said.
The committee said it has learnt that finding an optimal solution for a stressed asset exactly in 180 days is almost impossible and that lending institutions have stated that 12 months are needed for a smooth and efficient resolution.
"The Committee feels that going by the prescribed timelines, every stressed project of the power sector will ultimately land in National Company Law Tribunal (NCLT).
About 66 GW of conventional energy is under various degrees of financial stress which include 54,805 MW of coal based power (44 assets), 6,831 MW of gas based power (nine assets) and 4,571 MW of hydro power (13 assets), it added.
