Thursday, 19 November 2020

Power Producers Asso Urges FM for Revival of Infra Industry

By 121 News

Chandigarh Nov. 19, 2020:- Association of Power Producers (APP) has urged Finance Ministry for key financial support required for the revival of the infrastructure industry. In a letter to Finance Ministry, Nirmala Sitharaman, APP has highlighted the concerns of power debtors and extended litigations that have been egging the power sector.

In letter, the association has brought forward one of the biggest challenges afflicting the power companies, the large overdue of receivables pending over long time, including regulatory dues.

APP has suggested that a mechanism or policy framework should be formulated in lines of MSME Act & Consumer Dispute Resolution Act, wherein at least 75% of the claim amount has to be paid by any party in order to file an appeal challenging the orders of regulatory commissions. The amount can be adjusted in future once the final judgement from higher courts is given, APP said.

Highlighting the issue of on tap targeted long term-repo operations (TLTRO) , APP has requested that GoI/RBI need to undertake a specific TLTRO tranche of 1,00,000-cr focused on infrastructure companies with minimum investment grade rating . This would help power sector companies meet their capex requirement for setting up new projects in the renewable sector, for the environmental emission control equipment and for their working capital needs.

On low cost infrastructure sector funding by Development Financial Institutions, APP mentioned that ssince infrastructure assets need long term pay off, they cannot be financed by the short-term liabilities of commercial banks.

The proposed Development Finance Institution to fund infrastructure projects may be hastened to solve the infrastructure financing needs of the country, APP suggested.

Talking about Incentivising Banks to lend to infrastructure sector, APP pointed out that stringent criteria of defining stress , like one-day delay in meeting debt servicing obligation which includes monthly interest, is not suitable for assessing loan quality of powers sector assets, considering the ecosystem in which it operates and the long life of such projects. Such criterion makes it difficult for banks to fund power sector investments making banks reluctant to fund the investment. The power sector needs investments of around Rs 50,000 crore to meet the new environment rules for coal-based power plants for the remaining 120 GW of power plants which are yet to place FGD equipment orders.

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