Domestic power producers approached the RBI Governor on Friday, seeking quick resolution of fiscal issues impacting the sector due to the existing banking norms.

The industry wants the RBI to consider lowering the base rates for long-term lending for infrastructure projects or, alternatively, allowing banks to lend at lower interest rates during the first 2-3 years and charge higher rates later.

In a presentation to the RBI Governor, the producers, under the aegis of the Association of Power Producers (APP), proposed that refinancing of overseas borrowings by foreign branches of Indian banks should be permitted.

They also sought part re-financing for repayment of existing external commercial borrowings (ECBs) by raising fresh funds.

Among APP’s members are the Adani Group, GMR, GVK, Tata Power, Reliance Power, JSW, Jindal Power and Essar.

The producers pointed out that 136 GW of private sector capacity with investment of over ₹6.23 lakh crore is in crisis and requires resolution through appropriate policy interventions and hand-holding by the financial sector.

The issue of under-recovery of costs due to fuel shortage, interest rate and FOREX impact, delays in regulatory redressals, and equity constraint due to discoms were raised, a member of the association who was present at the meeting told BusinessLine here.

Time, cost overruns
Investments of ₹3,00,000 crore and capacity of 46,500 MW are stuck due to time and cost overruns and funding constraints, the member said, adding: “We gave the entire break-up of how much fund is stuck and due to what reason.”

Under-recovery of fixed and variable costs has resulted in 52,100 MW, with an investment of ₹4,55,000 crore, getting stuck.

There are also projects impacted by the recent Supreme Court verdict on coal mines — 20,000 MW of independent power projects with investment of ₹1,21,000 crore.

“Stressed assets as well as stalled projects can become viable and can yield positive results within the 12{+t}{+h} Plan period. Compared to new projects with higher capex, interest rates and FOREX, and without mega project benefits, revival of existing projects will result in faster capacity additions at affordable tariffs,” another member said.

AAP Director-General Ashok Kumar Khurana said: “The (RBI) Governor acknowledged the predicament being faced by the power sector and informed that he would examine the issues raised and see what can be done to ease the transitory distress.”

The Ministry of Power, in a recent meeting called by the Finance Minister of all banks, had also flagged off the issues of the power sector.