SBI, lenders to float fund to take over 14 stressed power generating assets; move could boost project valuations

Power sector lenders led by State Bank of India (SBI) have reportedly decided to float a fund to take over 14 stressed power plants, of firms like KSK Energy, IndiaBulls and RKM Powergen, a media report said. The SBI, in a meeting on Wednesday in Mumbai, said that it will invest Rs 10 crore in every project while co-lenders will bring in equity on a pro-rata basis, or to the extent of their exposure to the project, The Economic Times reported. [caption id=“attachment_4383683” align=“alignleft” width=“380”] Representational image. AP[/caption] The decision to float a fund is aimed at preventing power generation projects from going into liquidation. The move will also improve projects’ valuations, the newspaper added. The lenders are trying to restructure the debt of 34 thermal power projects under stress – saddled with debt worth Rs 1.77 lakh crore. Over 75,000MW of power generating assets are currently stressed. The SBI proposal involves getting a power plant’s debt rated by credit rating agencies, followed by a valuation of power plants, some of which are under construction. The plants will then be offered to the National Investment Fund (NIF), which will then invite bidders, said the newspaper. SBI wrote-off bad loans worth Rs 20,339 crore in fiscal 2016-17, the highest among all the public sector banks, which had a collective write-off of Rs 81,683 crore for the fiscal.  

With inputs from PTI