Current Affairs

Government constitutes committee to revive stressed thermal power plant

The Union Government has constituted High Level Empowered Committee headed by Cabinet Secretary to address issues of Stressed Thermal Power Projects.
Govt. Constitutes committee to revive stressed thermal power plant
The committee has representatives from Ministry of Railways, Ministry of Finance, Ministry of Power, Ministry of Coal and lenders having major exposure to the power sector.

What will the committee do?

  • The Committee will look into various issues with a view to stressed assets or non-performing assets in thermal power and maximise efficiency of investment including changes required to be made in fuel allocation policy, regulatory framework, mechanisms to facilitate sale of power, ensure timely payments and payment security mechanism.
  • It will also consider if changes are required in provisioning norms, Insolvency and Bankruptcy Code (IBC), asset restructuring company (ARC) regulations and any other measures proposed for revival of stressed assets to avoid investments from turning bad.

A look at the background:

  • Department of Financial Services under Ministry of Finance in its report had suggested setting up of an empowered panel, besides giving operating thermal power plants not facing insolvency action, 6 months more months to resolve issues.
  • The report came after Allahabad High Court in June 2018 had ordered that no action will be taken against power producers till they are heard.
  • The power generation companies had challenged Reserve Bank of India’s (RBI's) February 2018 circular that laid down stricter timelines for initiating insolvency proceedings.
  • It also mandated that the banks classify even one-day delay in debt servicing as default.
  • Private power producers feared that the RBI’s new regulations will push projects with capacity of about 60,000-70,000 megawatts (MW) towards bankruptcy and had sought more time.
  • RBI is not in favour of giving more time to these power plants.

Questions:

Q1. The Union Government has constituted High Level Empowered Committee to address the issues of which Projects?
a. Stressed Rural Irrigation Projects
b. Stressed Thermal Power Projects
c. Stressed Defence Acquisition Projects
d. None of the above

Q2. Who will head the High Level Empowered Committee?
a. Cabinet Secretary
b. Press Secretary
c. Finance Secretary
d. None of the above
Government constitutes committee to revive stressed thermal power plant Government constitutes committee to revive stressed thermal power plant Reviewed by Inderjeet Virdi on July 31, 2018 Rating: 5

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