NTPC in talks to rescue 3,600 MW Mahanadi power plant

Energy major National Thermal Power Corporation (NTPC) is in talks for a financial rescue of a 3,600 MW thermal power plant in Rs 30,000 debt, which is unable to service in Chhattisgarh.

NTPC plans to collaborate with the banks to rescue the KSK Mahanadi Power plant. The collaboration between NTPC and the banks will be a 50/50 joint venture after officially infusing funds in the company.

The State Bank of India (SBI) is the largest lender for KSK Mahanadi Power, with a Rs 5,000 crore outstanding loan. It had also involved personal guarantees for recovering the dues provided by KSK Mahanadi Power's former promoter, S Kishor and K A Sastry.

According to the sources, Adani, Tata Power, Brookfield and Jindal Steel and Power Ltd (JSPL) have submitted their Expression of Interest (EoI) to acquire the plant. However, the banks are not sure about getting attractive offers due to previous discussions with the companies and chose parallel discussions with NTPC for other solutions.

NTPC has offered the same deal to the banks to form a joint venture and revive the Jhabua Power plant in Madhya Pradesh. Sources said that Jhabua's total debt is Rs 4,900 crore and could form a template for the recent discussions with the bankers.

According to the deal, NTPC agreed to infuse Rs 900 crore in Jhabua Power. It may have to increase sums running into multiples into KSK Mahanadi Power.

The insolvency of the KSK Mahanadi Power was commenced on 3 October 2019 at the National Company Law Tribunal (NCLT), which entered into a plea by the banks for recovering their amounts.

As per the latest filings, at the end of March 2019, the company generated Rs 4,000 crore in revenue.

The power plant has 25 years of Power Purchase Agreement (PPA) with the electricity boards in Gujarat, Tamil Nadu, Uttar Pradesh and Andhra Pradesh.

In 2019, Adani offered Rs 11,000 crore to the bankers to take over the power plant, but the offer was rejected because not all banks agreed to the terms of the bid.

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