Association seeks aid for power sector

Ludhiana, November 19

The Association of Power Producers (APP) has urged the Finance Ministry for key financial support for the revival of the infrastructure industry. In a letter to the Finance Ministry, APP has highlighted concerns of power debtors and extended litigations that has been egging the power sector.

In the letter, the association has brought forward one of the biggest challenges afflicting 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 the lines of the MSME Act and Consumer Dispute Resolution Act, wherein at least 75 per cent of the claim amount has to be paid by any party to file an appeal challenging the orders of regulatory commissions. The amount could be adjusted in future once the final judgment from the higher courts were given, APP said.

On low-cost infrastructure sector funding by development financial institutions, APP mentioned that since infrastructure assets need a long-term pay off, they could not be financed by the short-term liabilities of commercial banks.

The proposed development finance institution to fund infrastructure projects might be hastened to solve infrastructure financing needs of the country, the association suggested.

Talking about incentivising banks to lend to the infrastructure sector, APP pointed out that stringent criteria of defining stress such as one-day delay in meeting debt servicing obligation which includes monthly interest, is not suitable for assessing loan quality of power 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. — TNS

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