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Tata Power-backed Renascent Power Ventures, which acquired a 75.01 per cent stake in Prayagraj Power from lenders as part of stressed asset resolution process, is likely to start selling power from the plant without any discount on power tariff.
Following representations made by lenders to the Uttar Pradesh Electricity Regulatory Commission (UPERC) — which has been hearing the petition filed by SBI, the lead lender, for change in ownership of the plant — the regulator is likely to come out with an order by the end of this week, sources aware of the matter told BusinessLine.
While the new owner of Prayagraj Power would not be required to offer any discount on the tariff, sources added, UPERC has asked it to submit an affidavit, according to which the State distribution company will have a “right of first refusal” for Prayagraj Power’s 10 per cent capacity which is presently not tied up with any power purchase agreement (PPA).
Tata Power is also planning to operate Prayagraj Power at a higher plant availability of 85 per cent against previous 80 per cent which would allow the State discom to get more power from the plant, the sources added.
Tata Power spokesperson did not comment on the development.
As BusinessLine reported earlier this month, the UPERC has taken a view that if power assets are sold at a discount with banks taking large haircuts, the new owners should be passing the benefits to end-consumers by reducing the power tariff. In its order dated March 7, the regulator directed SBI to submit its offer of reduction in fixed charges and also the computation on the basis of which such reduction is offered.
However, according to sources, the regulator has been given a detailed explanation of resolution process under the Insolvency and Bankruptcy Code, 2016, as well as the valuation of asset arrived by the lenders which had no room for any discount on power tariff.
Industry relieved
This comes as a relief for the power industry that is plagued by many issues, including non-availability of long-term fuel supply arrangements, lack of PPAs despite growing power demand, inability of promoters to avail of additional working capital, among others.
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