Punjab govt pays banks ₹1,426 crore to complete takeover of GVK Power's facility
SECTIONSPunjab govt pays banks ₹1,426 crore to complete takeover of GVK Power's facilityBy Joel Rebello, ET BureauRate Story
Follow usShareFont SizeAbcSmallAbcMediumAbcLargeSavePrintCommentSynopsisThe Punjab government has finalized the payment of ₹1,426 crore to banks, including IDBI, to acquire the debt-ridden 540-MW GVK Power's Goindwal Sahib thermal power plant. This settlement, equivalent to 43% of principal dues, marks a significant recovery for banks involved. Litigation delays with the plant owners have now been resolved, facilitating the transaction.
AgenciesThe money was distributed to banks late on Tuesday evening and equates to a recovery of 43% of their principal dues including some pass-through payments which were stuck due to litigation between the plant owners and the government.
"This is one chunky recovery after many weeks and will directly boost bank bottom lines in the fourth quarter. The government has also paid some receivables which were due that has boosted recovery," said a person aware of the transaction.
IDBI Bank is the largest beneficiary from this account receiving ₹306 crore, followed by Punjab National Bank (PNB) which received ₹165 crore. Union Bank of India and Axis Bank are the other top lenders to the account.
The company was one of many coal plants which were declared as an NPA after the government cancelled coal allocations in light of a Supreme Court order quashing 214 blocks in September 2014.
The project was conceived back in 1994 and had a memorandum of understanding with the Punjab State Power Corp (PSPC) to supply power for 25 years but the project failed to take off due to problems regarding coal availability. Total admitted claims amounted to ₹6,584 crore including ₹650 crore in receivables from the PSPC. Lenders have received some of these receivables with the settlement too.
The state government stepped in as the sole bidder in July 2023 after earlier bidders including large power producers like Adani Power, Jindal Power and Vedanta backed out over concerns on litigations between the private power producer and state government over non-payment of dues, ET had reported in its July 6, 2023 edition.
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