Adani Power, NTPC, JSW Energy in Race to Acquire Sinnar Thermal Plant

15 Jul 2024 , 12:42 PM

Some of India’s largest power producers, including Adani Power, JSW Energy, Jindal Power, Vedanta Group, Torrent Power, and state-owned NTPC, are among 15 companies that have submitted formal expressions of interest (EOIs) for a resolution plan to take over the debt-ridden Sinnar Thermal Power near Nashik in Maharashtra.

Indiabulls Power created the 1,350 MW power plant, which is now a subsidiary of RattanIndia Power. It is a unique power producer that is widely available in India, where developing a greenfield project is both time-consuming and expensive.

Bidders have until later this month to submit an initial resolution plan with a ₹10 crore deposit, according to news reports.

“The beauty of this project is that it has a massive 1,600 acres, of which only 110 acres have yet to be bought, allowing any company who buys it to double capacity by adding another 1,350 MW. However, coal supply was, and continues to be, a challenge that the prospective buyer must address,” according to a news report.

In December 2022, government-owned South Eastern Coalfields terminated the coal supply contract with Sinnar, citing the lack of a power purchase agreement (PPA) and the non-commissioning of the majority of the plant’s units. Sinnar’s PPA with the Maharashtra State Electricity Distribution Company (MSEDCL) was terminated a few years ago.

“Coal supply is a significant challenge. Furthermore, just one 270 MW unit has begun commercial operations. The remaining four units have only functioned at full capacity for three to seven hours, leaving a significant amount of work to be done. There may possibly be some dispute around the land acquisition. On the plus side, the company has good equipment from companies like as BHEL, Kirloskar, and L&T,” quoted the report.

Sinnar was admitted to insolvency after the bankruptcy appellate court lifted a stay to commence corporate insolvency proceedings against the company, as ET reported in January. Shapoorji Pallonji & Co. filed a recovery action for nonpayment of dues after completing a portion of the plant.

Power Finance Corp (₹6,553 crore) and its subsidiary REC (₹5,262 crore) are the company’s top two creditors, with a total due of ₹15,909 crore.

The other creditors are Punjab National Bank (PNB), Axis Bank, Canara Bank, Bank of India, and Life Insurance Corporation (LIC).

The factory, located in Sinnar Special Economic Zone (SEZ), is approximately 50 kilometres from the city and 4 km from a national highway.

According to a second report, the Maharashtra government-owned MSEB Holding Company, which owns wholly-owned power production, transmission, and distribution arms, may also be interested in bidding.

Mahagenco, the state’s electricity generation business, operates the 2,190-MW Koradi power plant near Nagpur. Mahagenco may be interested in the asset because the state may prefer to keep such a major power asset under its control.

It is India’s largest state-owned power producer, with about 13,000 megawatts of installed capacity.

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