Compounding matters, in 2014, the US and Europe had slapped economic sanctions on Russia for its military actions in Ukraine. Its output declined from 22 million tons of oil (2014) to 17.6 million tons (2017) and was expected to touch 13 million tons (2020). On one hand, Vankor had hit peak production. Over the next 12 months, Indian oilcos picked another 34.9% at the same valuation. The deal, pegged in August 2015 at $900 million for a 15% stake, was finalised (in September 2015) at $1.25 billion. In the case of Essar Oil, India saw two curiously asymmetric deals.įirst, a clutch of Indian oilcos – led by ONGC Videsh – overpaid for a 49.9% stake in Rosneft’s Vankor oilfield. A third cohort, however, ended up on the selling block. Eventually, for some power plants, relief came in the form of PPAs with state discoms another set were given coal-linkages. A successful legal challenge gave the sector some temporary cover from a RBI circular that would have otherwise mandated bankruptcy proceedings. How does one understand this? By the end of 2018, India had no less than 2,511 companies facing insolvency proceedings – 34 of them stranded power projects. In July 2020, when the price of Indonesian coal had fallen, the Gujarat government reversed its earlier order allowing power tariffs to be linked to that price, effectively allowing these companies to withhold the benefit of cheaper coal from consumers. Even as the CERC was evaluating the report, Gujarat accepted it and allowed higher coal costs to be passed on to consumers. In October 2018, the committee recommended tariffs be hiked. The accompanying footnote, however, makes it clear only three projects are being considered: Adani Mundra, Tata Mundra and Essar Salaya. The report says the committee was set up to find “solutions in respect of imported coal based power projects”.
Its mandate reiterates the BJP’s focus on these three companies. Based on its draft report, a second committee was set up by the Gujarat government. The matter went all the way to the Supreme Court which, in April 2017, said compensatory tariffs wouldn’t be allowed. In June, even though the Department of Revenue Intelligence had flagged over-invoicing of imported coal by Adani and others, the Union Ministry of Power called a meeting to “discuss options for resolving the financial distress being faced by the three generators and also consequently resolve the potential insolvency threat faced by the lenders”.Ī working group was set up. The BJP stepped into to extricate these, all running on imported coal, from bankruptcy courts. In 2010, having signed low-priced power purchase agreements (PPAs) from state discoms of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana, these units demanded tariff revisions saying a price hike in Indonesian coal prices necessitated one.
It’s instructive to compare the experience of that power project with three others – of Tata, Adani and Essar. By the end of 2018, taking over the project, banks began looking for buyers. Its attempts to recast the loan – by swapping debt with equity, and getting a fresh investor to infuse capital into the project – were shot down by banks. A power plant run by a well-regarded business group in North India fell short on working capital due to delays in government permissions and delivery of plant machinery. Those with captive coal blocks had slipped into trouble after the Supreme Court cancelled all coal block allocations in 2014.Ī third set of companies defaulted for other reasons. Some, unable to compete with rivals with cheap coal from their own captive coal blocks, had spun into trouble. If crony capitalism under the Congress-led United Progressive Alliance was characterised by scams like captive coal block allocation where undeserving companies landed coal blocks, it reveals itself under the BJP through the party’s careful extrication of some business groups from the bankruptcy process while letting others get possessed and sold by banks.īy 2018, almost 34 thermal power plants across India were staring at the prospect of facing bankruptcy proceedings.
#Adventure capitalist support codes 2018 code#
Two new books, the first by former RBI governor Urjit Patel and the second by RBI deputy governor Viral Acharya, have finally focused attention on the Narendra Modi government’s attempts to dilute India’s nascent Insolvency and Bankruptcy Code (IBC). The Bharatiya Janata Party finally faces its own coal scam.
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