August 07

Power ministry brings mechanism for stressed projects for servicing debt in first place

New Delhi: The power ministry on Monday introduced mechanism 'Trust Retention Account' for certain stressed power plants to utilise their surplus after meeting operating expense, for servicing debt in the first place. In case the developers using coal linkage of amended SHAKTI policy, a Trust Retention Account (TRA) must be put in place, if it is not there already, a Ministry of Power order said. 

According to the order, all the revenues generated shall be deposited to the TRA. Generally, the lead banker would act as a TRA agent.  However, it said that in case of a non-banking financial company, such as PFC or REC, which is a lead financier, any bank, which is one of the lenders, can be appointed as the TRA agent. 

The companies will first pay statutory payment (taxes) followed by fuel cost, transmission expenses, operation and maintenance expenses and then pay interest on loan and principal payments.  The high-level committee on stressed power projects in its report had suggested in November last year that the net surplus after meeting operating expenses generated shall be used for servicing debt in the first place. 

The recommendations were implemented in earlier in March this year. Now, the Ministry of Power has brought out the mechanism for that.

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