Punjab utility bids for GVK Power plant, Energy News, ET EnergyWorld

Mumbai: Punjab State Power Corporation (PSPCL) has offered ₹1,080 crore to lenders to acquire GVK Power (Goindwal Sahib) that is undergoing corporate insolvency resolution, said people aware of the development. The offer from the state power distribution company equates to a 16 per cent recovery of the claims filed by lenders with the resolution professional (RP).

Ravi Sethia, the RP backed by KPMG, did not respond to ET’s request for comments. He has admitted ₹6,584 crore in claims from 12 financial creditors.

GVK Power (Goindwal Sahib) has a 25-year power purchase agreement with PSPCL and now it is the sole bidder for the Punjab-based company. Incidentally, the company has undisputed trade receivables of ₹327 crore from PSPCL and another ₹334 crore disputed trade receivables from the state utility, according to an information memorandum circulated by the RP to the potential bidders.

Twelve corporates, including Adani Power, Jindal Power and Vedanta, have shown interest in acquiring the 540-MW thermal power plant spread across 1,100 acres of land in Punjab, but backed out over concerns arising from a series of litigations between the private power producer and state government over non-payment of dues, said power sector experts.

PSPCL has withheld payments of close to ₹1,400 crore that was claimed by GVK Power (Goindwal Sahib) that eventually pushed the company into insolvency, they added.

Separately, the company was also a victim of politics at the state level, legal experts say.

In October 2021, the state government threatened to terminate the power purchase agreement with GVK citing the high tariffs charged by the power producer. The PPA’s termination was part of fulfilling an election promise by the then Congress government.

The Punjab government had signed the PPA with GVK Power when the Shiromani Akali Dal-BJP combine was in power earlier. The cancellation resulted in a series of litigation between the company and the state government.

  • Published On Jul 6, 2023 at 07:57 AM IST

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