Axis Bank puts GMR Chhattisgarh on block

Axis Bank, the third largest private bank, is looking out for buyers to take controlling stake in GMR Chhattisgarh. Listed entity, GMR Infrastructure holds 47.6 per cent share in GMR Chhattisgarh Energy (GCEL).

GCEL operates a 1,370 MW coal-based power plant in Raikheda, Chhattisgarh. The plant which is operational from June 2015 has been granted a provisional Mega Power Project status by the Chhattisgarh Power Project. The plant has been allotted two coal blocks in Talabira I in Odisha and Ganeshpur in Jharkhand with reserves of over 90 MT.

In February 2017, a consortium of GCEL lenders led by Axis Bank had converted the company's Rs. 2,990 crore debt to equity under the strategic debt restructuring (SDR) plan. Following the SDR, the banks own a 52.4 per cent stake in the company. The lenders now seek bidders for this stake, reported a leading news outlet.

Power generation at GCEL was hit as state-owned coal suppliers refused to sign long-term supply agreements until the project had a long-term power purchase agreement (PPA). The company only managed to secure short-term PPA.

Also, power distribution entities (discoms), which are primarily state-run, delay payments to independent power producers (IPPs). Due to these delays power plant face severe cash crunches and are unable to service their debt. Industry experts estimate that at the end of FY17, around Rs. 20,000 crore payments to power producers remained unsettled. The other power firms hit by non-payment of dues by discoms include Adani Power, Tata Power and JSW Energy.

Earlier, in April 2017, the state-owned NLC India was reported to be in talks with lenders for buying a stake in GCEL.