Punjab State Power Corp is set to acquire GVK Power (Goindwal Sahib) by offering ₹1,400 crore to lenders, people aware of the development told ET, marking the first such takeover of a private electricity generator by a state-run discom, or distribution company.
The GVK Group entity is undergoing a corporate insolvency process.
Last week, lenders unanimously voted on a resolution plan given by Punjab State Power Corp (PSPCL), said the people cited above. KPMG-backed resolution professional, Ravi Sethia, has filed an application with the National Company Law Tribunal (NCLT) to get the plan approved.
GVK Power (Goindwal Sahib) has a 25-year power purchase agreement with PSPCL, which was also the sole bidder for the Punjab-based company.
The discom’s offer would imply 21% recovery for verified lenders.
Twelve corporates, including Adani Power, Jindal Power, and Vedanta, showed 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 the state government over non-payment of dues.
PSPCL suffered a setback in September 2014 after the Supreme Court cancelled coal blocks allotted to various projects, including GVK Power. Thereafter, it made a series of attempts to enter a one-time settlement with lenders offering 27-28% recovery. However, the negotiations failed after the outbreak of Covid-19 since lenders refrained from giving new loans to distressed thermal companies.
PSPCL has withheld payments of close to ₹1,400 crore that GVK Power (Goindwal Sahib) claimed, eventually pushing the company into insolvency, said officials from the power sector.
The thermal power 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. RP, who did not respond to ET’s request for comments, has admitted ₹6,584 crore in claims from 12 financial creditors.
Legal experts say the company was also a victim of politics at the state level.
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.
