DIPAM declines PFC-REC debt resolution proposal for KSK Mahanadi project

New Delhi: The Department of Investment and Public Asset Management (DIPAM) has rejected Power Finance Corporation and REC Ltd's proposal for a debt resolution plan for the 1,800-MW KSK Mahanadi Power project.

The state-owned companies had requested approval from the department to participate in the ongoing insolvency proceedings by submitting a debt resolution plan. This plan had the potential to secure a better valuation for the project they were interested in.

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However, DIPAM rejected the proposal with a view that lenders' backed resolution plan should normally be avoided as it involves additional resource infusion and business risks.

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The project is currently undergoing insolvency proceedings, but the resolution process has been hindered since June 2022. This is because the NCLT (National Company Law Tribunal) stayed the sale process after a plea was made to consolidate the resolution of KSK Mahanadi and two of its ancillary companies that are also under the resolution process.

During the insolvency proceedings, REC and PFC, with NTPC Ltd as the technical partner, received interest from Vedanta Ltd, Adani Power Ltd, and Jindal Power Ltd for the auction of the asset.

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