India’s largest private sector power producer, Adani Power Ltd, along with other major industry players such as Vedanta Group, Jindal Power Ltd (JPL), and four other companies, have entered the bidding process to acquire the distressed 1,350 MW Sinnar Thermal Power Plant. Located near Nashik, Maharashtra, this power plant has become a focal point for several key players in India’s energy sector, including state-owned power giants MAHAGENCO and NTPC, who have submitted a joint bid for the acquisition.
The Sinnar Thermal Power Plant is currently owned by RattanIndia Power and was originally developed by Indiabulls Power. Due to financial difficulties and unpaid dues related to the plant’s construction, the facility was admitted into corporate insolvency in September 2022 under the purview of the National Company Law Tribunal (NCLT). The insolvency process was initiated following a petition filed by Shapoorji Pallonji & Co, the construction company responsible for building the plant. As a result, the plant is now undergoing bankruptcy resolution, drawing significant interest from both private and public-sector companies.
Competitive Bidding for Sinnar Thermal Power Plant
Earlier this month, six resolution plans were submitted to the authorities overseeing the insolvency process, as part of the ongoing evaluation under the bankruptcy code. While the exact value of the bids has not yet been determined, it is known that all the interested parties, including Adani Power, Vedanta Group, and Jindal Power, have submitted initial proposals. These bids are subject to compliance checks, and further negotiations between the resolution professional and creditors are expected before a final decision is made. Each bidder has submitted a Rs 10 crore deposit as part of their proposal to demonstrate their commitment.
The plant’s major creditors include Power Finance Corporation (PFC), which is owed Rs 6,553 crore, and its subsidiary Rural Electrification Corporation (REC), which is owed Rs 5,262 crore. Together with other creditors, such as Punjab National Bank, Axis Bank, Canara Bank, Bank of India, and Life Insurance Corporation (LIC), the total outstanding dues amount to Rs 15,909 crore. These financial liabilities add a layer of complexity to the bidding process, as potential buyers must carefully evaluate the plant’s valuation in light of these obligations.
The Sinnar Thermal Power Plant is strategically located within the Sinnar Special Economic Zone (SEZ), approximately 50 kilometers from Nashik and 4 kilometers from a major national highway. Its prime location, combined with its potential for capacity expansion, has made it an attractive asset for bidders despite the challenges associated with its acquisition.
Challenges Facing the Sinnar Thermal Power Plant
One of the significant attractions of the Sinnar Thermal Power Plant is its potential for expansion. The plant is surrounded by 1,600 acres of land, which offers the possibility of doubling its current capacity by adding an additional 1,350 MW of power generation. However, unresolved issues such as land disputes, coal supply problems, and the absence of a power purchase agreement (PPA) could complicate the valuation process for creditors and prospective buyers alike.
The plant’s coal supply has been a persistent problem since December 2022, when South Eastern Coalfields Ltd canceled its coal contract with the facility due to the absence of a valid PPA and the incomplete commissioning of the plant. The previous PPA with the Maharashtra State Electricity Distribution Company (MSEDC) was terminated several years ago, leaving the plant without a stable buyer for its generated power. This lack of a PPA remains a significant hurdle for any company looking to acquire and operate the facility.
In addition to coal supply issues, the plant’s lack of railway connectivity presents another challenge. Any prospective buyer would need to invest heavily in building a 150 to 200-kilometer railway line to facilitate coal transportation to the plant. Such an infrastructure project could cost hundreds of crores, further complicating the plant’s valuation for bidders.
At present, only one of the plant’s 270 MW units has achieved commercial operations, while the remaining units have been operating intermittently. This inconsistent performance, coupled with unresolved logistical and infrastructure issues, adds another layer of complexity to the acquisition process.
MAHAGENCO and NTPC’s Joint Bid for Sinnar Thermal Power Plant
The joint bid by state-owned power producers MAHAGENCO and NTPC is seen as a strong contender in the race to acquire the Sinnar Thermal Power Plant. MAHAGENCO, which boasts over 13,000 MW of installed capacity, is the largest state government-owned power producer in India. Its expertise and existing infrastructure, particularly the 2,190 MW Koradi power plant near Nagpur, could provide a significant advantage in operating the Sinnar facility.
MAHAGENCO’s Koradi plant could potentially serve as a coal supplier to the Sinnar Thermal Power Plant, helping to resolve the coal supply issues that have plagued the facility since 2022. The joint bid’s strength also lies in the ability of MAHAGENCO and NTPC to leverage their existing resources and infrastructure, which could reduce the need for costly new investments in logistics and coal supply chains.
However, despite these advantages, the unresolved challenges related to land disputes, coal supply contracts, and the lack of a PPA will likely influence the final outcome of the bidding process. As the resolution professional continues to evaluate the submitted bids, all eyes will be on which company or consortium ultimately secures ownership of this key energy asset.
The future of the Sinnar Thermal Power Plant remains uncertain, but with several major players in the mix, the outcome of this bidding process will undoubtedly shape the future of power generation in Maharashtra and beyond.
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