Weekly Power Sector Round up: 24th October 2020

Power PPAs cannot be terminated during insolvency process

The National Company Law Appellate Tribunal (NCLAT) has ruled that DISCOMs cannot terminate their power purchase agreements (PPAs) with insolvent generation companies during the entire corporate insolvency resolution process (CIRP).

The NCLAT upheld an order passed by the Hyderabad bench of the National Company Law Tribunal (NCLT). According to the NCLAT, the asset classification of a power project includes the generation plant and its PPA and it should be looked at together and not in isolation.

The moratorium rules under the Insolvency and Bankruptcy Code (IBC), where all debt resolution activities are suspended during CIRP, would be applicable to power projects as well including the PPA contracts it signed.

OEMs unlikely to invest in electrification in the short term: Ind-Ra

Big original equipment manufacturers (OEMs) of two-wheelers and passenger vehicles are most likely going to keep from investing in the electric vehicle infrastructure, despite having robust balance sheets, according to India Ratings & Research (Ind-Ra).

Among the reasons for this are the COVID driven economic slowdown, the absence of a strong and stable government policy, corporate focus on meeting regulatory requirements and new product launches and consumer resistance because if the high cost of EVs.

However, long-term plans are on the table. OEMs and auto ancillaries would continue to invest in startups or collaborate with partners.