Power sector Current Affairs

Government constitutes high level empowered committee to revive stressed thermal power plant

Union Government has constituted High Level Empowered Committee headed by Cabinet Secretary to address issues of Stressed Thermal Power Projects. The committee has representatives from Ministry of Railways, Ministry of Finance, Ministry of Power, Ministry of Coal and lenders having major exposure to the power sector.

Key Facts

The Committee will look into various issues with view to stressed assets or non-performing assets in thermal power and maximise efficiency of investment including changes required to be made in fuel allocation policy, regulatory framework, mechanisms to facilitate sale of power, ensure timely payments, payment security mechanism. It will also consider if changes are required in provisioning norms, Insolvency and Bankruptcy Code (IBC), asset restructuring company (ARC) regulations and any other measures proposed for revival of stressed assets to avoid investments from turning bad.

Background

Department of Financial Services under Ministry of Finance in its report had suggested setting up empowered panel, besides giving operating thermal power plants not facing insolvency action 6 months more months to resolve issues. The report came after Allahabad High Court in June 2018 had ordered that no action will be taken against power producers till they are heard.

The power generation companies had challenged Reserve Bank of India’s (RBI) February 2018 circular that laid down stricter timelines for initiating insolvency proceedings. It also mandated that banks classify even one-day delay in debt servicing as default. Private power producers feared that t RBI’s new regulations will push projects with capacity of about 60,000-70,000 megawatts (MW) towards bankruptcy and had sought more time. RBI is not in favour of giving more time these power plants.

Month: Categories: India Current Affairs 2018

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Index of Industrial Production (IIP): Industry growth slips to 7-month low of 3.2% in May 2018

According to the data released by the Central Statistics Office (CSO), factory output measured in terms of the Index of Industrial Production (IIP) has slipped to seven-month low of 3.2% in May 2018. It was mainly due to sluggish performance of manufacturing and power sectors coupled with poor offtake of fast moving consumer goods (FMCG).

Besides, IIP was revised down to 4.8% in April 2018 from previous estimates of 4.9%.  During April-May 2018, the IIP had recorded growth of 4.4% as compared to 3.1% in same period year ago. The IIP had expanded by 2.9% in May 2017 and previous low was 1.8% in October 2017.

Breakaway of May 2018 IIP

Manufacturing sector: It grew by just 2.8%, marginally up from 2.6% in the corresponding period last year.

Power generation growth: It decelerated sharply to 4.2% as compared to a high of 8.3% year ago.

Mining sector output: It recorded an impressive growth of 5.7% as against 0.3% in May last year.

FMCG sector: It was the worst performer among user based goods segment, as its output declined by 2.6% as against a growth of 9.7% year ago.

Use-based classification: Its growth rates in May 2018 over May 2017 are 5.7% in primary goods, 7.6% in capital goods, 0.9% in intermediate goods and 4.9% in infrastructure/construction goods. The consumer durables and have recorded growth of 4.3% in the month under review.

Index of Industrial Production (IIP)

IIP is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period. It is compiled and published monthly by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation.

Base year: CSO had revised base year of IIP from 2004-05 to 2011-12 in May 2017 to capture structural changes in economy and improves quality and representativeness of indices. The revised IIP (2011-12) reflects changes in industrial sector and also aligns it with base year of other macroeconomic indicators like Wholesale Price Index (WPI) and Gross Domestic Product (GDP).

Sector wise items and weightages: It covers 407 item groups. Sector wise, the items included falls into 3 categories viz. Manufacturing (405 items), Mining (1 items) & Electricity (1 item). The weights of three sectors are 77.63%, 14.37%, 7.9% respectively. The revised combined weightage of eight core Industries in the IIP is 40.27%.

Month: Categories: Business & Economy Current Affairs 2018

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