The Ministry of Power has introduced mechanism ‘Trust Retention Account’ (TRA) for certain stressed power plants to utilize their surplus after meeting operating expense, for servicing debt in the first place. It noted that in case the developers using coal linkage of amended SHAKTI policy, TRA must be put in place, if it is not there already.
According to the Ministry, all the revenues generated shall be deposited to the TRA. Generally, the lead banker would act as a TRA agent. However, it said that in case of a non-banking financial company (NBFC), like PFC or REC, which is a lead financier, any bank, which is one of the lenders, can be appointed as the TRA agent. The companies will first pay statutory payment (taxes) followed by fuel cost, transmission expenses, operation and maintenance expenses and then pay interest on loan and principal payments.
In November 2018, the high level empowered committee on stressed thermal power plants in its report had suggested that the net surplus after meeting operating expenses generated shall be used for servicing debt in the first place. The recommendations were implemented in earlier in March 2019. Now, the Ministry of Power has brought out the mechanism for that.
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