What is Pariwartan scheme in Power sector?

National Affairs

15 Jul 2023 Zinkpot — We Inform, You Perform. 665

Pariwartan scheme refers to ‘Power Asset Revival through Warehousing and Rehabilitation’.
This is a Central Government scheme to protect the value of the stressed power projects and prevent their distress sale under the IBC.
Issues faced by the stressed projects include shortage of funds, lack of power purchase agreements, and fuel shortages.
These stressed projects will be housed under Asset Management and Rehabilitation Company (AMRC) which will be owned by financial institutions.
The AMRC will charge a fee and help complete the projects that are stranded for lack of funds.
State-run Rural Electrification Corp. Ltd (REC) has identified projects with a total debt of around Rs. 1.8 trillion as part of this scheme.
This scheme is inspired by the Troubled Asset Relief Programme, which was introduced in the United States during the 2008 financial crisis.
Under this scheme, the promoter’s equity will be reduced to make way for the transfer of management control to the financial institutions. On the other hand, the lenders will convert their debt into equity.
The projects will be transferred to the AMRC at net book value, wherein it will own a 51% stake in the projects, and the balance 49% will be held by the lenders.

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