Power Ministry Introduces ‘TRA’ Mechanism for Strained Projects Servicing Debt in First Place

The Power Ministry has announced that it has introduced mechanism 'Trust Retention Account' for definite stressed power plants to utilize their surplus after meeting operating expense, for retuning debt in the first place. In case the developers using coal linkage of revised SHAKTI policy, a Trust Retention Account (TRA) must be put in place, if it is not there by now, a Ministry of Power order believed.

According to the order, all the profits generated shall be deposited to the TRA. Largely, the lead banker would act as a TRA agent.

Nonetheless, it said that in case of a non-banking financial company, such as 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.

The high-level committee on strained power projects in its report had recommended in November last year that the net surplus after meeting operating expenditures generated shall be used for servicing debt in the first place.