Mihan power crisis a greater worry for banks.

NAGPUR: The dispute between Abhijeet Group and Maharashtra Airport Development Company (MADC) over supply of power in Mihan has become a greater worry for the former's lenders rather than the units operating in this special economic zone (SEZ).

Abhijeet Group which has a captive power plant for Mihan had slapped a notice on MADC, indicating its intent to terminate the contract with it. The company does not find it feasible to operate due to a negligible demand in Mihan. It is supplying power through generator sets which costs Rs20 a unit, but is sold for Rs3.30.

As the notice period ended on Tuesday, the company has still not decided a further course of action. MADC, on the other hand, has filed a petition in the high court against the notice. It has also moved the Maharashtra Electricity Regulatory Commission (MERC).

At the same time, the consortium of bankers which have an exposure of Rs1,100 crore in Abhijeet Group's Mihan power plant filed a plea to become an intervener in the court case on Monday. Sources say if Abhijeet Group and MADC fall apart, the lenders will be the biggest losers.

Due to losses, Abhijeet Group's loans for Mihan venture have already gone through a debt restructuring scheme. So the bankers are keen that the power plant remains operational. If Abhijeet Group exits Mihan there is a little scope for the power it produces to have enough demand in the open market, said a source.

Even as the termination notice was issued after the bankers were taken into confidence, the lenders are not in favour of snapping ties with MADC, and have asked Abhijeet Group to refrain from doing so. As a result, so far Abhijeet Group is only posturing against MADC, and will continue to supply power in Mihan-SEZ for now. In fact, all the company wants that the notice will at least prompt MADC to come to the negotiation table.

However, there has been no encouraging response from MADC except that the officials have been asking the Abhijeet Group to continue with power supply till the elections, said a source.

MADC officials on the other hand had a lukewarm reaction to the affair. A senior official not wishing to be named said the petition with MERC only apprises the agency about the situation in Mihan. The first hearing with MADC was held on Tuesday. In the high court, the case has been adjourned till April 1 after the bankers filed a plea to become interveners. As far as investors in Mihan are concerned they can apply for power connections with the MSEDCL, the MADC officer said.

Source : timesofindia.indiatimes.com