The Punjab government has completed the payment of Rs 1,426 crore to banks led by IDBI to complete the takeover of the debt laden 540 MW GVK Power’s Goindwal Sahib thermal power plant. The money was distributed to banks late on Tuesday evening and equates to a recovery of 43% of their principal dues including some pass through payments which were stuck due to litigation between the plant owners and the government.

IDBI Bank is the largest beneficiary from this account receiving Rs 306 crore, followed by Punjab National Bank (PNB) which received Rs 165 crore. Union Bank of India and Axis Bank are the other top lenders to the account.

The company was one of many coal plants which were declared as NPA after the government cancelled coal allocations in light of a Supreme Court order quashing 214 blocks in September 2014.

The project was conceived back in 1994 and had a memorandum of understanding with the Punjab State Power Corp (PSPC) to supply power for 25 years but the project failed to take off due to problems regarding coal availability.

Total admitted claims amounted to Rs 6,584 crore including Rs 650 crore in receivables from the PSPC. Lenders have received some of these receivables with the settlement too.

The state government stepped in as the sole bidder in July 2023 after earlier bidders including large power producers like Adani Power, Jindal Power and Vedanta backed out over concerns on litigations between the private power producer and state government over non-payment of dues, ET had reported in its July 6, 2023 edition.

Earlier in January, Punjab chief minister Bhagwant Mann had announced that the government had completed formalities in purchasing the plant.

The 540-MW thermal power plant is an independent power plant and is spread over 1,100 acres of land in Goindwal Sahib in Tarn Taran.

Mann said the plant will now be called Sri Guru Amardas Thermal Power Plant after the third Sikh Guru.