(Bloomberg) -- NTPC Ltd.'s bid to buy an indebted power plant is being blocked by rules requiring the Indian state generator to first clear dues at its own unit, according to people with information on the matter.
Lenders to Jhabua Power Ltd. have told NTPC that Ratnagiri Gas & Power -- one of NTPC's joint ventures once owned by Enron Corp. -- is a non-performing asset and regulations therefore disqualify NTPC's bid. NTPC is seeking to buy Jhabua's 600-MW plant, the people said, asking not to be identified as details are private.
NTPC is a late entrant into the market for stressed projects, which is heating up with firms including Deutsche Bank AG making bids. The urgency for Indian lenders to clean up their bad debt gives investors an opportunity to buy cheapened assets and profit when economic growth revives.
Read more: Deutsche Bank Bids for Another Ailing India Power Project's Debt
India's largest power producer has made the highest bid of about 19 billion rupees ($267 million) for Jhabua's coal-fired project.
Representatives for NTPC and Axis Bank Ltd., Jhabua's lead lender, didn't reply to requests for comment.
India's bankruptcy rules bar companies owning non-performing assets from bidding for other stressed assets.
To contact the reporters on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net;Suvashree Ghosh in Mumbai at sghosh186@bloomberg.net
To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Jeanette Rodrigues, Unni Krishnan
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