The saga of the ill-fated Dabhol Power Plant in Maharashtra continues. Days after coming to power for the first time in May 2004, the United Progressive Alliance government formed its first empowered group of ministers to try and revive the project, but even as the UPA is coming to the end of its second term, Dabhol is again sinking.
As a first step, the government formed the Ratnagiri Gas and Power Pvt Ltd (RGPPPL), a joint venture between gas utility GAIL, power generator NTPC and the Maharashtra government in July 2005.
This was after Dabhol's principal promoter US-based Enron Power declared itself bankrupt in 2001, and the project seemed doomed. GAIL and NTPC hold 32.9 per cent stake each in RGPPL while the Maharashtra government has 17.4 per cent. Lenders to the project - IDBI Bank, State Bank of India, ICICI Bank and Canara Bank - hold the remaining 16.8 per cent.
The country's biggest gas-based plant, with a generation capacity of 1967 MW, RGPPL was allocated gas on priority from the Reliance Industries' operated KG D6 gas field and from marginal fields of ONGC. But following the decline in gas production at KG-D6, there is now no gas for the plant. Against an allocation of 9.2 MMSCMD of gas, the plant now gets nothing at all. It has stopped producing power since March. "Only occasionally, if ONGC has some excess gas and provides it, the plant is run on limited capacity. Else it is lying idle," says an official from the company.
The official adds that unless RGPPL gets domestic gas or the government intervenes in some other manner, it is impossible for the company to earn revenues. The Maharashtra State Electricity Distribution Company, or MSEDC, the RGPPPL's primary consumer, has refused to buy electricity generated with imported gas, as that would make it too expensive.
"We have requested the petroleum ministry to allocate at least 5 mmcmd gas to us so that we could generate at least 60 per cent of the installed capacity, or else we cannot even break even," he says.
However, RGPPL's proposal for being given top priority in getting gas has hit a roadblock with Andhra Pradesh Chief Minister Kiran Kumar Reddy opposing it.
NTPC Chairman and Managing Director Arup Roy Choudhury admits to the problem, but says he in touch with both the finance and petroleum ministry's to resolve it. "We became part of this company because the government wanted us to. The government wanted us because this project was sinking. Now again the project is sinking," he adds.
He confirms that RGPPL had appointed global consultant Delloite Touche Tumastu to suggest the way forward.
The company has a mounting debt of Rs 8436 Crore. In the first quarter of this fiscal year, it was unable to pay even the interest as MSEDC defaulted on its payment. "It has now agreed to pay," says Choudhury.
Naturally, investors are worried and are seeking the government's intervention. A senior official in power ministry told Business Today that ICICI Bank Managing Director Chanda Kochhar had recently written to the ministry, seeking review of the project and urging that operations be started as soon as possible. Kochhar added that if these issues are not dealt with, the banks will find it difficult to finance such projects. ICICI is one of the major lenders to the project.
"We have not defaulted on any payment as yet, and are servicing our debt," says Choudhury. Nor was NTPC trying to get out of the project. "We will not run away from this," he adds. But in the same breath he admits that once the new formula for domestic gas comes in play from April next year, it will be impossible for RGPPPL to run gas based power plants. "I am finding it difficult to find consumers at even existing rate of $4.2 per mmbtu price of gas," he says.
There may be a ray of hope for the company in the gas import business. But here too, unlike the other gas terminals in the country, it is only available for eight months, as RGPPL does not have breakwater facility - the infrastructure required for holding ships during uneasy waters, especially during monsoon season.
"We are in process of tendering for this facility which was stopped because of a legal matter that has been resolved now," CMD GAIL B. C. Tripathi earlier told Business Today. He also said RGPPPL has plans to increase the import capacity and re-gassify more gas. "The demand for gas is huge in the country, where industry wants to replace expensive fuel with gas," he said.
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