GAIL gets environment nod for 220-Mw power plant...

 

GAIL India Ltd, the nation's biggest gas marketing company, has received environmental clearance for setting up a 220 MW gas-based power plant at Raigad in Maharashtra at a cost of Rs 1,028 crore.

The state-owned firm plans to use 1 million standard cubic meters per day of natural gas to generated 220 mega-watt of electricity at the proposed combined cycle power plant.

The State Level Environmental Impact Assessment Authority of Maharashtra in its 63rd meeting "decided to accord environmental clearance to the project under the provisions of Environment Impact Assessment Notification, 2006," R A Rajee, Principal Secretary in Environment Department of Maharashtra Government, wrote to GAIL on December 23.

GAIL plans to set up the combined cycle gas based power plant within the existing LPG plant boundary. Electricity generated at the plant will be sold to Maharashtra.

The project, which will use natural gas or imported liquefied natural gas (LNG) as fuel, is proposed to be located within GAIL's existing LPG recovery plant at Raigad.

GAIL has appointed Tractebel Engineering Pvt Ltd as consultant for preparation of Detail Feasibility Report (DFR).

According to the company's proposal, natural gas requirement for use in the proposed project would be about 1 million standard cubic meters per day.

The supply of fuel is proposed to be available from GAIL pipeline network. A new pipeline of about 400 meters is to be laid to connect the power plant.

GAIL in the project reported stated that about 1 mmscmd gas is available for the proposed project. Gas can be made available for the project either from domestic fields or imported LNG).

Source: Business Standard

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SBI warns of Dhabol power project becoming an NPA...

 

Warning that the Ratnagiri Gas and Power Private Limited (RGPPL) 1979 MW Dhabol power project was on the verge of becoming a non-performing asset (NPA) and the public and private sector banks could stand to lose an exposure of Rs. 9000 crore, State Bank of India (SBI) chairperson, Arundhati Bhattacharya has sought government intervention to save the situation from turning grim by allocating adequate gas to RGPPL to ensure its smooth operations.

Earlier, ICICI bank had informed the government that RGPPL, popularly known as Dhabol power project was turning into a NPA due to failure of the government to allocate adequate gas.

In a letter to the Power Secretar, P.K. Sinha, the SBI chairperson has pointed out that RGPPL has not been able to service interest for August, September, and October 203 and the instalment for the quartering ending September 30 due to the lenders. “The account if on the verge of becoming an NPA if interest for August 2013 is not serviced on or before November 29,” the letter states.

Further it has pointed out that the exposure of public sector lenders, currently about Rs. 8500 crore (SBI’s share is Rs. 1752 crore), was restructured once in 2009 under the guidance of Ministry of Power due to delay in implementation of the project. The company has no funds to meet repayment commitments and the company is on the verge of default in meeting repayment commitments because of stalled operations due to non-availability of fuel. This would result in slippage of asset quality, which would be a setback for the lenders despite their sacrifice through waivers and concessions in reviving the project, it added.

Ms. Bhattacharya said as against 8.5 mmscmd of gas requirement, there has been no supply for the last four months and the supply of 0.9 mmscmd from GAIL India as and when gas is available is not sufficient to run even one out of the six gas turbines at technical minimum operating parameters. “We request you to use your good offices in ensuring adequate supply of gas for the project to enable the power plant to run without interruption to protect the interests of all the stakeholders. We request you to take up with Power Ministry and the Government of Maharashtra for payment of dues to RGPPL immediately so that the company would be able to meet its repayment commitment to the lenders in time to tide over the crisis,” the letter states.

The current plant load factor (PLF) of Dhabol project has fallen to 29 per cent much lower than 45 per cent in April and 38 per cent in May this year. For RGPPL to achieve break even and service its current debt obligations, it has to operate at a PLF of 69 per cent during 2013-14 and 79 per cent in 2014-15.

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Dabhol Power Plant's generation restored after supply of 1.4 MMSCD gas from GAIL India...

 

After the forced shut down of about 4 months and 20 days for want of gas, the  Ratnagiri Gas & Power Pvt Ltd (RGPPL) has restored power generation from early Saturday morning. The plant with a total generation capacity of 1,967 MW is currently generating 320 MW following the supply of 1.4 million standard cubic meters per day (MMSCMD) gas from GAIL India.

The power is supplied to Maharashtra State Electricity Distribution Company and union territory of Dadra, Daman and Diu at the per unit tariff of Rs 4 to 4.50.
 
As reported by BS, the plant was closed since July 16 for the non availability of gas. The closure prompted ICICI Bank, one of the lenders to the project, to appeal to the petroleum and power ministries for an early restoration of gas. The frequent closure of plant had led to the successive default in the repayment by RGPPL to its lenders with an exposure of Rs 8,500 crore.
 
RGPPL requires about 8.5 gas for full operation and its allocation has been made by the Centre since it was revived in April 2006.  Company has so far supplied about 48 Billion Units to Maharashtra using Naphtha, R-LNG & domestic gas. Of the 8.5 MMSCMD, 7.6 MMSCMD of gas was from KG D-6 Basin and 0.9 from Marginal Gasfields of ONGC (through GAIL). In addition, RGPPL has tied up R-LNG, the available alternative fuel on fallback basis.  However, RGPPL was not able to use R-LNG following strong opposition from MahaVitaran which draws 95% of the power. MahaVitaran has said R-LNG use will lead to increase in the per unit tariff to Rs 8-9 and will put further stress on its balance sheet.
 
RGPPL spokesman hoped that the restoration of gas will help earn revenue from the power purchasing states and thereby able to part pay the total monthly instalment of rs 108 crore to the lenders.  RGPPL had projected that it faces a realistic prospect of turning into an NPA by December 2013 unless another Rs  200 crore  are urgently released.

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Fate of Dabhol power plant remains uncertain...

 

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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NTPC, Gail hire Deloitte to work out Dabhol revival plan...

 

Taking note of the operational mess and heavy defaults to leading lenders, including ICICI Bank, State Bank of India (SBI) and others, the operator of the beleaguered Dabhol power project — Ratnagiri Gas and Power Pvt Ltd (RGPPL), being promoted jointly by state-owned NTPC Ltd and Gail (India) Ltd, has hired global consulting firm Deloitte to work out a new business plan for effective functioning of the plant, currently lying idle due to dwindling gas supplies.

“Banks with a heavy exposure in gas-based projects, especially the Dabhol power project, have expressed serious concerns on viability and we need to address the fuel issue immediately,” Rajiv Takru, financial services secretary, told HT.

Shortfall in supply of domestic gas has sharply affected the plant’s operational and financial performance as its entire capacity of 1967 mw is currently stranded due to lack of domestic gas supply.

“RGPPL has engaged Deloitte as consultant for conception of a business plan in view of current gas shortfall scenario and other associated issues,” said a senior company official..

RGPPL has a debt of Rs. 9,000 crore and has defaulted in its debt servicing obligation in September, October and November 2013,” said a senior government official. “This is worrisome as the default has happened the first time after the project’s restructuring in 2009.”

If operations are not resumed and unless payments are made, there is a possibility of the project to be classified as a non-performing asset. RGPPL’s outstanding dues have ballooned to Rs. 1,017.64 crore as on November 25.

“The viability of RGPPL depends on viability of its power and LNG business on a standalone basis,” the official said.

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Power ministry seeks gas for Dabhol Power Project...

 

The Dabhol power plant, the Centre's most prestigious business rescue mission, has been languishing for almost nine months now. But it took ICICI Bank MD Chanda Kochhar's warning to shake the power and oil ministries out of their stupor.

Earlier Kochhar wrote to power minister Jyotiraditya Scindia to warn that Rs 8,500-crore loan to the Dabhol project could turn sour for lenders as the plant was running at merely 3% of its capacity and unable to pay installments.

After Kochhar's letter, the power ministry asked the oil ministry to give the Dabhol project top priority at par with fertilizer sector and allot gas from new sources available in 2013-14. The power ministry has sought more than a million cubic metres a day (mcmd).

In its communication to the oil ministry, the power ministry has admitted that Dabhol's entire 1,967MW capacity has been stranded in the absence of domestic gas supply. The project is also unable to recover its fixed costs by running the plants on costlier imported fuel since this pushes up the price of electricity which consumers are unwilling to buy.

Dabhol was created after taking over Enron's mothballed plants and an adjacent gas shipping port after the US energy major went bust in 2001. It is now owned by Ratnagiri Gas and Power Projects Ltd, a joint venture of state-run gas utility GAIL and power generation major NTPC.

The project has to run at a minimum 85% capacity to be able to pay installments. This requires about 6.5 mcmd of gas. But the supply to the plant dwindled to 0.6 mcmd, or 7% of its allocation, before coming to a grinding halt from March 1 after the government refused to give power sector equal priority with fertilizer industry in allocation of domestic gas.

Industry sources said it was important to keep Dabhol spinning since any default by the project would have a severe impact on the banking industry and make a dent deeper than the outstanding loan.

Lenders already sacrificed about Rs 2,500 crore at the time of asset takeover and also addressed the need for Rs 1,220 crore as completion cost at the time of restructuring in 2009.

Dabhol's case is a pointer to the crisis gripping the gas-fired power industry. LNG, or gas imported in ships, cannot be used as an alternative since it costs nearly three times that of domestic fuel and pushes up power tariffs. State utilities refuse to buy power at higher tariffs for fear of evoking public ire. As a result, most of the old gas-fired plants aggregating over 18,000MW capacity are running at less than 30% of their capacity.

The power ministry reckons Rs 40,000 crore invested in new gas-fired power plants with an installed capacity of 4,904MW are at risk of turning into non-performing assets (NPAs) due to non-availability of domestic gas, primarily due to low production from the Reliance-operated Andhra offshore field. These plants were set up after Reliance projected a production of 80 mcmd of gas. The plants have been rendered idle as production has fallen to 10 mcmd after briefly hitting a peak of about 69 mcmd in March, 2010.

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GAIL plans 100 MW wind projects after commissioning 4.5 MW in Gujarat…

Gas Authority of India Ltd (GAIL) is planning to develop 100 MW Wind Project in various states such as Tamil Nadu, Karnataka and six other states at a cost of around Rs. 620 Crores.

 

The move came from the initial results of 4.5 MW wind power project in Gujarat. 

 

 

The company is setting up another 14 MW WEG project in Gujarat partly for captive use in the State and part;y for sale to the State utility. “GAIL is also in the process of setting up a 100 MW WEG project in Karnataka and Tamil Nadu for commercial use. The wind potential states such as Andhra Pradesh, Gujarat, Kerala, Madhya Pradesh, Maharashtra and Rajasthan are also on the radar of GAIL to expand its presence in the wind energy sphere,” according to an internal plan document of the company.

 

It says, the increasing prices of fossil fuel and the growing concern over global warming due to green house gases (GHG) emissions by fossil fuel-based power generation, have led to interest around the world for harnessing renewable sources for power generation. “Based on the current trend in prices of wind mills along with associated activities, the cost of the proposed 100 MW wind energy project of GAIL is estimated at around Rs.620 crore. The initial projects in Tamil Nadu and Karnataka are envisaged to be commissioned during 2012-2013,” it states.

 

Out of the total project cost, the company intends to invest Rs.248 crore (or 40 per cent of the project cost) as equity and the balance Rs.372 crore is proposed to be met through finance from banks or financial institutions. The rate of interest for getting finance for this project for a period of eight years with a moratorium period of two years is likely to be around 10.25 per cent per annum.

 

The project is envisaged to have optimised combination of wind turbine generators (WTGs). Power from WTGs in the wind farm shall be generated at low voltage and stepped up to 33 kV or other suitable voltage.

 

All the eight states have a wind power policy in place where the period of power purchase agreement (PPA) ranges from 10 years to 20 years.

 

Apart from being environmentally-friendly, the wind energy projects will generate employment for the local stakeholders.

 

 

Source: The Hindu

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