Government moves RBI to bail out lenders of Dabhol Gas based power plant...

 

Coming to the rescue of the lenders of Ratnagiri Gas and Power Projects Ltd (RGPPL), including SBI and ICICI Bank, and PSU promoters NTPC Ltd and GAIL India Ltd, which have huge exposure in the beleaguered Dabhol project, the finance ministry has asked the Reserve Bank of India (RBI) for a one-time relaxation to save the company and its Rs. 13,000-crore  assets from being classified as a non-performing asset (NPA).

“At a recent meeting chaired by finance secretary Arvind Mayaram it was directed that the department of financial services (DFS) will take up the matter for relaxation of asset classification norms to RGPPL with RBI, with a request for extended forbearance till March 31 2014 as a one-time exception, considering the circumstances and the exposure of PSUs, including PSU banks,” a senior government official told Hindustan Times.

The move would not only provide RGPC a breather, but also give some time to the lenders who would otherwise have had to show fresh slippage in their books.

RGPPL is the company promo­ted by NTPC and GAIL India’s largest gas-based power plant, the 1967 mega watt Dabhol Power project that is currently stranded due to lack of availability of domestic natural gas.

The lenders and PSU promoters of RGPPL have been sounding the alarm over Dabhol’s balance sheets. NTPC, SBI and ICICI Bank had in separate communications to the government warned that the project is on the verge of becoming an NPA, which would have a backlash on its promoters.

The company has a debt exposure of Rs. 8,500 crore, apart from equity ownership by PSU and banks.

“The viability of the plant is in question, and it was clearly pointed out in the meeting that RGPPL has not been able to repay debt to lenders from September 2013, and unless adequate affordable domestic gas is ensured and the beneficiaries commence paying corresponding fixed cost, the plant will be declared an NPA,” the official said.

The meeting also decided that the petroleum ministry would move a note seeking directions from the empowered group of ministers (EGoM), about gas allocation and implementation of priority to RGPPL along with fertiliser units as per its original decision.

Further, Mayaram will write to chief secretary of Maharashtra, indicating that the state government is required to pay outstanding dues to RGPPL for the period when power was supplied to it.

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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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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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India to receive 200 Mn EURO loan from EU for Renewable Energy development…

India will receive a loan of 200 million euros from the European Union to finance private sector projects for the development of renewable energy resources.

The EU's assistance comes as part of its "strategic partnership" with India and will be made available by the European Investment Bank (EIB) to ICICI Bank, India's largest private bank, in the first-ever cooperation between the two financial institutions.

It is intended to provide long-term financing for investments on a number of electricity generating projects, especially in the areas of solar photovoltaic, biomass and onshore wind power by private companies, thereby making a contribution to India's efforts to reduce greenhouse gas emissions, the EIB said on Monday in a press statement.

The loan is being provided under the EIB's Energy Sustainability and Security of Supply Facility (ESF), a 4.5 billion euro programme designed to reinforce the EIB's goal of promoting renewable energy and energy efficiency in non-EU countries.

This is the first cooperation between the long-term financing institution of the 27-nation EU bloc and India under the ESF programme, the statement said.

The ESF is used when the bank does not need a credit guarantee from the EU because the recipients are investment-grade countries or where appropriate security can be provided.

In addition to the ESF, the EIB has an external lending mandate to implement the EU's lending operations outside the bloc as part of its cooperation with those countries and since 1993, the bank has carried out four successive lending operations for Asia and Latin America.

Under the current mandate, covering the period between 2007 and 2013, the EIB is authorized to lend up to 3.8 billion euros for financing projects that contribute to the avoidance or reduction of greenhouse gas emissions through foreign direct investment or technology and know-how transfer.

The lion's share of the funds, amounting to 2.8 billion euros, are earmarked for Latin America, while the Asian region will receive 1 billion euros.

The EIB's loan for India will "support the EU-India strategic partnership, which provides for cooperation in curbing climate change", the statement said.

The projects eligible for financing will bring economic benefits to the region by enhancing the production of energy from renewable resources, reducing the costs for imported energy, expanding the use of domestic resources and curbing greenhouse gas emissions and other airborne pollutants.

"The EIB will ensure that the projects are economically and financially viable, technically adequate and in compliance with the bank's environmental and social requirements," the statement said.

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