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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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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