Dormant Dabhol project running out of cash

Tells lenders that project has been shut since Feb 21, and payments for power urchase have stopped from that date

Ratnagiri Gas & Power Pvt Ltd (RGPPL), which operates the 1,967 Mw project previously known as Dabhol, has said it will be able to service debt to lenders only till June.

Thereafter, it has told IDBI Bank, ICICI Bank, State Bank of India and Canara Bank, it won't have the needed money. The project has stopped functioning from February 21 for lack of gas supply and MahaVitaran, the state power generation company, has consequently stopped paying for power purchase. The company is currently servicing the debt from its cash reserve of Rs 300 crore.

The four banks mentioned are also part-owners in RGPPL; they collectively hold 18.12 per cent of the equity. Of the rest, NTPC and GAIL have 32.74 per cent each; 16.94 per cent is with MSEB Holding Company.

An RGPPL official told Business Standard: "The issue was discussed at length at the board meeting on March 25. Lenders were insisting for regular debt servicing, as they were worried about their (dues) of Rs 9,000 crore. RGPPL currently requires about Rs 100 crore for debt servicing every month, after meeting its running expenses. Therefore, the company has conveyed clearly that it will be able to service the debt after June from the present cash reserve."

The project’s future, he said, was uncertain as the company had no indication from the central government on restoration of its gas allocation from Reliance Industries' KG-D6 basin. The latter has been hit by falling output and power plants come after fertiliser units in the allocation priority decided by the central government.

Another RGPPL official said the lenders might announce a payment moratorium of six months or a year after June if the company was unable to pay. "After the moratorium ends, if RGPPL fails to repay, there is every possibility that the lenders will take over the assets and approach the Debt Recovery Tribunal for its disposal," he said.

The official added the company was also banking on the outcome of its petition to the Central Electricity Regulatory Commission (CERC). “RGPPL has appealed that MahaVitaran, which draws 95 per cent of (our) power, should take the responsibility of debt servicing.

If the CERC upholds our plea, then the picture will change." If, however, the gas is not restored and CERC dismisses RGPPL's plea, there is every possibility that the project will be classified a non-performing asset in the banks’ books.

A MahaVitaran official rejected RGPPL's proposal and said his organisation was not prepared to take the responsibility of debt servicing. “The onus clearly lies on RGPPL, which has to organise the KG-D6 gas at an acceptable rate, as per the power purchase agreement. MahaVitaran has opposed RGPPL's move to go for RLNG (regasified liqufied natural gas) to run the project," the official said.

As reported earlier, RGPPL was allocated 8.5 million standard cubic metres a day (mscmd) of gas to operate the plant at full capacity. This comprised 7.6 mscmd from Reliance (RIL) and 0.09 mscmd from Oil and Natural Gas Commission through GAIL India, at $4.2/million British thermal units (mBtu).

However, the company got much less in 2011-12 and this year. Till date, there has been a generation loss of 8,387 million units (MUs), while the loss in rupee terms will be about Rs 3,000 crore during 2012-13. The project received an average of 2.7 mscmd of gas. In 2011-12, 3,095 MUs of generation was lost, as the company got about 6.3 mscmd.