Finance ministry steps in to keep Dabhol project afloat

Ratnagiri Gas & Power pleads to defer declaring project NPA till March 31, 2014

The Union finance ministry has finally stepped in to keep the problem-ridden 1,967-Mw Dabhol project afloat.  

The department of economic affairs has asked the petroleum and natural gas ministry to make all-out efforts for an early meeting of an empowered group of ministers, so that the supply of adequate gas for uninterrupted power generation is restored to the plant as early as possible.

Besides, Ratnagiri Gas & Power Pvt Ltd (RGPPL) has requested the department of banking services to defer the declaration of the Dabhol project as a non-performing asset (NPA) till the end of the current financial year. RGPPL has projected that it faces a realistic prospect of turning into an NPA by December unless another Rs 190 crore  is urgently released. Of the Rs 190 crore, the company will need Rs 140 crore to service debt to its lenders comprising ICICI Bank, SBI, Canara Bank and Rs 50 crore to the Power Finance Corporation. RGPPL has been defaulting in monthly debt servicing as it was unable to receive necessary payments from the Maharashtra State Electricity Distribution Company (MahaVitaran), which purchases 95 per cent of the power under the power purchase agreement.

The lenders’ exposure to RGPPL is currently about Rs 9,000 crore and this account was restructured by banks in 2009 under the guidance of the power ministry. Lenders have also informed that for RGPPL to achieve break even and service its current debt obligations, it has to operate at a plant load factor of 69 per cent during 2013-14 and 79 per cent during 2014-15 and the equivalent gas requirement would be 6.7 million standard cubic meters per day (MMSCMD) and 7.7 MMSCMD respectively.

Moreover, RGPPL has sought the intervention of Maharashtra Chief Minister Prithviraj Chavan and chief secretary J S Saharia to direct MahaViataran to clear its legal outstanding worth Rs 1,136 crore. These arrears are towards the payment of energy and capacity charge which MahaVitaran has disputed.

An RGPPL official told Business Standard: “The government of India is taking necessary steps for the supply of domestic gas. Besides, MahaVitaran should clear its legal dues at the earliest as it cannot escape from its obligation under the power purchase agreement.”

However, a MahaVitaran official said the company had been making part payment to RGPPL.