RGPPL incurs financial and generation loss due to closure of Dabhol project

Bats for gas pooling and subsidy; says can resume operations in 10-day notice

Ratnagiri Gas & Power (RGPPL), which has been operating the 1,967-megawatt (Mw) Dabhol project in Maharashtra since May 2006, has incurred financial and generation loss due to the closure of the project on December 28, 2013 for want of gas. RGPPL's financial loss was a record Rs 1,486.47 crore in 2013-14 compared with Rs 375.33 crore in 2012-13, while the generation loss was 14,000 million units.

Last week, the RGPPL board gave its approval to the conversion of debt into equity equivalent to interest dues of Rs 405 crore. This has led to an increase in RGPPL's equity to Rs 3,370 crore from Rs 2,965 crore. The equity holders include NTPC, GAIL India, IDBI Bank, ICICI Bank, State Bank of India and Canara Bank and MSEB Holding Company. Of the total debt of Rs 8,500 crore, RGPPL had so far repaid Rs 4,000 crore to the project lenders.

RGPPL's managing director A K Garg told Business Standard: "The power plant is currently under dry preservation due to fund constraints, caused due to non payment by beneficiaries. The capacity is not being declared. The power plant can start scheduling of power by the Maharashtra State Electricity Distribution Company (MSEDCL), at a 10-day notice. If gas pooling by the Central government is done with subsidy, say by April 1, 2015, the plant can start within 10 days of such availability of affordable gas."

Garg added that RGPPL's gas requirement is 8.5 million standard cubic metre per day (mscmd) for 85 per cent plant load factor (PLF). Minimum gas requirement is 7 mscmd to meet debt servicing. RGPPL invited bids every month for the purchase of re-gasified liquefied natural gas (RLNG) for almost 15 months starting from August 2013 to October 2014 and declared capacity on re-gasified liquefied natural gas (RLNG). Efforts are being continuously done to get an allocation of at least 4 mscmd domestic gas either through allocation from the new gas finds or through restoration of priority of RGPPL at par with the fertiliser sector.

"On the current price of LNG around $10, RGPPL's power cost comes to Rs 6.37 per unit including fixed cost, which is considered costly under the current power scenario. If any gas pooling contemplated at the Central-government level materialises, RGPPL could get a PLF of 40 per cent during 2015-16 on likely scheduling by MSEDCL with a cap price of Rs 5.50 per unit," said Garg. However, he admitted that MSEDCL, which procures almost 95 per cent power from the project, is opposed to an alternate gas as it fears an increase in the purchase cost and the per unit tariff.

Garg said he favours pooling of domestic gas and RLNG, and that the pooled gas should be made available for at least 40 per cent of the PLF for two years to enable payment of interest charges and cover for operation and maintenance cost. According to him, 8.5 mscmd domestic gas may be made available from FY18. He said gas pooling will limit the total power cost to Rs 5-50 per unit, especially through subsidy from the government for excess cost and tax waiver on value-added tax, central sales tax and service tax.