RGPPL rejects MahaVitaran's move to terminate PPA for Dabhol power purchase

Board to meet in April to convert Rs 450-crore debt into equity to avoid project turning into NPA

Ratnagiri Gas & Power Pvt Ltd (RGPPL) has rejected Maharashtra State Electricity Distribution Company’s (MahaVitaran) ‘unilateral’ move to terminate the power purchase agreement (PPA) for procuring power from the 1,967-megawatt Dabhol project, according to sources.

The RGPPL board will meet in the first week of April to deliberate on MahaVitaran’s move and also to decide on converting the additional debt of Rs 450 crore (equivalent to RGPPL’s dues till January 2015 to project lenders) into equity. This will avoid the project turning into a non-performing asset.

An RGPPL official told Business Standard: “The PPA still holds good. MahaVitaran’s unilateral action is not acceptable. RGPPL is awaiting a final order from the Appellate Tribunal for Electricity on MahaVitaran’s plea against the Central Electricity Regulatory Commission’s order allowing RGPPL to use regasified liquefied natural gas for the restoration of power generation.”

According to the official, under the PPA, MahaVitaran draws 95 per cent power from the Dabhol power project.

Last week, Maharashtra energy minister Chandrashekhar Bavankule had said that MahaVitaran through a letter dated May 8, 2014 had terminated the PPA and the entire understanding between the two parties had been disrupted. Again on January 12 this year, MahaVitaran informed RGPPL that with the PPA being terminated, there was no question of purchasing power from the project. The government also conveyed its no-objection to the Centre for the takeover of the project by NTPC, a Central public sector undertaking.

Bavankule had also said that the state government and MahaVitaran had given their approval to RGPPL to sell power to any other distribution company outside the state and indicated that it would purchase 85 per cent of power.

The official said: “The sale of power to other distribution companies will be possible, but as far as RGPPL is concerned, its PPA with MahaVitaran is still in place.”

The official said the RGPPL board would meet in the first week of April for the conversion of additional debt of Rs 450 crore into equity. Debt worth Rs 405 crore had already been converted into equity in December 2014, which led to an increase in RGPPL’s paid-up share capital to Rs 3,370 crore from Rs 2,965 crore. As on date, RGPPL’s authorised share capital is worth Rs 3,500 crore.

The current shareholding after the conversion of Rs 405 crore into equity is 28.91 per cent for NTPC; 28.91 per cent for GAIL India, 9.94 per cent for IDBI; 6.64 per cent for ICICI Bank; 7.95 per cent for State Bank of India, 1.70 per cent for Canara Bank; 0.62 per cent for IFCI Ltd; and 15.32 per cent for MSEB Holding.