Debt servicing of Ratnagiri Gas & Power set to be hit

The Ratnagiri project, revived in May 2006, has been closed since February 21 this year

Ratnagiri Gas & Power, which operates the 1,967-Mw Ratnagiri project (formerly called the Dabhol power project), has said it might not be able to service the debt to its lenders if operations continue to remain shut for want of gas. The project, revived in May 2006, has been closed since February 21 this year.

MahaVitaran, which procures 95 per cent of power from the Ratnagiri project, has already stopped paying Ratnagiri Gas & Power due to lack of supply. Lenders fear if the situation deteriorates, the project would become a non-performing asset. ICICI Bank, IDBI Bank, State Bank of India and Canara Bank together hold 18.12 per cent equity in Ratnagiri. While NTPC and GAIL (India) hold 32.74 per cent each, MSEB Holding Company accounts for 16.9 per cent.

A Ratnagiri Gas & Power spokesperson told Business Standard, "The company might stop debt-servicing, unless domestic gas supplies commence immediately and operations restart. Ratnagiri Gas & Power has debt of Rs 9,000 crore and needs about Rs 100 crore for debt-servicing every month, after meeting its running expenses." The spokesperson added the company board would meet on March 23 to take stock of the situation.

A senior IDBI Bank official said till date the company had been servicing the debt but if the unit was shut for more time, credit quality risks might become a challenge for lenders (loan default and eventually slippages and burden of provisioning). Many gas-based power plants in Andhra Pradesh are similar problems. Konesema Power, a gas power project hit by lack of supplies from KG basin, had gone for debt-restructuring, said another public sector bank official. Ratnagiri Gas & Power had been allocated 8.5 million standard cubic metres a day (mscmd) of gas to operate the plant at full capacity. Of this, 7.6 mscmd was from Reliance Industries, while 0.9 mscmd was from ONGC (through GAIL India).

However, this financial year as well as the last, the company received much less. So far, there has been a generation loss of 8,387 million units. And, so far this financial year, losses stand at about Rs 3,000 crore. In the last financial year, there was a loss of 3,095 million units, as the company received an average 6.3 mscmd of gas (a loss of Rs 1,150 crore). This is despite the fact that allocation to the project is on a priority basis, preceded only by the fertiliser sector's requirement.

The Maharashtra government would soon take up the Ratnagiri project, as well as power supply under a pool-pricing arrangement, with the Centre.

A senior government official said, "Deputy Chief Minister Ajit Pawar, who is also in charge of the energy department, has already told the legislature it would be impossible for MahaVitaran to procure power from the Dabhol project if it is run on RLNG (regassified liquefied natural gas). The rate would surge from the current Rs 4.8-5.8 to Rs 8-9 a unit, as RLNG in the open market costs $15 per million British thermal unit. However, under a pool-pricing mechanism, power could be available at Rs 2.5-3 a unit."