Green signal for demerger of RGPPL

Was essential as MSEB Holdings has 13.51% equity in Dabhol project

The Maharashtra Cabinet on Friday gave its approval for the demerger of Ratnagiri Gas & Power Pvt Ltd (RGPPL) into Ratnagiri Power Company and Ratnagiri LNG Company. The liquefied natural gas company will re-gasify imported LNG and pool with domestically available gas during the low-demand season.

The state’s approval was needed since the government owns a 13.5 per cent stake in RGPPL through MSEB Holding Company. The other stake holders are financial institutions (35.41 per cent), NTPC (25.51 per cent) and GAIL (25.51 per cent). MSEB Holding will have 4.1 per cent equity in the gas entity.

The Centre had in October last year decided to revive the 1,967-Mw Dabhol project, which had remained closed since December 2013. The project again became operational in November 2015. It currently generates 500 Mw, which it supplies to the Indian Railways. The project had earlier been allotted imported regasified LNG and given a subsidy to procure it from the Power System Development Fund.

A state government official told Business Standard,

“The lenders to the project were insisting on the demerger and for that the state Cabinet’s clearance was necessary. Already, part of the debt has been converted into equity and the company’s share capital stands at Rs 3,820.27 crore. The demerger will help avoid RGPPL from converting to non-performing asset.” He said the state government had already taken a decision to provide relief in value-added tax, central sales tax, and transmission cess.

Incidentally, state-run Maharashtra State Electricity Distribution Company (MahaVitaran) has unilaterally terminated its power purchase agreement with RGPPL since early 2015. MahaVitaran is currently not drawing power from the Dabhol project.