RGPPL may stop debt servicing if Dabhol remains shut for gas

Lenders fear project may turn into a non-performing asset

Ongoing Dabhol power project now named Ratnagiri project has taken a new twist. The Ratnagiri Gas & Power Pvt ltd (RGPPL), which operates 1,967 MW project, has expressed its inability to service debt to its lenders if the project continues to remain shut for want of gas.

The project, which was revived in May 2006, has been closed since February 21 this year due to non availability of gas. MahaVitaran, which procures 95% power, has already stopped payment to RGPPL for lack of supply. If the situation further deteriorates lenders have feared that the project will turn NPA.

ICICI Bank, IDBI Bank, State Bank of India and Canara Bank collectively hold 18.12% equity in the Ratnagiri Gas & Power Pvt Ltd, which operates the plant. The balance equity is held by 32.74% each by NTPC and GAIL and 16.94% by MSEB Holding Company.

RGPPL spokesman told Business Standard “The company may stop debt servicing altogether unless domestic gas supplies commence immediately and its operation restarts. RGPPL has an outstanding debt of Rs 9,000 crore and needs about Rs 100 crore for debt servicing every month after meeting its running expenses.” The company spokesman said the RGPPL board is meeting on March 23 to take stock of the situation as the lenders are pressing for debt servicing.

Senior IDBI Bank official said till date the company has been servicing the debt. But if unit is shut for more time due to problems in getting fuel, credit quality risks might become 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, gas power project hit by lack of supplies from KG basin, has gone for debt restructuring, said another Public sector bank official.              

As reported earlier, RGPPL has been allocated 8.5 million metric standard cubic meter per day (MMSCMD) of gas to operate plant at its full capacity. This comprises comprising 7.6 MMSCMD from RIL and .09 MMSCMD from ONGC through GAIL India at $4.20 million British thermal unit (mmBtu).

However, the company has been receiving much less quantity during 2011-12 and during current fiscal. Till date there has been a generation loss of 8,387 million units while the loss in rupee terms will be about Rs 3,000 crore during 2012-13 as on date. The project received an average 2.67 MMSCMD of gas. In last fiscal 3,095 MUs of generation was lost as the company received an average 6.3 MMSCMD of gas. The loss will be of the order of Rs 1,150 crore. Despite gas allocation to Dabhol project is considered on a priority list after fertilizer sector, the company is unable to get it.”

In a related development, Maharashtra government will soon send a fresh communication to the Centre seeking an early take over the problem-ridden Dabhol project and supply power under pool pricing arrangement.

A senior government official said, “The deputy chief minister Ajit Pawar, who also holds energy department, has already told the legislature that it would be impossible for the MahaVitaran to procure power from the Dabhol project if it will be run on RLNG".

The per unit tariff will surge to Rs 8-9 per unit from the present level of Rs 4.80 to Rs 5.80 as the RLNG in open market costs at $15 per million British thermal unit (mmBtu). However, under the pool pricing mechanism the power can be available at Rs 2.50 to 3 per unit.