 "Dabhol power project set to be revived")
The 1967-Mw Dabhol power plant is set to be revived for a second time, with the Centre proposing to demerge Ratnagiri Gas Power Pvt Ltd (RGPPL) into two entities. Besides, the plant, closed since December 2013, has got a breather from the Indian Railways, which has committed itself to purchasing 500 Mw of power under a short-term power-purchase arrangement at Rs 4.75 a unit - half the rate at which it earlier procured power.
The restructuring proposal will now need to be cleared by the Maharashtra Cabinet, since the state government owns a 13.5 per cent stake in RGPPL through MSEB Holding Company. An approval from the Central Electricity Regulatory Commission will also be required.
The project will start re-generating power from November 1 this year. It had earlier been allotted imported R-LNG and given a subsidy to procure it from Power System Development Fund (PSDF).
A joint venture between state-owned GAIL India and NTPC Ltd, RGPPL is proposed to be demerged into Ratnagiri Power Company and Ratnagiri LNG Company. The LNG company will re-gasify imported LNG and pool with domestically available gas during the low-demand season. The two new entities will have the same equity structure.
Union Power Minister Piyush Goyal on Wednesday said the company's debt would be converted into equity or quasi preferential shares. Bankers would provide fresh loans to the project, and both NTPC and GAIL would put in fresh equity.
"The approach of all stakeholders is in the national interest, where each is ready to forgo some part of benefit. As there still will be some gap in the total outstanding loan, some lenders' debt will also be converted into equity," said Goyal. The Maharashtra government will waive transmission and subsidy charges while supplying power from this plant to the Indian Railways.
The project's total debt of Rs 8,500-9,000 crore includes Rs 1,750 crore from SBI, Rs 2,000 crore from IDBI Bank, and Rs 400 crore from Canara Bank. Among private banks, ICICI Bank has a Rs 1,200-1,500-crore exposure. At present, lenders own about 20 per cent in the company.
ICICI Bank Managing Director & Chief Executive Officer Chanda Kochhar said: "The revival of the Dabhol power plant will go a long way in boosting the investment climate in the country. The lenders worked closely with the rest of the stakeholders, including the Maharashtra government, NTPC, GAIL and the railway ministry, to restart the project."
In June this year, RGPPL converted Rs 450 crore worth of debt into equity, the first conversion since that of Rs 405 crore of debt in December last year. After this, RGPPL's equity increased to Rs 3,820 crore from the level of Rs 3,370 crore. The company's authorised share capital stands at Rs 3,500 crore.
"The revival plan for the now-closed Dabhol project is a big positive, especially for banks and financial institutions," said Parag Jariwala, vice-president, Institutional Research, Banking and Financial Services, Religare Capital.
The current gasification capacity of the LNG terminal is 3.5 million tonnes, which is to be increased to 5 million tonnes. RGPPL will build an additional break-water facility to increase its gasification capacity. While the power plant will use the bulk of the gas, the surplus will be sold in the market.
RGPPL will need 8.5 million standard cubic meters per day of gas to operate at a 1,967-Mw capacity. The company recently secured 1.98 million standard cubic feet per day of gas in the an auction and proposed a sale price of Rs 6.15 a unit. Of this, it will charge Rs 4.70 per unit from the Railways, and the remaining Rs 1.45 a unit is proposed to be bridged through support from the Union government's Power System Development Fund.
Maharashtra State Electricity Distribution Company (MahaVitaran), which was earlier drawing almost 95 per cent of power, had terminated its power-purchase agreement with RGPPL in January this year. RGPPL and MahaVitaran are currently locked in a regulatory battle. However, notwithstanding its decision to terminate the agreement, MahaVitaran had given its approval to conversion of debt into equity.
The Dabhol plant in Maharashtra's Ratnagiri district has been facing tough times since its inception. The project was set up by the erstwhile US-based Enron Corporation, which went bankrupt in 2001. In 2005, the then government asked NTPC, GAIL and the Maharashtra government to form RGPPL to implement the power project.
The project procured gas from Reliance Industries' KG-D6 gas block, which went dry in 2013. Not viable to run at costly imported gas, the project has been defunct for more than a year, with discoms refusing to purchase costly power.
DABHOL SAGA
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Railways to buy 500 mw from the project under a short-term agreement
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1,967 mw Dabhol project is closed since December 28, 2013 for want of gas
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RGPPL has secured 1.98 mmscmd gas. The per unit tariff is projected at Rs 4.70
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Maharashtra has terminated PPA in January this year
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Twice debt (Rs 450 cr and Rs 405 cr) was converted into equity to avoid project turning NPA
