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Ratnagri Gas and Power Private Limited, struggling to restore Dabhol power generation, plans to increase its authorised share capital to Rs 4,000 crore from Rs 3,500 crore to stay afloat and thereby avoid turning the project into non-performing asset (NPA). This is necessitated to further convert the debt of Rs 343 crore into equity. The 1,967-Mw project has been closed since December 28,2013 for want of gas.
RGPPL's move comes close on the heels of Maharashtra State Electricity Distribution Company Ltd (MahaVitaran)'s decision to terminate power purchase agreement (PPA) through its letter despatched on January 12 to RGPPL. This apart, RGPPL's proposal to increase its authorised share capital is subsequent to conversion of debt of Rs 405 crore into equity resulting it increase in the total paid up share capital to Rs 3,370 crore from 2,964.90 crore. RGPPL board gave its consent at its meeting held in early December in which MahaVitaran had strongly opposed the conversion of debt into equity citing that it would lead to increase in the per unit tariff to Rs 5.50 and it won't be in a position to procure power from the project.
RGPPL official told Business Standard: ''Lenders to the Dabhol project are insisting that the RGPPL pays dues worth Rs 500 crore during July 2014 and January 2015. Besides, lenders are pressing for further conversion of debt into equity to avoid NPA.
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However, RGPPL has expressed its inability to further convert debt into equity, as the margin between the authorised share capital and the equity is just Rs 130 crore. However, the proposed conversion of additional debt of Rs 343 crore into equity will be possible only after RGPPL increases its authorised share capital to Rs 4,000 crore. The board will soon take a call in this regard.
The official said RGPPL has incurred financial and generation loss due to the closure of the project. RGPPL's financial loss was Rs 1,486 crore in 2013-14 compared with Rs 375 crore in 2012-13, while the generation loss was 14,000 million units.
The official said the present share holding after the conversion of Rs 405 crore into equity include NTPC 28.91 per cent (earlier 32.86 per cent), GAIL India 28.91 per cent (32.86 per cent), IDBI Ltd 9.94 per cent (6.34 per cent), ICICI Bank Ltd 6.64 per cent (4.25 per cent), State Bank of India 7.95 per cent (5.16 per cent), Canara Bank 1.70 per cent (1.11 per cent), IFCI Ltd 0.62 per cent, MSEB Holding 15.32 per cent (17.41 per cent).
A MahaVitaran official said conversion of debt into equity is a temporary solution. "The project can be revived only after assured gas of 8.5 million metric standard cubic metre per day is restored by the Centre. The conversion of additional debt into equity will lead to rise in per unit tariff and for that a regulatory approval is required,'' the official said, and added that MahaVitaran has already terminated its PPA with PPA with RGPPL. Therefore, the ball is now in the Centre's court to take corrective measures.
