The Union finance ministry has advised state-run GAIL and NTPC to infuse an additional equity of Rs 475 crore each in the Dabhol power project, with lenders converting their Rs 450-crore debt into equity as a part of the financial restructuring to revive the beleaguered project.
On August 22, Financial Services Secretary Arun Ramanathan suggested to Power Secretary Anil Razdan a revival plan for the nation's largest gas-fired power plant, official sources said. He suggested that GAIL, NTPC and the Maharashtra government infuse an additional equity of Rs 1,200 crore to meet the investment required for completing the remaining work at the 2,150-mw power plant and the adjacent LNG import terminal.
Lenders, who had previously reduced the interest during construction (IDC) by Rs 466 crore, would convert the Rs 450-crore debt into equity and reduce interest dues by a further Rs 104 crore, they said.
The power plant needs Rs 1,020 crore to complete the unfinished portion, while the LNG facility needs an additional Rs 1,344 crore. The latest completion cost estimate is Rs 1,494 crore higher than the September 2007 estimates.
Post-conversion, the total equity capital of Ratnagiri Gas and Power, the new owner of Dabhol power plant, would be Rs 3,415 crore. NTPC and GAIL will own a 28.6 per cent stake each, with both infusing Rs 975 crore in equity. The Maharashtra government will have a 15 per cent stake with Rs 515-crore equity and lender 27.8 per cent with Rs 950-crore equity (28.6 per cent).
So far, NTPC, GAIL and lenders have infused Rs 500-crore equity each and the Maharashtra government another Rs 265 crore.
More From This Section
Sources said Ramanathan estimated a total project cost of Rs 12,907 crore, comprising the acquisition cost of Rs 8,485 crore, Rs 2,364 crore being the capital required to complete the project, Rs 265 crore being the non-cash equity from the Maharashtra government and IDC of Rs 1,793 crore.
Besides additional equity infusion, he also wanted long-term domestic gas to be made available for all the three units of the project and merchant sale of power disallowed.
Currently, only one block of 740 mw at Dabhol is operational, producing 330 mw. Another block with the same capacity has been shut down and may produce 650 mw from October. The third block of 670-mw capacity is expected to be operational from January 2009, producing 580 mw.
The five million tonnes a year LNG terminal is likely to be fully operational in 2011.
Ramanathan and Razdan had been asked by a committee of secretaries headed by Cabinet Secretary K M Chandrasekhar to rework the financials of the Dabhol project and study the possible sale of the LNG terminal after hiving it off from the power unit. Sources said the finance ministry was concerned over the increase in the completion cost of the project and had been seeking a freeze on the investment needed for completion of the power unit and the LNG plant.
The completion cost, which was estimated at Rs 870 crore when Indian lenders and a consortium of NTPC and GAIL took over the plant, was put at Rs 1,960 crore in September 2006, and has now been further revised to Rs 2,144 crore, excluding Rs 220 crore for mandatory spares.
The interest during construction has gone up from Rs 683 crore to Rs 2,413 crore. The lenders had absorbed an increase in the cost by waiving off IDC of Rs 466 crore and were willing to accommodate an additional sum of Rs 455 crore, sources said.