Lenders to take a hit on Ratnagiri Gas exposure
Rajendra Palande Mumbai Rising cost of liquefied natural gas (LNG) may force Indian lenders to the Dabhol Power Company to go for a haircut.
|
On the line of foreign lenders, they too need to take a substantial hit on their Rs 5,500 crore funded exposure to make the project, rechristened as Ratnagiri Gas & Power Ltd, viable. |
|
Unless domestic lenders agree to take a hit on their exposure, the 2,184 MW plant will not be able to sell power at Rs 2.30 per unit. |
|
Industrial Development Bank of India (IDBI), ICICI Bank, State Bank of India (SBI) and Canara Bank may have to forgo at least 20 per cent of their loan exposure to DPC, sources said. |
|
In absolute terms, the amounts to a sacrifice of Rs 1,100 crore. The foreign lenders to the Enron-promoted DPC have settled their exposure at a 20 per cent discount. |
|
The Rs 2.30 per unit price at which Maharashtra has agreed to buy electricity from the power plant is based on the assumption that LNG price would be $3.65 per MMBTU. |
|
"LNG prices moving anywhere closer to the $ 4 per MMBTU level will make the project at its current revival cost absolutely unviable. The current LNG prices are ruling much higher than $ 4 per MMBTU and it calls for a review of the costing," banking sources said. |
|
The price of Rs 2.30 a unit includes Rs 1.33 towards variable cost and 97 paise towards fixed costs. The variable costs include the cost of LNG. |
|
The only way to reduce the project cost would be by bringing down the fixed cost as the variable cost is linked to the market price of LNG, the sources said. |
|
The cost of the revived power project would work out to Rs 10,660 crore "" Rs 7,700 crore as cost of the plant and the balance for the LNG storage and regassification facility. The cost of the power plant is Rs 1,100 crore higher than the amount that would have been spent on a similar capacity Greenfield project. |
|
Indian lenders had thus far avoided any need to take a hit on their loans as they have already waived the interest component. It is now the turn of the four Indian banks to contribute their part after the foreign lenders exited with 20 per cent less, the sources said. The higher cost of the revived power plant amounts to exactly 20 per cent of the outstanding loans of the Indian lenders. |
|
The phase-I of the power project, located at Guhagar in Ratnagiri District of Maharashtra, was operational before it was shut in 2001 following a dispute with the sole customer, Maharashtra State Electricity Board (MSEB). |
|
Construction of the Phase-II of the project was nearly complete. The government has formed Ratnagiri Power and Gas Company to acquire the project from the Indian lenders, with equal equity participation from National Thermal Power Corporation, GAIL India and the lenders taken together. |
|
|
|