 "Ratnagiri Gas Power Plant gets lifeline from Indian Railways")
The project would start re-generating power from November 1, 2015. The plant was awarded imported R-LNG and subsidy to procure same from Power System Development Fund (PSDF) through government held auction last month. This is a short term power purchase arrangement with the Railways.
The project, which is a joint venture of state owned GAIL and NTPC, would be demerged into two companies now – Ratnagiri Power Company and Ratnagiri LNG company. The LNG company would re-gasify imported LNG and pool with domestically available gas during low demand season.
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The current gasification capacity of the LNG terminal at the plant is 3.5 million tonne would be increased to 5 million tonne. RGPPL would build an additional break-water facility to increase it gasification capacity. While the power plant would use majority of the gas, the surplus fuel would be sold in the market.
The two new entities would have a mirror image of the share holding of the existing share holders. The minister of state for power, Piyush Goyal said some amount of the value of the shareholders would be transferred as 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 was in national interest where everyone was ready to forego some part of their benefit and be part of the fruits of the project. As there still would be some gap in the total loan outstanding, some lender debt would also be converted into equity,” said Goyal.
The Maharashtra state government would waive off transmission and subsidy charges while supplying power to Indian Railways. The proposal would be cleared by the state government and the electricity regulatory commission.
RGPPL will need 8.5 million standard cubic meters per day (MMSCMD) gas to operate at 1,967 Mw. The company has recently secured 1.98 million standard cubic feet per day of gas in the gas auction and has proposed a sale price of Rs 6.15 per unit. Of this, it will charge Rs 4.70 per unit to the Railways and the rest Rs 1.45 per unit is proposed to be bridged through support from the Union government’s Power System Development Fund.
RGPPL in June converted debt of Rs 450 crore into equity which was for the second time after it the conversion of debt of Rs 405 crore into equity took place in December last year. After this, RGPPL's equity increased to Rs 3,820 crore from the present level of Rs 3,370 crore. RGPPL's authorized share capital stands at Rs 3,500 crore.
Maharashtra State Electricity Distribution Company (MahaVitaran), which was drawing almost 95% of power, has terminated PPA with RGPPL in January this year. RGPPL and MahaVitaran are currently locked in regulatory battle. Notwithstanding its decision to terminate PPA, MahaVitaran had given its approval for conversion of debt into equity.
Parag Jariwala, Vice President, Institutional Research, BFSI on the Revival of RGPPL said, “The revival of the now closed Dabhol project is a big positive especially for banks and financial institutions.”
Total debt of the project is Rs 8,500-9,000 crore comprising SBI (Rs 1750 crore), IDBI Bank (Rs 2,000 crore), Canara Bank (Rs 400 crore) and among private banks ICICI Bank has Rs 1,200-1,500 crore exposure. Lenders have earlier converted Rs 400 crore exposure into equity and SBI, CBK, ICICIB and IDBI — now own 20% in the company. The development is positive for banks as it will reduce their asset quality risk."