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Ratnagri Gas & Power Pvt Ltd, which is struggling to restore its Dabhol power plant in Maharashtra, plans to increase its authorised share capital to Rs 4,000 crore from the present Rs 3,500 crore to stay afloat and thereby avoid turning the project into a non-performing asset (NPA). Hiking share capital is necessary as it will convert debt of Rs 343.45 crore into equity. The project with 1,967 MW generation capacity has been closed since December 28, 2013 for want of gas.
RGPPL's move comes close on the heels of MahaVitaran's (Maharashtra State Electricity Distribution Company Ltd) decision to terminate power purchase agreement (PPA) through its letter despatched on January 12 to RGPPL. This apart, RGPPL's proposal to raise its authorised share capital is subsequent to conversion of debt of Rs 405.12 crore into equity resulting in increase in the total paid up share capital to Rs 3,370.02 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 purchase power from the project.
RGPPL official told Business Standard: “Lenders to the Dabhol project are insisting that RGPPL pay dues worth Rs 500 crore. Besides, lenders are pressing for further conversion of debt into equity to avoid it from becoming an NPA. However, RGPPL has expressed its inability for further conversion of debt into equity as the margin between the authorised share capital and the equity is just Rs 130 crore. The proposed conversion of additional debt of Rs 343.45 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 a record Rs 1,486.47 crore in 2013-14 compared with Rs 375.33 crore in 2012-13, while the generation loss was 14,000 million units.
RGPPL official informed that the present shareholding after the conversion of Rs 405.12 crore into equity include NTPC 28.91% (earlier 32.86%), GAIL India 28.91% (32.86%), IDBI 9.94% (6.34%), ICICI Bank 6.64% (4.25%), State Bank of India 7.95% (5.16%), Canara Bank 1.70% (1.11%), IFCI 0.62%, MSEB Holding 15.32% (17.41%).
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 (mmscms) 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 RGPPL. Therefore, the ball is now in the Centre's court to take corrective measures.
