Ratnagiri Gas plans Rs 1,000 cr initial offer for Dabhol plant

Ratnagiri Gas and Power Pvt Ltd (RGPPL), which operates the 2,140 mw power plant at Dabhol, Maharashtra, plans to raise over Rs 1,000 crore through an initial share sale.

The company, jointly owned by power utility National Thermal Power Corporation (NTPC), gas utility GAIL India and the Maharashtra State Electricity Board (MSEB), also plans to trim its debt of almost Rs 7,000 crore by converting Rs 500 crore worth of such loans to equity, after the public offer.

"The plan is to raise the money to pay off our loans," said RGPPL Chairman R K Goel. The public offer is likely in October-December this year.

RGPPL is taking the IPO route after lenders declined additional funding to cover the increase costs to complete the project, a GAIL official said.

The cost to complete the project, which was estimated at Rs 870 crore when NTPC and GAIL took over the power plant from US-based Enron, more than doubled to Rs 1,960 crore by September 2006 and now stands at about Rs 2,300 crore, the official said.

The company intends to initiate the public offer process by seeking the approval of the board, at its meeting on March 20, to change the company from a closely held entity into a public limited body.

Once the company's board approves the public offer, it will increase its share capital to Rs 4,000 crore from the current Rs 2,000 crore. Of the Rs Rs 4,000 crore capital, promoters GAIL, NTPC, MSEB and financial institutions have contributed Rs 2,985 crore. A part of the public offer proceeds will make up the balance, Goel said.

He said that a part of the Rs 7,000 crore loans from lenders (IDBI, ICICI Bank, SBI, Canara Bank and IFCI) for the project will be converted into equity through a private placement. The funds mobilised will also be used to pay off the Rs 350 crore loan taken from Power Finance Corporation (PFC) and another Rs 500 crore loan given by NTPC.

RGPPL meets most of the norms for a public company and would only have to obtain a certificate for commencement of business from the registrar of companies.

The Dabhol plant will be fully operational by the first week of April when the third power generating unit is commissioned, Goel said.

Seventy per cent of the work on the liquefied natural gas (LNG) terminal has also been undertaken and it will be commissioned in November.

The breakwater, which will enable the five million tonnes a year LNG terminal operate to full capacity, would be ready by the end of 2011.

The cost of the breakwater is around Rs 600 crore and that for the LNG terminal is Rs 4,400 crore.

Goel added that the power plant is expected to function at a plant load factor of around 80 per cent when it is completed.