NTPC to infuse additional equity in Dabhol project

NTPC Ltd, which currently holds 28.3 per cent equity in the 2,150 Mw Dabhol plant of Ratnagiri Gas and Power Pvt Ltd (RGPPL), is considering an infusion of Rs 500 crore as an additional equity into the project to part-finance the completion of the liquiefied natural gas (LNG) terminal.

The LNG terminal requires Rs 1,200 crore for its completion. "We are working out the pre-conditions for such an equity infusion right now. Subsequently, we will approach the board with the proposal," said a member of the NTPC board.

NTPC's Rs 500-crore loan to RGPPL for the LNG terminal gives it the right of first refusal in case the terminal is hived.

NTPC, along with other stakeholders of RGPPL "" Gail India and Maharashtra State Electricity Board (MSEB) "" was asked by the Empowered Group of Ministers (EGoM), headed by external affairs minister Pranab Mukherjee, to work out the options for completing the LNG terminal.

They have to come up with the options by August 26, failing which the EGoM may decide to hive off the LNG terminal. "All the stakeholders are examining various options," said a senior RGPPL official.

The MSEB, which holds 15 per cent equity in RGPPL, has also offered around Rs 250 crore as additional equity, or the funds required as per the proportion of its stake in RGPPL.

RGPPL is, however, stymied on the debt front with the Power Finance Corporation (PFC) stopping disbursement of the Rs 1,400-crore loan that it had committed earlier, after giving an installment of Rs 360 crore.

It has stopped funding on three grounds "" doubts over project's viability, debt-service coverage (DSC) ratio of the plant which is extremely low and the fact that RGPPL has no fuel tie-ups.

The total funding required for completing the three power blocks and the LNG terminal is estimated around Rs 2,200 crore.

Meanwhile, the 740-Mw block II of RGPPL has stopped production of electricity due to non-availability of gas after the stay order given by the Gujarat High Court on a government directive to pool prices of imported LNG and domestic gas. The block II had started running on gas on July 31, but it had to be shut down due to gas order.

Prior to getting gas, the unit was running on naphtha, which is an expensive fuel.

According to the RGPPL official, if the court does not take a decision soon, RGPPL would be forced to go back to using naphtha or spot LNG as fuel. Naphtha is a costly fuel for which RGPPL used to pay Rs 6.75 per unit, while the Maharashtra state distribution utility buys the power from RGPPL at Rs 5.50 per unit. The spot LNG would be available at a cost of $7-$11 per million British thermal unit.

"The delay will impact the project viability and interest during construction will rise further," said the official.