Ratnagiri Gas and Power Private Limited’s (RGPPL) efforts to build a breakwater facility and ramp up production at an LNG regasification unit have been stalled, with key promoter NTPC declining to pump in the required R600 crore. Bankers told FE the state-owned energy major is reluctant to put in its share of money unless a long-term power purchase agreement (PPA) is signed with Indian Railways.
A banker explained that the project has a debt-to-equity ratio of 1:1, and while the consortium of banks will provide R1,200 crore as debt, GAIL and NTPC would be required to contribute R600 each as promoters’ equity.
“Attempts to reach a consensus on the breakwater facility have failed as NTPC refuses to budge from its stance,” he said.
RGPPL wants to construct a breakwater facility to facilitate ships to berth at its docks throughout the year. While it can receive around 10 ships at present, the breakwater facility would allow it to receive up to 80 ships in a year. The LNG plant currently cannot receive ships between May to October as high waves prevent passage of ships.
In FY15, RGPPL reported a net loss of Rs 1,433 crore on the back of Rs 182 crore in revenues. Its debt stood at Rs 7,800 crore in FY15 and finance costs were at Rs 779 crore in the same period. According to RGPPL’s website, NTPC owns 25.51% of the company, GAIL (25.51%), MSEB Holding (13.51%) and lenders IDBI Bank, ICICI Bank, State Bank of India, Canara Bank and IFCI together own 35.47%.
In June last year, RGPPLl had signed a PPA with Indian Railways to supply power till 2017. The agreement with the railways was under the Power Sector Development Fund (PSDF) scheme, floated by the government in 2014. The scheme envisages waiver of state-based charges, which will enable a uniform power purchase cost across states.
At present, the railways buys power at Rs 4.70 per unit, and the government adds an additional Rs 1.45 per unit as subsidy. In September last year, RGPPL’s board had approved the de-merger of the company, one for power generation and the other for running a liquefied natural gas (LNG) terminal.