Dabhol equity holders seek cut in interest rate to 8%

Written by Sanjay Jog | Mumbai | Updated: Mar 15 2009, 04:53am hrs
In a bid to revive the beleagured 2,150-mw Dabhol power project, equity holders of Ratnagiri Gas & Power Pvt Ltd (RGPPL) including NTPC, GAIL India and MSEB Holding have made a slew of suggestions for the revival of the project. They have called for a reduction in an interest rate to 8% from the current level of 12%, zero return on equity (RoE) till the project becomes viable, delinking of power block and LNG terminal for the purpose of tariff fixation.

In a bid to make the per unit tariff affordable, RGPPL equity holders have asserted that the power block should not service the LNG terminal. At present, 17 paise is charged to service the LNG terminal in the total per unit tariff of Rs 3.01.

Similarly, the equity holders are of the view that GAIL India, which is an equity holder as well as the LNG terminal operator, be allowed to pump gas into other clients after supplying the required quantity to Dabhol project. After this arrangement, GAIL India will be able to take care of servicing of LNG terminal. The LNG terminal is expected to be operational in the last week of March. GAIL India has tied up one ship of LNG for commissioning the terminal.

Currently, the project is geneerating only 600 mw and there have been delays in the revival of the project. RGPPL sources told FE, A substantial hike in tariff was not possible but there are other options to keep the project up and running. The project, which was to be revived fully by December 2008 or early 2009 is already running behind the schedule. Apart from increase in the revival cost to Rs 12,500 crore from Rs 10,300 crore, the frequent tripping of turbines and rotar is affecting generation. Thus, equity holders have argued in favour of zero RoE for 2009-10 and 2010-11. Later, ROE can be restricted to 9% for 2011-2012 and 12% for 2012-2013.

Moreover, the equity holders have suggested that there will be no repayment of debt in 2009-2010 and 2010-2011 aggregating to Rs 1,104 crore and re-schedulement of Rs 1,107 crore falling due in 2011-2012 to 2015-2016 to later years.

Besides, they have argued that the rate of interest be reduced to 8% which will ease RGPPLs debt repayment burden.

Revival effort

The equity holders of Ratnagiri Gas & Power Pvt Ltd NTPC, GAIL India and MSEB have called for zero return on equity till the project becomes viable

In a bid to make the per unit tariff affordable, RGPPL equity holders have asserted that the power block should not service the LNG terminal