Dabhol meet to be stormy over PFC loan

Written by Sanjay Jog | Mumbai | Updated: Jan 23 2009, 05:03am hrs
The meeting of the board of directors of the beleaguered Ratnagiri Gas & Power Ltd (RGPPL) scheduled for Thursday is expected to be stormy over the Rs 300-crore loan from Power Finance Corporation. The project is also facing troubles with its insurers rejecting to renew the cover in view of frequent trippings and consequent damages to turbines, besides possible delays in the completion of the project revival.

As reported by FE , the Maharashtra government, under whose undertaking MSEB Holdings hold 15% equity in the 2,150- mw Ratnagiri power project, has offered to provide a soverign guarantee for the proposed Rs 300-crore loan. However, PFC has laid down several stringent conditions and one of them is relating to the recovery of money in the wake of default in payment of RGPPL.

According to sources, PFC wants the Maharashtra government to ensure that the amount is paid to PFC if RGPPL defaults. However, the state government has rejected PFCs condition on the grounds that the sovereign guarantee is like surety. Maharashtra is one of the equity holders while the balance 85% is held by NTPC, GAIL India and lenders. It will not be Maharashtra but other lenders should also give guarantee for payment of dues to PFC in the wake of RGPPLs default. The board is expected to resolve the issue.

RGPPL desperately needs Rs 300 crore to carry out repairs and restoration of turbines, with its power generation ranging between 300 and 600 mw. Sources indicated if PFC delays in releasing the funds, there is every possibility of the project revival getting further delayed till July. RGPPL has earlier rescheduled completion of revival by June and expects to attain 1,900 mw generation against total capacity of 2,150 mw.

Moreover, the state-run National Insurance Corporation, in an association with other insurance companies, had provided an insurance cover for the Dabhol power project assets. RGPPL had asked NIC and others to renew the insurance cover. However, so far there has not been any response. The insurance companies have cited the frequent tripping of gas turbines and rotar as the major reasons for not being keen to renew insurance policies. RGPPL, which possesses Dabhol power project assets since October 2005, is due to pay a premium of Rs 45 crore by end of January and part of which has to be paid by May this year.