Maharashtra nixes Dabhol debt plan

Written by Pallavi Ail | Mumbai | Updated: Oct 9 2014, 05:53am hrs
Dhabol power plantBanks already own 16.87% of RGGPPL, which owns the 1,967 MW Dabhol power plant, and want to convert some part of their dues of Rs 8,500 crore into shares.
The Maharashtra government has rejected both the proposals put forward by the consortium of lenders to Ratnagiri Gas and Power (RGPPL), one which would allow them to convert some portion of their dues into equity and a second to sell the LNG regasification terminal at the power plant, three sources familiar with the matter told FE.

Banks already own 16.87% of RGGPPL, which owns the 1,967 MW Dabhol power plant, and want to convert some part of their dues of Rs 8,500 crore into shares. At a meeting with the Union finance secretary in late September, banks said that if neither option was accepted by the state, they would put the proposal to vote. Since the other stakeholders GAIL and NTPC are understood to be on board for the debt conversion option, chances are the proposal will go through.

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Maharashtra State Electricity Board (MSEB), which holds a 17.41% stake in RGPPL, is understood to be apprehensive that banks might sell their shares to private players, thereby diluting the governments control.

The Maharashtra government is not in agreement with either of the options put forward by the lenders whether converting their debt into equity or selling the LNG terminal, a source familiar with the matter said.

He pointed out that the lenders and the Centre were proposing the debt be converted into equity at par value or R10 per share. But once gas becomes available, the share price could rise and MSEB may have to buy it back at a higher value for full control, he added.

Maharashtra is against selling the LNG terminal as it will mean losing the only cash-generating asset at the power station; the plant is lying idle for want of gas.

RGPPLs total debt is around R8,000 crore of which the terminal accounts for R3,000 crore. The terminal can generate profits and the debt be serviced. But until gas is available, it will be difficult to service the power plants debt, an MSEB source said.

NTPC and GAIL are not willing to sell the LNG terminal since it is the only cash-generating asset, a source in NTPC said.

RGPPL last made an interest payment of about Rs 80 crore in late May this year, a company official said, confirming no payment had been made thereafter. Since the repayments on the loans are overdue by more than 90 days, the asset should be classified as a non-performing asset (NPA).Lenders are hesitating to declare the RGPPL as an NPA as it would be a massive default, the RGPPL official said. Bankers could not be reached for comment. State Bank of India, IDBI Bank and ICICI Bank form the consortium of lenders to RGPPL and have written to the power ministry to try and help find a resolution to the shortage of gas.