Ratnagiri Gas to make profits in Year 1, says IDBI

Mumbai, Nov 20 | Updated: Nov 21 2005, 06:46am hrs
Even as Ratnagiri Gas & Power Pvt Ltd (RGPPL) has yet to clinch the deal for long-term gas supply for the Dabhol project, the Industrial Development Bank of India (IDBI) has projected that the company will earn profits in the first year of operations as per current business plans.

The project is expected to generate cash flows to yield a return of 14% annually on the equity capital.

In an exclusive interview to FE after RGPPL formally took possession of the Dabhol power project assets in the first week of October, a senior IDBI official said earnings from the project would depend on cost of completion, the negotiated price of gas and the tariff. The estimated cost for the revival of phase-I and the completion of phase-II would be around Rs 10,303 crore.

Apart from IDBI, the state-run National Thermal Power Corporation (NTPC) and GAIL India have pumped in Rs 500 crore each to pick up equity in RGPPL. Besides, RGPPL is in the process of negotiations with suppliers of gas, construction contractors.

Charged Up

Cash flows projected to yield a return of 14% annually on the equity capital
Cost of revival of phase-I and completion of phase-II estimated at Rs 10,303 cr
Apart from IDBI, NTPC and GAIL India have picked up Rs 500 cr equity each

Escalation, if any, in project cost would need to be addressed by all stakeholders, the official said.

The power ministry has asked RGPPL to revive phase-I by May 15 next year while phase-II, which comprises the regasification plant, is to be commissioned during August and November next year.