With lenders and Maharashtra government failing to resolve their differences over how to salvage...
With lenders and Maharashtra government failing to resolve their differences over how to salvage the debt-laden Ratnagiri Gas and Power (RGPPL), the Centre has come out with a strategy.
The plan, which will be discussed at a meeting of stakeholders chaired by finance minister Arun Jaitley soon, includes persuading the state government to agree to keep the pace of a plan of converting portions of the lenders’ dues into shares as a short-term measure.
The meeting, which was slated for Thursday, has been rescheduled. Further, to boost long-term viability of the 1,967 MW plant, it would be allowed to sell power at prices up to 43% higher than envisaged in the existing power purchase agreement with the state electricity board.
Sources told FE that RGPPL stakeholders have agreed to run the plant at 40% plant load factor (PLF) with liquefied natural gas (LNG) from GAIL at $10/mmbtu. At this fuel cost, the cost of generation works out to be R6.37 per unit — R1.50 per unit more compared to generation with 100% domestic gas — which includes fixed cost of R1.34 per unit and fuel cost at R5.04 per unit.
As per the formula, the power from the plant will be sold at R5-5.50 per unit as against R3.84 provided in the PPA. Additionally, the central government will provide a subsidy of R1-1.50 per unit from the national clean energy fund (NCEF) or power development fund (PDF) while the lenders will forgo any return on equity (RoE) in terms of fixed cost till the plant becomes financially viable.
The power plant has remained closed since October, 2013 due to paucity of gas.
“In order to implement this strategy, Maharashtra State Electricity Board (MSEB) has to agree to purchase power at the accepted rate (R5-5.50 per unit) or allow power to be sold to other states who who are willing to purchase at this price,” an official added.
Besides, lenders’ role in preparing a detailed viability study through experts was also discussed. Lenders offered to consider refinancing of debt as per latest RBI guidelines and observe a moratorium on repayment of loans for three years while the company continues to service the interest.
As for the short-term measure, the conversion of dues into equity has been held up because of Maharashtra government’s reluctance to allow the lenders to increase their shareholding in RGPPL. While stakeholders GAIL and NTPC are understood to be on board for the debt conversion option, MSEB, which holds 17.41% stake in RGPPL, has opposed the plan fearing that banks might sell their shares to private players, thereby diluting the government’s control.
“To overcome these hurdles, Maharashtra State Electricity Distribution Company (MSEDCL) support is required at this juncture to ensure the completion of conversion process without going through dispute resolution mechanism so that the dues up to January 1, 2015 are converted into equity at the earliest in order to retain the asset category as standard,” a government official said.
Banks already own 16.87% of RGPPL, which owns the 1,967 MW Dabhol power plant, and want to convert some part of their dues of R8,500 crore into shares. A total of R114.95 crore of dues has already been converted into equity for the period of March to July, 2014. However, despite conversion notice, dues of R92.31 crore for July to November, 2014 has not been converted into equity yet.
The scheduled meeting is likely to be attended by officials from oil, power and finance ministries and lenders that include SBI, IDBI Bank and ICICI Bank, along with NTPC, GAIL and chairman of RGPPL.