Lenders to the Ratnagiri Gas and Power (RGPPL), which runs the Dabhol power plant, are barely managing to classify the account as standard although State Bank of India (SBI), chairman Arundhati Bhattacharya fears that the company “is on the verge of default” and might soon slip into the non-performing asset category, report Vishwanath Nair in Mumbai & Pranav Nambiar in New Delhi. Senior bankers confirmed to FE on Monday that RGPPL had paid its dues for August, in late November, thereby allowing banks not to put the asset in the non-performing asset portfolio. “We are hoping the company will pay its dues for September by end-December,” a senior banker said. RGPPL owes banks a fairly large R8,500 crore.
Meanwhile, Bhattacharya has dashed off a letter to the Union power secretary raising concerns the company's ability to service its loans given the acute shortage of the supply of gas to the power plant. “This would result in slippage of asset quality, which would be a setback for lenders despite their sacrifice through waivers and concessions in reviving the project,” Bhattacharya says. The letter, reviewed by FE, notes that the capacity utilisation of the plant is very low and that RGPPL has “no funds to meet repayment commitments and is on the verge of default due to stalled operations because of non-availability of fuel”.
This is not the first time that RGPPL, which took over the Dabhol assets in 2005, has paid installments at the last minute, bankers confirmed. Earlier this year, Chanda Kochhar, managing director and chief executive officer, ICICI Bank, had also written to the power ministry, raising concerns about the health of the power plant. “Lenders have sacrificed about R2,500 crore at the time of asset takeover and also addressed R1,220 crore as completion cost at the time of restructuring in 2009,” Kochhar had pointed out.
SBI has an exposure of Rs 1,752 crore to the Dabhol power plant. IDBI Bank has an exposure of nearly Rs 2,000 crore and Canara Bank is known to have an exposure of close to Rs 400 crore.
The company now needs to pay its dues for the July-September quarter by December 31, so that it is not close to being classified as a bad asset once again. As against a gas requirement of 8.5 mmscmd, the power plant has received no gas for the last four months, while a supply of 0.9 mmscmd from GAIL as and when available, is not sufficient to run even one of the six gas turbines at minimum operating parameters.
Bankers are now expecting to see some resolution on the gas supply issue in the January-March period. The gas-based power project has already gone through a process of financial restructuring in 2009. GAIL and NTPC hold 32.9% each in RGPPL, while the Maharashtra government holds 17.4%. Lenders IDBI Bank, ICICI Bank, State Bank of India and Canara Bank hold the remaining 16.8%.
Dabhol was allocated 7.6 million standard cubic meters per day of gas from KG-D6, but never received more than 3 mmscmd in three years of operations. Fuel supplies stopped in March after output at KG-D6 fell sharply. Maharashtra bought 95% of the plant's power, while Goa purchased 1%. Daman & Diu and Dadra and Nagar Haveli consumed 2% each.