The long-term power purchase agreement (PPA) between RGPPL (Ratnagiri Gas and Power Private Limited) and Indian Railways is stuck owing to disagreement over price per unit of power. While RGPPL and lenders, sources said, have agreed to sell power at R5 per unit, excluding state-wise transmission charges, Railways has said it will not pay more than R5 per unit including the charges.
“Dabhol has informed railways that it cannot bear the state and central transmission charges on its behalf,” a source said, adding that transmission charges vary between 50 paise to R1 in most states.
According to people familiar with the negotiations, the power ministry will soon call a meeting to discuss the issue. “Indian Railways obtained the deemed licensee status because of the Dabhol agreement and now they are not ready to pay us more than R5, although it used to pay as much as R9 to discoms,” a source told FE, adding that the long term PPA is expected to be valid for 15 years.
In FY15, RGPPL reported a net loss of R1,433 crore on the back of R182 crore in revenues. Its debt stood at R7,800 crore in FY15 and finance costs were at R779 crore in the same period. According to RGPPL’s website, NTPC owns 25.51% of the company, GAIL (25.51%), MSEB Holding (13.51%) and lenders IDBI Bank, ICICI Bank, State Bank of India, Canara Bank, IFCI together own 35.47%.
In June last year, RGPPLl signed a PPA with Indian Railways to supply power till April 2017. The agreement with Railways was under the Power Sector Development Fund (PSDF) scheme, floated by the government in 2014.
In September last year, RGPPL’s board had approved the de-merger of the company, one for power generation and the other for running a liquefied natural gas (LNG) terminal. Although Power Finance Coporation (PFC) has not given its consent for the demerger, lenders expect it to be accepted by the Delhi High Court since 75% of stakeholders by value have agreed to it.
FE had reported that Power Finance Commission (PFC), which had loaned R1,200 crore to Dabhol, wanted its loans to be part of the LNG plant as well after the demerger for it to agree to the demerger.
The plan was to hive off the LNG unit into a separate special purpose vehicle (SPV). It envisages the hiving off of the 5 mtpa LNG re-gasification plant into a separate SPV. The SPV will take on 50% of the total debt of RGPPL.
