Dabhol stakeholders to meet on December 3 to decide on demerger

Lenders to RGPPL (Ratnagiri Gas and Power Private Limited) are slated to meet other stakeholders in New Delhi on December 3 to finalise the demerger of the company, sources told FE, adding that while creditors have agreed to the proposal, NTPC has given a conditional approval.

According to a banker, NTPC’s approval is subject to a long-term power purchase agreement with Indian Railways. “Equity shareholders, secured creditors and unsecured creditors of Dabhol will be present and therefore is crucial to take a decision on the demerger,” he said.

In September last year, the RGPPL board had approved the demerger, one for power generation and the other for running a liquefied natural gas (LNG) terminal. The plan was to hive off the LNG unit into a separate special purpose vehicle (SPV). It envisages 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.

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Meanwhile, the long-term PPA between RGPPL and the railways is stuck owing to disagreement over price of per unit of power. While RGPPL and lenders have agreed to sell power at Rs 5 per unit, excluding state-wise transmission charges, railways has said it will not pay more than Rs 5 per unit including state and central transmission charges.

At present, railways buys power at Rs 4.70 per unit, and the government adds an additional Rs 1.45 per unit as subsidy.

In FY15, RGPPL had reported a net loss of Rs 1,433 crore on the back of Rs 182 crore in revenue. Its debt had stood at Rs 7,800 crore in FY15 and finance costs were at Rs 779 crore.

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 had signed a PPA with railways to supply power till 2017. The agreement was under the Power Sector Development Fund scheme, floated by the government in 2014. The scheme envisages waiver of state-based charges, which will enable a uniform power-purchase cost across states.

At present, railways buys power at Rs 4.70 per unit, and the government adds an additional Rs 1.45 per unit as subsidy.