Dabhol revival plan trips on interest rate

Efforts by lenders to extend the loan repayment period of the power operations at Dabhol have hit a roadblock. Two promoters — GAIL and NTPC — are unwilling to pay a higher interest rate that banks would necessarily need to charge them to protect the net asset value (NAV) of their exposure. Ratnagiri Gas and Power (RGPPL), which runs the power plant, currently pays banks an interest rate of 8% and the net debt stand is Rs 7,645 crore.

Following the conversion of loans of Rs 450 crore into equity, the consortium of banks led by State Bank of India (SBI) is now the majority shareholder in the company with a stake of 35.48%. GAIL and NTPC each own stakes of 25.5%.
A banker familiar with the discussions told FE that since Reserve Bank of India (RBI) has specified that banks must protect the NPV even after the loan repayment period is extended, banks have no option but to raise the interest rate.

The RBI had said in December last year that banks can change the repayment period if the “net present value of the loan remains same before and after the change in loan amortisation schedule”. However, NTPC And GAIL are not comfortable with paying a higher interest rate, sources said.

Following the recent round of auctions for the import of gas, RGPPL can run its plant at a plant load factor of 35% and should be in a position to generate close to 700 MW. Bankers also want to hive off the LNG unit into a separate special purpose vehicle (SPV). They had recently made a presentation to RRGPPL officials mooting the option of hiving off the 5 mtpa LNG re-gasification plant into a separate SPV. The SPV will take on 50% of the total debt of RGPPL.

“Lenders don’t want the LNG plant to bear RGPPL’s expense burden as it is currently the only revenue-generating part of the company,” an official had told FE. If the proposal to segregate the businesses is accepted, bankers will refinance the new company with an additional R1,200 crore to construct a breakwater facility. Ships are currently unable to service the LNG plant between May and October since the seas are choppy.

In December last year, the RBI had allowed banks to refinance existing infrastructure projects under the 5/25 model provided the projects have commenced commercial operations. The loans can be extended for up to 25 years with the option of refinancing it every five years by either the existing banks or fresh lenders.



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