A consortium of financial institutions, which have invested in the Ratnagiri Gas and Power Pvt Ltd, which took over the assets of the erstwhile Dabhol Power Co earlier this month, is likely to bring in a few more lenders to raise an additional Rs 400-500 crore (Rs 4-5 billion) for RGPPL.
Of the Rs 10,338 crore (Rs 103.38 billion) that was assessed by Rothschilds as the value of the Dabhol plant, RGPPL has already spent Rs 7,012 crore (Rs 70.12 billion) - borrowed from institutional investors - to acquire the 2,184 mw capacity plant at Guhaghar.
While the power plant itself is fully functional, the liquefied natural gas terminals are yet to be completed. Of the three LNG terminals, one is complete, but the other two are in different stages of development. Again, while the jetty for birthing LNG tankers is about 70 per cent complete, the breakwater facility is said to be only around 30 per cent complete.
The lenders have estimated that the cost of completing these structures, combined with the cost of replacement and repair of machinery already installed, would be in the range of Rs 900-1,200 crore (Rs 9-12 billion).
The interest component during construction, on the other hand, is expected to be around Rs 700 crore (Rs 7 billion). Besides, the new entity, RGPPL, has to pay for the cost of preservation of the plant over the past three years, estimated at Rs 170 crore (Rs 1.7 billion).
The infusion is also expected to help the company absorb the additional cost of power, as Maharashtra is unwilling to pay a price of more than Rs 2.33 per unit. Union power secretary R V Shahi said the state would not have to pay more than Rs 2.50 per unit and any price above this would have to be approved by the state Cabinet.
This rate was determined assuming that the cost of gas would be around $3 per MMBTU (Million British Thermal Unit). But with the cost of gas shooting up to $4 per MMBTU in the past few months, the cost of power from Dabhol is unlikely to be in the Rs 2.30-2.50 per unit range.
RGPPL has already cleared the dues of foreign lenders from the Rs 1,200 crore (Rs 12 billin) invested by Life Insurance Corporation of India in government-guaranteed bonds and Rs 800 crore (RS 8 billion) lent by a consortium of banks led by Punjab National Bank.
The plant is expected to come online by May 2006 with the naphtha fuel already available at the plant.
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