EGoM to discuss speeding up Dabhol''s revival
22 February 2007
New Delhi: The empowered group of ministers headed by external affairs minister Pranab Mukherjee will today consider a restructuring proposal to speed up the revival of the Ratnagiri Gas and Power Pvt Ltd's 2,150 MW gas-based power Dabhol power plant, which has faced time and cost overruns.
Ratnagiri Gas and Power Pvt Ltd (RGPPL), was formed in July 2005, to as a 50:50 joint venture between GAIL and NTPC for taking over the assets of the Dabhol Project. The two public sector units have an approved investment of Rs500 crore each as equity contribution in RGPPL. The delay in revival has resulted in a cost escalation of Rs 2,594 crore over the original Rs10,303 crore project cost. The government is keen to bring back the project cost to the original figure, which may entail financial measures.
Some of the measures likely to be implemented are reducing interest rate for lenders to 3 per cent from 8 per cent at present, options relating to relaxation in depreciation and return on equity and increasing borrowings to meet the cost increase.
Additional interest during construction will also be considered and Gail may be asked to bear the additional cost, which has gone up from Rs664 crore to Rs950 crore.
Eventually Gail and NTPC as the owners of RGPPL may have to accept a lower return on their equity and the additional burden may be divided among them in accordance with their equity holding of 28.33 per cent each in RGPPL.