Financial Daily from THE HINDU group of publications
Friday, Oct 14, 2005
Financial Daily from THE HINDU group of publications Friday, Oct 14, 2005 |
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Money & Banking
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Financial Institutions Industry & Economy - Power Ratnagiri Gas lenders seek RBI help in turning loans to standard assets C. Shivkumar
Bangalore , Oct. 13 LENDERS to the Ratnagiri Gas and Power Private Ltd (RGPPL) have sought the Reserve Bank of India's intervention in classifying the loans as standard assets. Top bankers in the lending consortium said that in the normal course, the loans would become standard assets since the assets were taken over by a new entity. However, the major problem was that almost all the lenders had classified the assets as stressed, and provisioned the same, treating it as a substandard asset in line with the RBI's guidelines. In fact, bankers had begun provisioning the loans to the erstwhile Dabhol Power Company way back in 2002. They include IDBI, ICICI, SBI, IFCI and Canara Bank. Converting the loan as a standard asset would imply reversing the provisions made for the project, the sources said. "Clearance from the RBI is required for a such a reversal," they added. The reclassification of the loan assets to the 2,184-MW project would, however, have major implications for the lenders' bottomlines. The reclassification would, in fact, result in raising the profits of the lenders, the sources added. Banks and FI exposure in the new RGPPL is currently Rs 7,000 crore, after the buyout of the foreign lenders' loans in the project. Bankers said that only the domestic loan component to the project was treated as a substandard asset. Foreign lending was backed by sovereign and deferred payment guarantees provided by the domestic FIs in the project. The bankers also said that there were little fears of the loans slipping back into delinquency. The bankers said: "We are equity-holders, no doubt, but since both NTPC and GAIL are involved, we do not foresee the loans slipping into NPA again." Fuel tariff woes This was despite the fact that the project has still not tied up its fuel supplies for power generation, slated to begin by the first half of next year, as tariff concerns dog the operators. Gas is currently available in the international markets though the price was high, the sources said. Even Woodside Energy of Australia has offered gas to GAIL, though tariffs are still a contentious issue, the sources said. Gas is currently priced in the world markets close to about $10 per million metric British thermal units (MMBTU). The high tariff was partly in view of the supply chain involved. The project would require at least 2.1 million tonnes per annum for operating both phase one and phase two. Firing the project on naphtha was not attractive in view of the high prices. Naphtha is currently priced upwards of $500 per tonne. In fact, NTPC had sought a gas pricing on a CIF (cost, insurance and freight) at anywhere between $3 and $3.65 per MMBTU. This was to ensure that the power tariff from the project was maintained at about Rs 2.50 kilowatt-hour and competitive to thermal power tariff.
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