A revival plan for the financially strained Dabhol Power Plant has finally begun to take shape. Bloomberg TV India caught up with BK Batra, Deputy Managing Director of IDBI Bank, to get the lender’s perspective.

Can you give us a sense of what’s your exposure to Dabhol?

The aggregate exposure of lenders to Dabhol in terms of debt is about ₹7,800 crore. So one fourth of that is with IDBI, or ₹1,700 crore.

In the new equation, as the power plants get back on stream, when do you expect to get back the principle repayment?

With an aggregate investment of about ₹12,000 crore, we have nearly 2,000 MW of gas-based power generation facilities integrated with a 5 million tonne LNG terminal located right on the coast. And, therefore there is potential to generate enough revenue to service the entire debt that is outstanding today.

However, as of now, the way it is planned is that these entities will be demerged into SPVs and they will be run as independent profit centres. The LNG terminal will have near shareholding of the current company and its capacity will be ramped up to 80 cargos per year after doing some capital expenditure for the break water facilities. That will take place after two-and-a-half years.

But currently the LNG terminal is operational and generating revenues for the last two-and-a-half years.

The idea is to increase its revenue generation capacity and at the same time run the power plant at at least 500 MW capacity under the Centre’s PSDF (Power Sector Development Fund) scheme and then take the power plant beyond the 500 MW capacity.

So the revenue generation will ramp up over the next few years. There were points where we had doubts but now we are fairly confident that the plant operation will be back on track and lenders repayment will take place in the future.

Can you please take us through the financial arrangements?

The plant requires additional capital investment of about ₹1,600-1,800 crore. That requirement is going to be taken equally from equity and debt. The debt portion of about ₹800-900 crore, the lenders will pick up and the equity portion is expected to be picked up by GAIL and NTPC together. We are not envisaging picking up any more equity in the company.

We are going to do some sort of readjustments in the repayment of the principle after the demerger takes place. And that way we are postponing our repayment. Our interest rate in this case is already low. So we will continue with that. Some portion of the debt may not be immediately serviceable; we might convert it into some instrument.

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