Even as R.K. Goel, chairman of Ratnagiri Gas and Power Pvt. Ltd (RGPPL) announced the company’s Rs1,000 crore initial public offering (IPO) in fiscal 2009, along with a private placement of Rs500 crore, major stakeholders in the company deny plans to seek private investors for the 2,140MW project.
The chairman’s remarks came in the backdrop of interest shown by companies, including Reliance-Anil Dhirubhai Ambani Group (R-Adag), in acquiring RGPPL equity.
“In the first instance, the board of RGPPL will this month consider changing its character from a private company to a public limited one. We will take this proposal to the company’s board on 20 March. The total equity capital base of RGPPL is Rs4,000 crore. Post-IPO, a private placement of Rs500 crore is possible, wherein the lenders to the power plant may convert their debt into equity,” Goel, who is also director (finance) at GAIL (India) Ltd, said on the sidelines of a press conference on Tuesday to announce plans for a subsidiary to manage gas distribution in cities.
However, senior officials at GAIL and NTPC Ltd, the two main stakeholders in RGPPL, are not in favour of any private investor participation.
Energy crisis? Ratnagiri Gas and Power plans a Rs1,000 crore initial public offering and a Rs500 crore private placement (AFP)
NTPC and GAIL each hold a 28.33% stake, the others being the Maharashtra State Electricity Board, which owns 15%, and lender banks—IDBI Ltd, State Bank of India, ICICI Bank Ltd and Canara Bank.
GAIL officials, who did not wish to be identified, said, “GAIL has not decided anything on RGPPL’s equity dilution. There is no such move for the same, nor the need for it.”
“I do not have any information whether there is any such proposal at present or one in the offing,” U.D. Choubey, GAIL chairman and managing director had earlier told Mint.
An NTPC executive, who didn’t want to be named, added, “There is no such proposal for allowing private sector participation in Dabhol.”
Sushil Kumar Shinde, union power minister said, “We have maintained that we will not allow any private sector participation in the project. We will look into the matter and enquire about it.”
RGPPL was originally promoted by Enron. It ran into trouble soon after, with the government with which Enron signed the agreement losing in the state assembly elections, and the new government questioning the high cost of power the plant would produce. Even in its new avatar, the project has been mired in controversy over issues ranging from inadequate gas to faulty equipment as reported by Mint earlier.
Companies such as Anil Ambani’s Reliance Power Ltd and Mukesh Ambani’s Reliance Industries Ltd have been showing interest. “We may consider investing in the Dabhol integrated power plant when the government allows private sector participation after things stabilize for the project,” R-Adag chairman Anil Ambani had earlier said. Mint had reported this on 7 January.
While an R-Adag spokesperson declined comment, an RIL spokesperson did not respond to emailed questions.
Industry analysts believe it is the 1.2 million tonnes per annum (mtpa) LNG terminal at the project, which will be increased to 5mtpa by 2010, that has caught the private sector’s fancy. India has only two LNG regasification terminals where LNG, which is transported in liquid form and usually by ships, needs to be converted into gas before it is used. Both are located in Gujarat and are owned by Petronet LNG Ltd and Shell India Pvt. Ltd.
Kuljit Singh, a partner at audit firm?Ernst and Young, said there could be some “premium that can be generated from the IPO market...as the project is not fully functional, the company may not be able to get the premium it would have, provided the project was fully functional. The right timing and valuation is the call that the company has to take. The private sector is interested as it is a strategic asset.”