New Delhi: State-owned NTPC Ltd and GAIL (India) Ltd, the majority stake holders in Ratnagiri Gas and Power Project Ltd, formerly known as Dabhol Power Co., may exit the project entirely if the government decides to hive off a liquefied natural gas (LNG) terminal associated with it.
The proposal to hive off the terminal, one of several options, has already been forwarded to the empowered group of ministers (eGoM) on the project by a committee of secretaries (CoS), a group of senior bureaucrats, after a 30 September meeting chaired by the cabinet secretary, as reported by Mint on 28 October.
Potential buyers could include private sector buyers, a significant departure from the government’s earlier stand.
The CoS also recommended that the eGoM revisit the clause in the existing investment contract that entitles GAIL and NTPC to the first right of refusal, ahead of inviting bids for the terminal, implying the government was in principle not opposed to its sale to private companies.
Any exit by NTPC or GAIL will jeopardize the already beleaguered operations at the project, which has been the subject of numerous controversies over its high power tariffs, the corporate and financial failure of the main promoter Enron Corp. and faulty equipment supplied by General Electric Co.
NTPC and GAIL are opposed to the proposal to hive off the terminal on grounds that Ratnagiri Power would then cease to be an integrated power project.
NTPC’s board has already decided to exit the project if the government goes ahead with the option of hiving off the terminal, said a government official who declined to be named. GAIL plans to approach its board, said chairman and managing director U.D. Choubey.
GAIL has already been independently approached by the Essar Group, Adani Group and UK’s BG Group seeking a partnership to acquire the LNG terminal, as reported by Mint on 30 October.
NTPC officials declined to reveal the date on which the board took its decision and Mint could not independently verify it either.
R.S. Sharma, chairman and managing director of NTPC, declined to comment on the board’s decision. “Whatever the board has decided, I cannot make it public. This is a delicate issue. We need to speak to the government first,” he said.
Reliance Power Ltd and Reliance Industries Ltd, controlled respectively by estranged brothers Anil Ambani and Mukesh Ambani, too have previously expressed their interest in acquiring the terminal.
Spokesmen at RIL and Reliance-Anil Dhirubhai Ambani Group did not respond to the emailed questions.
Industry analysts believe that from a long-term perspective, the terminal will be a significant revenue earner.
“The eGoM on Dabhol project decided that it will be an integrated plant. Based on that, our board approved the infusion of funds with certain conditions such as it being an integrated project. If the conditions change, we will have to go back to our board,” said GAIL chairman Choubey.
While NTPC and GAIL hold a 28.33% stake each in Ratnagiri Power, the rest is held by Maharashtra State Electricity Board (15%), and several banks.
The LNG terminal is part of the integrated power project with a capacity of 2,150MW that is being derated to 1,844MW. The terminal has a capacity of 1.2 million tonnes per annum (mtpa) and this is to be raised to 5mtpa. While 2.1mtpa will be required for the power project, the balance can be used for merchant sales.