India’s Ratnagiri to split LNG, power businesses as part of revival plan
By RAJESH KUMAR SINGH and DEBJIT CHAKRABORTY
Bloomberg
Ratnagiri Gas & Power, which owns a liquefied natural gas (LNG) terminal and an adjoining power plant built by the now-defunct Enron Corp. on India’s west coast, will split the businesses as part of a revival plan.
The power plant, which has an installed capacity of 1,967 megawatts and has been lying shuttered since last year due to a lack of affordable gas, will resume generating electricity from Nov. 1, Power Minister Piyush Goyal told reporters in New Delhi on Wednesday. Indian Railways has agreed to buy 500 megawatts from the project, he said.
“All issues related to Ratnagiri Gas & Power are resolved and it will be able to service its debt,” Goyal said.
Revival of the plant will boost investor confidence in the nation’s power sector, which is contending with low capacity use, stranded assets and unprofitable state retailers. The restart is also crucial to fulfilling Prime Minister Narendra Modi’s pledge of providing electricity to all in a country where more than half the population has no access to power.
Ratnagiri Gas & Power has a debt of about 90 billion rupees ($1.4 billion), taken from lenders including IDBI Bank, State Bank of India and ICICI Bank, according to Parag Jariwala, an analyst at Religare Capital Markets. The lenders had earlier converted 4 billion rupees of debt into equity and now own about 20% in the company, he wrote in a note.
“The development is positive for banks as it will reduce their asset-quality risk,” Jariwala said in the note.
Shareholding Structure
State-run gas distributor GAIL India and the country’s biggest power producer NTPC are the main founders of Ratnagiri Gas & Power, each holding 25.51%, according to its website. The shareholding in each of the demerged entities will remain the same, Goyal said.
Ratnagiri Gas & Power’s LNG terminal will also build a breakwater. This barrier, built out into the sea to protect a harbor from the force of waves, will allow shipments through the year, raising its handling capacity to 5 million tons from 3 million tons annually. The terminal is currently shut for six months during the monsoon season.
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