Ratnagiri Power on revival path as lenders sign inter-creditor pact
Ratnagiri Gas and Power Pvt Ltd, which had turned a non-performing asset (NPA) for banks in the fiscal first quarter ended June after Reserve Bank of India (RBI) insisted to downgrade the account, is now on course for a resolution. Canara Bank, which had taken a dissenting approach from the other lenders and moved the National Company Law Tribunal (NCLT) against the resolution plan of Ratnagiri Gas and Power (RGPPL), has come on board. All the ten lenders in the consortium have buried their differences and signed the inter-creditor agreement that gives RGPPL, which owns an integrated power generation and regassified liquefied natural gas (LNG) facility, a deep restructuring of its Rs 90 billion loan for a repayment cycle of 10 years. The banks have submitted the resolution plan to RBI and are awaiting approval. “Canara Bank was the only one which was yet to sign the agreement. As a result, RBI asked all the banks to downgrade the account and classify it as an NPA in the June quarter. Now with all the banks in agreement, we have submitted the proposal to RBI for its final approval. We will abide by whatever the regulator tells us,” said a banker who is involved in the restructuring process. The Plan Power plant loans will be restructured by the banks LNG business would be demerged into a new company, Konkan LNG Pvt Ltd The demerged entity will be given a loan of Rs 15 billion for a breakwater facility The sustainable part of RGPPL’s loan of Rs 90 billion would be serviced by the company The unsustainable part will be converted into cumulative redeemable preference shares The sustainable loan will be repaid over a 10-year period at a rate of 10% The restructuring will involve bifurcating RGPPL’s business into two parts –Power plant whose loans will be restructured by the banks, and demerger of the LNG business into a new company, Konkan LNG Pvt Ltd (KLPL). This demerged entity will be given an additional loan of Rs 15 billion for a breakwater facility. In March 2018, National Company Law Appellate Tribunal (NCLAT) had approved the demerger of RGPPL’s LNG business into KLPL. The debt restructuring will involve dividing RGPPL’s existing loan of Rs 90 billion into sustainable, which the company will service, and unsustainable, which will be converted into cumulative redeemable preference shares (CRPS). The sustainable loan will be repaid over a 10-year period with an interest rate of 10%, down from the earlier 13%. Canara Bank, which had an exposure of Rs 4 billion, had filed two separate cases against RGPPL and KLPL under Section 7 of the Insolvency and Bankruptcy Code (IBC), which had taken the other banks in the consortium by surprise and delayed the resolution plan. The Dabhol Power company, which is now called RGPPL, was set up in 1992 as a joint venture between Enron as a majority shareholder while GE and Bechtel were minority shareholders. But the construction and operation of the plant were in news for corruption involving political parties, both in India and the US. The central point of the controversy was over the pricing of power, which fixed at Rs 8 per unit was exorbitant compared to the hydroelectricity power, which was at just Rs 0.35 a unit. The power purchase agreement was signed with the Maharashtra State Electricity Board (MSEB). In 1999, the plant began producing energy, but by 2001 MSEB stopped paying for the power and sought to cancel the power purchase agreement. After Enron ran into scandals in the US and finally filed for bankruptcy there, the Dhabhol plant stopped production. In 2005, it was taken over and revived by converting it into RGPPL, a company owned by the government. The loans and equity were later bought by a consortium of lenders and MSEB, GAIL and NTPC in 2005. The Konkan-based power plant ran into trouble in 2013 after lower natural gas output from Reliance Industries’ KG D6 basin hit production. Current shareholders of the RGPPL is National Thermal Power Corporation (25.51% stake), GAIL (25.51%) , MSEB (13%), IDBI Bank (12.50%), SBI (10%) and Canara Bank (2.15%).
Haldia Petrochemicals to invest in a Rs 78,000 crore hydrocarbon processing complex in Odisha
Odisha has cleared a Rs 78,225 crore investment proposal by Haldia Petrochemichals towards a hydrocarbon processing complex in Balasore, an official in the state’s industry department said. The state’s single window system cleared the proposal. It will be given a go-ahead by the state’s High Level Committee chaired by Chief Minister Naveen Patnaik soon. The project, which comprises a light crude refinery, aromatic complex and ethylene crackers complex, is an enhanced investment commitment from HPL, whose initial proposal of Rs 28,700 crore was cleared in March. “HPL had come back to the state on its own with comprehensive and enhanced investment proposal,” the industry department official said. The project, an endorsement for Naveen Patnaik’s Make in Odisha effort, includes a 1.080 polyethlene unit, a 1.6 mtpa unit of paraxylene, and 1.25 mtpa of purified terepthalic acid (PTA). Odisha expects Haldia to anchor downstream processing industries, as the company has done in its plant in East Midnapur, in West Bengal. HPL will work with the state government to develop downstream units and an ecosystem in the region. “It has been agreed to make adequate quantities of ethylene and propylene, and C4 streams such as Butene-1 and butene-2 shall be made available for downstream units. Common utilities such as steam, compressed air, industrial gasses, power etc shall also be made available to downstream players,” said the official. HPL has also promised to rope in “a global oil and petrochemicals company as a strategic partner who will provide the feedstock supply security and be an equity partner.” The project cost of the first phase is pegged at Rs 52,900 crore, with Rs 15,886 crore as equity and Rs 37,014 crore in debt. Odisha Industrial Infrastructure Development Corporation (OIIDCO) has identified 2391.82 acres of land in Balasore, near the upcoming Subarnarekha port that is being developed by Tata Steel. About 900 acres of this is forest land and 300 acres is held privately.
Numaligarh Refinery to foray into crude exploration in Assam
North East India’s largest refiner Numaligarh Refinery Ltd on Thursday said it has firmed up plans to diversify into exploration of crude oil within the next few months. The Mini Ratna PSU’s board has already given its nod for an initial investment of Rs 150 crore for the diversification and the company has sought approvals for commencing exploration in two blocks in Assam along with other partners. “This is the first time NRL is getting into exploration. We have already received our board’s approval for this and in view of initial risk involvement, they have earmarked Rs 150 crore for the initial exploration purposes,” NRL Managing Director S K Barua told in an interview here. The company will pump in more money if oil is found in the two blocks, he said. The company has identified Namrup block in Dibrugarh and Mesaki in Tinsukia districts for foraying into an exploration of crude. “By October this year, we are likely to get government approvals for the two blocks. Then by early next year, we will start exploration works,” Barua said. Asked about the other partners, he said Oil India has 70 percent stake in Namrup block, while NRL has 20 percent and private player Hindustan Oil Exploration Company (HOEC) owns 10 percent. “In Mesaki, Oil India holds 70 percent stake and NRL, Indian Oil Corporation (IOC) and Bharat Petroleum’s wholly-owned subsidiary Bharat PetroResources Ltd (BPRL) own 10 percent each,” Barua said. Oil India will be the operator of the two blocks, he said adding that once oil is detected during the exploration process, drilling will be done. The NRL currently has one refinery in Golaghat district with an installed capacity of three million metric tonne per annum (mmtpa) and is importing crude to make it fully operational due to shortage of the raw material in Assam and north east region. The NRL is expanding its existing capacity to nine mmtpa at an investment of Rs 22,594 crore, which includes a 1,398 km crude oil pipeline from Paradip to Numaligarh and a 654 km product pipeline from Numaligarh to Siliguri. The company was set up in accordance with the provisions made in the historic Assam Accord and has been conceived as a vehicle for speedy industrial and economic development of the North Eastern region. Bharat Petroleum Corporation (BPCL) has 61.65 per cent stake in NRL, while Oil India and Assam government have 26 percent and 12.35 percent holding respectively. The present authorised capital of the company is Rs 1,000 crore and paid up capital is Rs 735.63 crore. The company’s product range includes LPG, naphtha, motor spirit, aviation turbine fuel, superior kerosene oil, high speed diesel, raw petroleum coke, calcined petroleum coke, sulphur, wax, nitrogen, mineral turpentine oil, special boiling point spirit, and liquid sulphur.
HPCL plans rapid vehicle-battery swap program
Bracing for a future with less-polluting fuels, Indian oil refiner Hindustan Petroleum Corp is planning a pilot program for swapping batteries of electric two- and three-wheelers at its outlets by December, according to people familiar with the matter. The initiative is aimed at helping the company maintain its grip on a segment of the mobility market that’s rapidly shifting to cleaner power sources, said the people, who asked not to be identified because the plans aren’t public. The ultimate capacity of the program hasn’t been decided. An HPCL spokesman wasn’t immediately able to comment. Two- and three-wheelers account for about two-thirds of HPCL’s gasoline sales, said the people. Those two types of vehicles now make up more than 80% of all autos on Indian roads, according to BloombergNEF. Their electric versions have achieved parity with gasoline vehicles in terms of total cost of ownership and are expected to lead electrification of transport in India, according to BNEF’s latest Electric Vehicle Outlook. The swap program, which will take place in the city of Thane in India’s western Maharashtra state, will allow consumers to replace depleted batteries with fully charged ones in just a few minutes. That’s a quicker option for motorists than recharging the battery themselves, which can take several hours. The pilot is among several HPCL initiatives to cater to electric vehicles, which include charging stations at seven of its retail outlets as of March and a plan to work with Tata Power to set up more. The speed of adaption of electric vehicles and consumers’ changing fuel preferences may be a risk to the motor fuel business, HPCL said in its annual report. Indian startups including Sun Mobility and Lithion Power Pvt. are currently providing battery swapping services for two- and three-wheelers and some buses. Last year, Finnish utility Fortum Oyj’s India unit and Sweden’s Clean Motion launched a battery swapping pilot near New Delhi. HPCL also isn’t the only Indian fossil fuel-focused company adapting to the influx of electric vehicles amid the transition to cleaner power. State-run NTPC Ltd. and Bharat Heavy Electricals Ltd. have also announced plans to set up electric vehicle chargers.
India increases oil and gas bidding window to three times a year
In a bid to increase participation in India’s ongoing oil and gas bidding rounds held under the Open Acreage Licensing Programme (OALP), the government has now increased the Expression of Interest (EoI) submission cycle to three times in a year from two times earlier, Directorate General of Hydrocarbons (DGH) said in a notification. “In view of recent policy reforms and changes aligned to promote ‘Ease of Doing Business’, the EoI submission cycle is increased from two to three times in a year,” DGH said. According to the revised EoI submission cycle; the first window for submission will now start from 1 April to 31 July, second from 1 August to 30 November, and the third from 1 December to 31 March every year. The fourth window of EoI submissions for oil and gas fields ended on 15 May 2019 and according to the information provided on DGH’s EoI submission portal, the government has received seven bids under the fourth round. Moreover, the government had earlier in February 2019 modified the Hydrocarbon Exploration and Licensing Policy for enhancing domestic exploration and production of oil and gas. However, the amendments in the policy would be effective from the fourth OALP round. According to the new reforms notified on 28 February 2019, the contractor will now have full marketing and pricing freedom for crude oil and natural gas to be sold at arm’s length basis through a transparent and competitive bidding process. Also, exploration blocks would be bid out exclusively on the basis of exploration work program without any revenue or production share to the government in category-I and category-II basins where presently no commercial production has commenced. However, royalty and other statutory levies will continue to be charged on the contractor. For unallocated/unexplored areas of producing basins (category-I basins), the bidding will continue to be based on revenue sharing basis but with more weightage to work programme (70 per cent weightage to work programme and 30 percent weightage to revenue share). An upper ceiling of 50 percent on biddable revenue share at higher revenue point has also been prescribed, besides other amendments. The government has, under the first three rounds of OALP, awarded 87 oil and gas fields to private and public entities. According to the DGH, the fifth EoI submission window which commenced on 16 May in the current year has now been extended up to 30 November 2019.