POWER PLAY

Calcutta, Nov. 4: Lenders to Ratnagiri Gas and Power Private Ltd, the erstwhile Dabhol Power Company, have sought the intervention of the Reserve Bank of India (RBI) in classifying the loans given to the company as standard assets.

Senior banks in the lenders? consortium said in the normal course, the loans would become standard assets since these were taken over by a new entity.

?However, a problem arose when almost all lenders classified the assets as stressed. Provisions were made for these loans, which became sub-standard assets under Reserve Bank?s prudential norms,? an official from a bank that lent to Dabhol Power Company said.

?We are looking into the matter. A decision will be taken soon,? RBI officials said.

Banks had begun setting aside provisions on loans to the erstwhile Dabhol Power Company from 2002. The lenders include Industrial Development Bank of India, ICICI Bank, State Bank of India, IFCI and Canara Bank.

Converting the loans into standard assets will imply reversing the provisions made for the project, sources said. ?The lenders require clearance from the Reserve Bank for such a move,? they added.

The reclassification of the loan assets to the 2,184-mw project will, however, have major implications for the lenders? bottomlines.

A senior IDBI official said the reassessment will result in raising the profits of lenders. Moreover, this will help lower the sticky assets of banks and FIs involved in the project. ?We are waiting RBI?s approval,? the official added.

Banks and FIs have together lent Ratnagiri Gas and Power around Rs 7,000 crore, after the buyout of foreign lenders? loans in the project. Officials said only the domestic loan component of the project is being treated as a sub-standard asset.

Foreign lending to the project is backed by sovereign and deferred payment guarantees provided by the domestic FIs in the project.

Bank officials also said the fear of Dabhol loans slipping back into the delinquency category was much lesser now. ?We are equity-holders, no doubt, but since both NTPC and GAIL are involved, we do not foresee the loans slipping into the NPA rut again,? officials said.

The IDBI-led consortium, NTPC and GAIL each holds a 28.33 per cent stake in RGPPL. Maharashtra State Electricity Board has 15 per cent stake in the company.

The completion cost of Ratnagiri Gas and Power has been pegged at Rs 10,303 crore, which include both revival and completion of phase I. The unit will generate 1,444 mw of power.