The Dabhol power project, once an iconic foreign venture, is on the brink of turning into a non-performing asset--or a bad loan for bankers--after it defaulted in clearing its dues to lenders, who have refused to either lend more or accept a government proposal to convert their debt into equity. The project has been lying idle since December as gas supply has come to a halt, resulting in no revenues to pay monthly installments on bank loans, estimated to be close to Rs.8,500 crore.
The bankers have taken the tough stand after the project failed to pay its installment for June, estimated to be about Rs.108 crore. Ratnagiri Gas and Power Projects Ltd, an equal joint venture between state-run generation utility NTPC and gas company GAIL that owns the project, have told lenders it has no money to pay unless Maharashtra state utility pays its dues.Lenders have now made it clear that they have no option left but to declare the company a defaulter since they have reached the limit of funds they are allowed to lend to one project. They have also refused to accept the proposal to turn the loans into equity--a move that will save the company from paying EMIs but will choke lenders from getting any return on their money.
Bankers, however, said that they cannot be asked to take on the burden every time.
The bankers have taken the tough stand after the project failed to pay its installment for June, estimated to be about Rs.108 crore. Ratnagiri Gas and Power Projects Ltd, an equal joint venture between state-run generation utility NTPC and gas company GAIL that owns the project, have told lenders it has no money to pay unless Maharashtra state utility pays its dues.Lenders have now made it clear that they have no option left but to declare the company a defaulter since they have reached the limit of funds they are allowed to lend to one project. They have also refused to accept the proposal to turn the loans into equity--a move that will save the company from paying EMIs but will choke lenders from getting any return on their money.
Bankers, however, said that they cannot be asked to take on the burden every time.
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