The 50:50 joint venture of Whessoe-Punj Lloyd sent a notice of default on March 16 to RGPPL, the owner of the 2,150 MW power plant as well the adjacent unfinished five million tonnes LNG receipt facility, for clearing all payments due against work already completed.
The JV has threatened to take legal action against RGPPL in Singapore and remove its equipments from the site if the payments are not made by April 2, official sources said.
The Punj Lloyd spokesperson was not available for comments. RGPPL has paid only Rs 68 crore (Rs 680 million) against Rs 317 crore (Rs 3.17 billion) worth of work executed on LNG jetty and dredging.
"Bills worth Rs 265 crore (Rs 2.65 billion) are pending with RGPPL," a source said. The JV was awarded a Rs 500 crore (Rs 5 billion) contract for completing the jetty facilities in June last year with a target date of July 2007 for completion. Besides, Rs 51 crore (Rs 510 million) of dredging work and Rs 15 crore (Rs 150 million) of marine work was also awarded.
When RGPPL, a joint venture of NTPC Ltd, Gail (India), IDBI-led lenders and Maharashtra State Electricity Board, took over the Dabhol project in 2005, only one of the three power blocks was in operational condition and the LNG terminal was 85 per cent complete.
RGPPL requires Rs 450 crore (Rs 4.5 billion) for revival of power plants and Rs 565 crore (Rs 5.65 billion) for the LNG works, but the cash-starved company, which has been running on loans from financial institutions, does not have the money to pay the contractors, the sources said.Sources said RGPPL has been delaying payments since the beginning of the contract in June last year. In fact, the first payment, which was due in October 2006, was delayed too.
Moreover, both Punj Lloyd as well as Whessoe have been running a cash flow deficit on this particular project as payments have been delayed, the sources said, adding the British company has also stopped supplying the material.
PFC, which was to give loan to RGPPL for payments, and main promoters NTPC and GAIL have so far not made any commitments on clearing the dues, the sources added.
While FIs are reluctant to infuse more money into the project, a solution mooted to tide over the crisis was to ask Gail to inject Rs 500 crore for the LNG terminal. In return, Gail was promised the first right to buy the terminal in case it is sold after hiving off.
Meanwhile, the revival cost for the entire project has already shot up to Rs 12,595 crore (Rs 125.95 billion) from Rs 10,300 crore (Rs 103 billion) at the time of RGPPL taking over Dabhol assets. The revival cost has gone up from Rs 870 crore (Rs 8.70 billion) to Rs 1959 crore (Rs 19.59 billion), while the interest during construction amounts to Rs 1,200 crore (rs 12 billion).
The delay in payments and Punj Lloyd's threat to walk out could further push the date of commissioning of the two power blocks. At present, RGPPL is running a 740 MW Block II on naphtha and expects to make the other two blocks operational in July and November this year to achieve full capacity.
The plant will shift to gas as feedstock once GAIL commissions the pipeline connecting the plant to Petronet's Dahej LNG receipt terminal in the first quarter of 2007-08.
Petronet will import 24 cargoes of spot LNG at Dahej and supply six million standard cubic meters of gas per day till September 2009 for the power plant.
The contracts for Dahej-Uran pipeline as well as the Dabhol-Panvel pipeline were also awarded by Gail to Punj Lloyd last year.
While the Dabhol-Panvel pipeline contract is worth Rs 164 crore (Rs 1.64 billion) and is to be completed by May this year, the Dahej-Uran pipeline contract was worth Rs 138 crore (Rs 1.38 billion) and is to be completed by April this year.
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