ICICI Bank raises Dabhol loan alarm

NEW DELHI: ICICI Bank has raised alarm over loan default by the Dabhol power plant after being rendered idle due to dwindling fuel supplies, indicating the severity of a situation that threatens to turn thousands of crores of rupees given to gas-fired generation projects into bad debt.

In a letter to power minister Jyotiraditya Scindia, ICICI Bank managing director Chanda Kochhar has said lenders have some Rs 8,500 crore exposure in the project that operated at merely 30% capacity in 2012-13 and is barely spinning at present. "Consequently, the company is struggling to meet its debt service obligations to lenders," Kochhar said.

Dabhol is one of the showcase business rescue missions the Centre carried out by taking over the mothballed plants and an adjacent gas shipping port after US energy major Enron went bust in 2001. It is now owned by Ratnagiri Gas and Power, a joint venture of state-run gas utility GAIL and generation major NTPC.