Dabhol power set to cost below Rs 3

Mumbai, Jan 18 | Updated: Jan 19 2007, 05:30am hrs
Despite constraints in the availability of sufficient gas at an affordable price, the centre is exploring various options to maintain the per unit tariff of the Ratnagiri project, formerly Dabhol project, below Rs 3.

However, The Ratnagiri Gas & Power Pvt Ltd (RGPPL), which has taken over the project since October 2005, would be in a position to run only two blocks of 740 MW each on gas/LNG, keeping the third block of 740 MW idle from April onwards. RGPPL is expected to soon ink an agreement with Petronet LNG for the supply of 1.2 million tonnes annually for the next two years.

This however, is not sufficient to run all three blocks of the project, which is currently operated on naphtha.

The centre is looking at various options such as low return on equity, extending depreciation benefit and allowing the Petronet LNG to pool its gas/LNG supply for the purpose of gas pricing.

Power secretary RV Shahi told FE that the financial restructuring would be done by exploring these options so that the per unit tariff would work out to less than Rs 3.

Shahi said he would soon hold a meeting with ICICI Bank and other lenders for carrying out financial restructuring of the project. Shahi admitted that this issue was discussed at length on Wednesday at the meeting of the empowered group of ministers (EGOM), headed by the external affairs minister Pranab Mukherjee.

Maharashtra, which currently draws 740 MW from RGPPL at Rs 5.10 per unit, has contended that it would stop purchasing power from April next if the tariff is above Rs 4. Maharashtra has an adhoc arrangement till March only.