Lenders insist hike in Dabhol power tariff to Rs 8 per unit

Written by Sanjay Jog | Mumbai | Updated: Feb 13 2009, 05:08am hrs
Evenwhen the country is witnessing quite competitive per unit tariffs for ultra mega power projects (UMPPs) ranging between Rs 1.19 and Rs 2.77, the per unit tariff of the troubled Dabhol power project will be risen to Rs 7.60-8 from the present level of Rs 3.01, if the lenders to the project press for it.

Indian banks and financial institutions, which have an equity of 28.33% in the 2,150 mw project, has insisted that the fixed cost component of the per unit tariff be increased by Rs 3.60 from the present level of Rs 1.01 due to rise in the revival cost to well over Rs 12,500 crore from Rs 10,300 crore and also because of increase in the interest during construction. The variable cost will be Rs 3 to 3.40 considering the gas prices. The rise in the tariff will help Ratnagiri Gas & Power Pvt Ltd (RGPPL) to servie debts. Maharashtra, which is so far the sole buyer, has expressed its inability to draw round the clock power from Dabhol project at the proposed tariff of Rs 7.60 to Rs 8. Instead, Maharashtra has asked RGPPL to sell the power to other states and recover the money. Maharashtra, whose monthly outgo for the drawal of 10,000 mw is Rs 1,600 crore, will have to shell out another Rs 400 crore if Dabhol tariff is risen to Rs 7.60 to 8. The plant is generating only 600 mw and it expects to reach to 1,800 to 1,900 mw and not 2,150 mw by June. However, in view of delays in the restoration of damaged turbines, this is unlikely. As reported by FE, already the per mw capital cost has risen to Rs 6 crore.

RGPPL sources told FE on Wednesday Lenders have already asked the RGPPL to freeze the cost and they have declined to share additional burden. Besides, RBI has asked lenders to declare their exposure in the Dabhol project as distress assets. The Canara Bank has already done so. Lenders suggest that the rise in per unit tariff is the immediate answer otherwise RGPPL will soon incur cash loss and turn toxic asset.

RGPPL sources noted it would not be possible to freeze cost due to the cost of turbine charged by GE which has supplied 9FA turbine. These turbines and rotar are tripped or damaged frequently and GE is not favour of either giving any guarantee of spares or entering into a comprehensive services and maintenance agreement with RGPPL.