The problems with the Dabhol power project never seem to end. Though its two units generate nearly 1,300 mw, that is nowhere near what was envisioned, largely due to technical flaws in the turbines supplied by GE. The now re-christened Ratnagiri Gas & Power Pvt Ltd (RGPPL) expects the third unit to come on stream by early April. Though this could help mitigate Maharashtra?s power shortage, issues pertaining to operations, project completion cost and corporate governance still remain unresolved. The finance ministry, in a scathing letter to the power ministry, made a strong pitch on behalf of lenders to the project that the completion cost (including mandatory spares and contingents) be frozen at Rs 2,364 crore. RGPPL, which has owned the project?s assets since October 2005, needs to recognise the interest liability, post the originally envisaged commercial operation dates, as a firm liability in its book of accounts and not contingent liability. The finance ministry is of the view that lenders would not absorb indefinite or open-ended increases in completion cost. Although lenders have made a commitment to undertake suitable financial restructuring in the event of an increase in completion costs, a waiver of interest or loan is not part of that commitment.
However, NTPC, GAIL and the Maharashtra government?stakeholders in RGPPL?have a different view. They feel the additional cost should be borne by lenders under the common term loan agreement. At present, the committee of secretaries is examining the issue following a direction from the empowered group of ministers (eGoM) led by Pranab Mukherjee. That apart, the Centre and RGPPL need, once and for all, to take a decision on hiving off the LNG terminal facility at the project site. Though the eGoM has indicated that this was considered earlier, it needs to back RGPPL so that a clear signal can be sent out to the private sector, which has time and again been expressing a desire to take over the terminal?and, indeed, the entire project. Moreover, the Centre will have to quickly take a decision on expanding the project?s capacity to 5,000 mw from the present 2,150 mw. An additional investment of Rs 10,000-12,000 crore will be needed for this purpose, dependent on the availability of long-term fuel. Until these issues are resolved, there appears to be no end in sight to the Dabhol saga.
