Faced with massive cost overrun, the government is mulling over selling five million ton a year LNG import facility adjacent to the beleaguered Dabhol power plant after hiving it off from the project.
A Committee of Secretaries headed by Cabinet Secretary K M Chandrasekhar on August 8 asked Financial Services Secretary Arun Ramanathan and Power Secretary Anil Razdan to rework financials of Dabhol and explore hiving off the LNG terminal.
Official sources said Finance Ministry was concerned over the increase in completion cost of the project and had been seeking freeze on the investment needed for completion of the power unit and the LNG plant.
The completion cost, which was estimated at Rs 870 crore when Indian lenders and a consortium of NTPC and GAIL took over the 2,150 Mw gas-fired power plant, was put at Rs 1,960 crore in September 2006 and has now been further revised to Rs 2,144 crore, excluding Rs 220 crore for mandatory spares.
Interest during construction (IDC) has gone up from Rs 683 crore to Rs 2,413 crore.
The lenders had absorbed increase in cost by waiving IDC of Rs 466 crore and were willing to accommodate an additional sum of Rs 455 crore, sources said.
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They added, the CoS was, however, of the view that the option of hiving off LNG terminal needs to be explored as it was likely to be a major financial burden on the finances of the company till its completion in 2011.
CoS desired that a suitable agreement could be entered into to safeguard the interest of Ratnagiri Gas and Power Pvt Ltd - the new owner of Dabhol - regarding option of use of the LNG terminal even after it hive off.
Dabhol needs only 2.1 million tonne LNG out of the terminal capacity of five million tonne.