Dabhol project may flame out in 10 days

The Dabhol power project may flame out in ten days as it will run out of naphtha.

The plant's operator "" Ratnagiri Gas and Power Ltd "" has not been able to make arrangements for replenishing its fuel stock and is unlikely to do so at such short notice.

A senior executive in the company told Business Standard: "We have so far been unable to arrange more naphtha at a competitive rate. The plant may, therefore, have to be shut down."

However, the Union power ministry is still hopeful of averting a crisis situation.

A group comprising Power Secretary RV Shahi, Petroleum Secretary MS Srinivasan and officials from the company and NTPC Ltd are trying to work out a short-term solution till the Dabhol LNG terminal gets ready by March 2007.

A senior power ministry official said IndianOil Corporation would import naphtha for the project, a proposal that has not found favour with Ratnagiri Gas officials as they believe that naphtha procured from outside will increase the cost and the time of firing the plant.

"Buying gas from the international spot market would also increase the delivered cost of power to Rs 6.50 or Rs 7 per unit, as compared to the Rs 4.30 per unit using naphtha," the executive added.

Ratnagiri Gas's negotiations with Qatar for LNG supply are also deadlocked. Qatar has made gas supply conditional to the company clearing its previous dues of around Rs 1,000 crore. It has also said that it can deliver gas only at Dahej, which is quite some distance away from the Dabhol site.

"This will require constructing a pipeline from Dahej to Dabhol, which will add $1 per MMBTU to the final price of gas," the executive said.

Originally, the price of power procured by the Maharashtra State Electricity Board was fixed at Rs 2.30 per unit, though it is now procuring it at Rs 4.30 a unit (purchasing gas from spot market could push the rate up to Rs 6.50-7 a unit).

Ratnagiri Gas's problems could be aggravated in the monsoon period when MSEB's peak demand comes down, reducing its shortage from 4000 Mw to around 3000 Mw.

"MSEB may then procure power from cheaper sources at around Rs 5.50 per unit, which is cheaper than the rate offered by RGPL," sources added.