Dabhol gas terminal not to be hived off

The much-delayed liquefied natural gas (LNG) terminal at the Dabhol power plant in Maharashtra will not be hived off into a separate entity, an empowered group of ministers (EGoM) has decided.

The ministerial group, headed by External Affairs Minister Pranab Mukherjee, has instead set up a committee to look into how the cost-overrun for the under-construction terminal and the associated breakwater will be financed, a senior official in the petroleum ministry said.

The Dabhol project will need around Rs 2,000 crore more for completion, of which around Rs 1,300 crore will be needed to complete the LNG terminal and the breakwater.

The 2,700-Mw power plant is being implemented by Ratnagiri Gas and Power Pvt Ltd (RGPPL). Gas utility GAIL India and National Thermal Power Corporation (NTPC) are the majority shareholders in RGPPL, each having a 28.3 per cent stake.

The committee, comprising secretaries from the power, petroleum and finance ministries, will decide on who would bear how much of the incremental costs of the plant. "Lenders have committed another Rs 500 crore. It is yet to be decided at what rate the debt would be raised," an RGPPL official said.

Both GAIL and NTPC have already injected Rs 500 crore each in the project. The Maharashtra State Electricity Board, which owns around 12 per cent in RGPPL, has also agreed to put in an additional Rs 300 crore in the project. Moreover, lenders have also waived Rs 466 crore debt that the entire project has incurred, the oil ministry official said.

The thinking now is that the LNG terminal, which will have a capacity of 5 million tonne per annum (mtpa), is an integral part of the power plant at Dabhol.

The power plant, when it starts producing electricity at full capacity, will require 2.1 mtpa of LNG.

"The remaining 2.9 mtpa of LNG will be available for merchant sale. The company controlling the LNG terminal may be given that benefit," the official said.

The terminal and breakwater are scheduled to be completed in early 2010. GAIL is talking to various suppliers for sourcing LNG for the plant through a long-term contract.

"We are looking at various options and are confident the LNG will arrive by April 2010," GAIL Chairman and Managing Director UD Choubey said.

At present the plant is producing 630 Mw of electricity from one of its three production blocks. A second block is likely to start production later this month, while the third block is expected to begin production early next year.

The electricity is being sold to Maharashtra State Electricity Distribution Company at Rs 3.10 per unit.