Dabhol plant may not get LNG supply soon

Minister of state in the Prime Minister's Office (PMO), Prithviraj Chavan, returned from Oman earlier this week without any concrete assurance on supply of gas for the Ratnagiri Gas and Power (RGPPL), the erstwhile Dabhol Power Company.

This is bad news for the state, which is facing a severe power shortage to the tune of 4,500 mega watt (mw).

The Maharashtra government is banking heavily on the generation of 750-mw of power from the Dabhol plant, which is expected to restart by the end of May this year. RGPPL plans to start power production during peak demand hours on the naphtha stored in the plant.

It is slated to resume full-fledged production from July or August, when supply of the gas is ensured.

After RGPPL started scouting for gas all over the world, Oman LNG dashed off a protest letter to the PMO for not keeping them in the loop.

Oman LNG was the original gas supplier to the erstwhile Dabhol Power Company (DPC), which reportedly "owed" $1.1 billion to the gulf-based company. Oman LNG also offered to supply the gas on spot purchase basis.

Following this, a team of officials led by the Union power secretary R V Shahi visited Oman but returned empty-handed. Chavan visited Oman last week but failed to achieve any breakthrough or get an assurance on the supply of gas.

Sources in the Union cabinet said, "First of all, there was no progress on the issue of settling the $1.1 billion due to Oman LNG by the erstwhile DPC. As gas is sold in the international market on the basis of long-term contractual arrangements, there is hardly any gas left with Oman LNG for India. They could only offer India gas which might not be lifted by the parties with whom Oman LNG has already entered into long-term contracts."

Besides, spot price of gas is expensive. Economically too, it doesn't make sense to run a power plant on such gas, as neither prices are known nor supply is assured, sources added.

Another team of officials from the petroleum and power ministries is likely to visit Oman by the end of this month.