Dabhol power to cost more

Electricity from the Dabhol power project in Maharashtra, which is likely to restart from July 2006, will cost Rs 2.50 to Rs 2.75 a unit, 20 per cent more than previous estimates, as natural gas prices have firmed up.

Gail, which has been tasked with sourcing of fuel to fire the plant, anticipates the price of liquefied natural gas (LNG) for the project to be in the range of $4.5 to $5 per million British thermal unit (mbtu), implying a tariff in the range of Rs 2.50 per KiloWatthour (kwh) to Rs 2.75 per kwh (unit).

"When the restructuring process was initiated, the cost of crude oil was $34 per barrel as compared to the current price of $60 per barrel. The LNG market is presently very tight and is expected to case only from 2009 onwards," Gail said in a presentation to the empowered group of ministers (EGOM) on September 8.

Gail had previously estimated a generation cost of Rs 2.30 per unit as it was confident of sourcing LNG for $3.65 per mbtu. Sources said, so far LNG has only been tied for phase-I (740 mw) from Qatar, at a rate which will translate into a final tariff of around Rs 2.50 per unit.

Ratnagiri Gas and Power, the special purpose vehicle promoted by Gail and the National Thermal Power Corporation for takeover of the Dabhol project, would import 0.64 million tonne per annum of LNG in 2006, which would go upto 2.83 million metric tonne per annum (MMTPA) in 2007 and 5 MMTPA from 2008 onwards. The power plant (740 mw phase-I and 1444 mw phase-II) requires 2.1 MMTPA and the balance 2.9 MMTPA would be used for merchant sale, sources said.