Dabhol revival faces gas crunch

Maharashtra Chief Minister Vilasrao Deshmukh met Petroleum Minister Murli Deora today to request for alternative sources of gas for the state's Ratnagiri plant.

Deshmukh said if no gas sources were tied up soon, the Dabhol power plant in Maharashtra would be run initially on naphtha. The Dabhol plant will be restarted in the second half of 2006.

While Deora admitted that LNG was hard to find in global markets, Deshmukh said the commissioning of the second phase of the Ratnagiri plant might get delayed a bit, from the early June schedule set by the government earlier.

"It looks like the start-up will be delayed," Deshmukh said.

State-run GAIL and National Thermal Power Corporation (NTPC)-owned Ratnagiri plant have not been able to tie up LNG for the 2,184 Megawatt (Mw) plant.

"It looks like it will have to be run on naphtha. Maharashtra is facing power shortage to the order of 4,500 Mw and we have requested that the plant be run on naptha for three to four hours every day to at least meet the peak demand," Deshmukh said.

However, naphtha as a fuel may turn out to be expensive. It costs at least double the landed cost of LNG and will push up the cost of electricity generation. The plant had used naptha earlier too, when it was shut down four years back.

"The cost of power will be more than the price of Rs 2.80 per unit (Kwh) agreed earlier. But there is no alternative. We are currently buying power from NTPC's Kawas plant at Rs 7.50 per unit," he said.

Murli Deora said the government was starting talks with Qatar for the supply of more LNG. A government contingent will visit Qatar next Monday, to hold talks regarding the issue.

More than five months after Dabhol's previous owners settled their claims with Indian authorities, the present owner Ratnagiri Gas and Power has not been able to revive the project, whose 740 Mw Phase-I was shut four years ago following a payment dispute.

General Electric and Bechtel, the power plant's earlier contractors, had agreed to help GAIL-NTPC complete the project, but no contracts had been signed as LNG had not yet been tied-up, a senior official said.