The trouble-prone Dabhol power project of Ratnagiri Gas and Power Project Ltd (RGPPL) has hit another roadblock — lapsed insurance cover.
The insurance cover for Block 1 of the 2,150-megawatt (Mw) plant has already expired, while the remaining two blocks will lose their cover in May this year.
The company is ready to commission a repaired turbine for Block 1, but cannot do so. “We cannot run the turbine as it belongs to Block 1 of the project, the insurance cover for which has already expired,” said a senior RGPPL official.
The 300-Mw turbine was shipped by RGPPL earlier this year from Singapore, where it was sent for repair at a GE workshop. The company had expected to raise the plant’s generation from 600 Mw to 900 Mw after making this turbine operational in addition to the two functioning currently. But the lack of insurance for the machine played spoilsport.
The Dabhol Power company, originally owned by Enron, morphed into RGPPL after it was taken over by a consortium of public sector banks, the Maharashtra government, GAIL India Ltd, NTPC Ltd and financial institutions.
There have been six major turbine failures at the plant since the project’s revival in 2005.
The repeated failure of turbines has made insurance companies wary of extending insurance cover to the plant. “No company is willing to provide insurance cover for the plant,” the official had said earlier.
The company is, however, in talks with insurance companies to get the turbine insured and have it running, the official said.
The issue is serious as the power generation in Block 1 is already stalled and with the insurance cover of the other two blocks expiring soon, the generation from the plant can come down drastically in the coming months. This in turn would mean additional power cuts for Maharashtra, which is already reeling under a monthly power shortage of over 4,600 Mw.
At the beginning of the current financial year, RGPPL had planned to generate about 10,000 million units (MUs) of power. However, frequent tripping of GE-supplied turbines forced it to scale down its projections by more than half.
This would also result in increased revenue losses for the company, which is already grappling with an annual revenue loss of over Rs 500 crore.
Experts say that making available insurance for the machines installed at Dabhol should be a priority for the government, even as providing insurance for a revived project might push up the tariff a bit.
“It is worth considering as costly electricity is still better than no electricity,” said Kuljit Singh, head of transaction advisory services, Ernst & Young. “Already new power capacities are not going to come up for some time because of the ongoing financial crisis,” he added.
This also comes at a time when GE, which has supplied six gas turbines to Dabhol, has agreed to start negotiations on the Contractual Service Agreement for the project, according to official sources.
