Ministries lock horns over Dabhol project

The erstwhile Dabhol power plant, rechristened Ratnagiri Gas and Power Private Limited (RGPPL), is caught in a tug-of-war between the ministry of petroleum, keen on hiving off the LNG terminal of the plant, and the ministry of power, which is against it.

The ministry of petroleum, which oversees the natural gas business in the country, is keen on the hive-off, which would make both the power and the gas operations of the 2,164 Mw gas-fired coastal power plant viable.

Officials of the RGPPL claim they have not been consulted in the matter at all. A top RGPPL official said, "We don't know anything about the LNG plant being hived off. No one, neither the ministry of power nor the ministry of petroleum has been in touch with us."

The petroleum ministry has already commissioned the ICICI Bank to evaluate the plant. Officials of the bank were not available for comment on the issue.

RGPPL is structured as a joint venture between the NTPC and GAIL, with the NTPC operating the power plant and GAIL responsible for the LNG plant.

When the plant was taken over by the Indian government, the LNG facility was only partially complete, with the bulk of the work on the jetty and storage tanks being incomplete, while the regassification plant was around 70 per cent complete. The total cost of completing the LNG plant was estimated at Rs 2,000 crore.

With Petronet LNG offering up to 15 per cent equity to gas majors from Oman and Qatar, the pressure on the ministry to hive off the LNG facility at Dabhol has gone up several notches.

Sources in the power ministry said the Petronet move would place it in a better position to make an offer for the LNG plant if it has already tied up for gas supplies. Petronet is offering equity to gas companies that will give up to 5 MTPA of gas.

Maharashtra may fall back on Dabhol

In a related development, senior Maharashtra government officials admitted that given the state's power situation they may have no choice but to buy Dabhol's expensive power.

The Central Electricity Regulatory Commission had approved RGPPL's tariff at Rs 6.50 per unit and allowed it to sell power to other off-takers if Maharashtra could not buy power.

With power from the eastern grid becoming unavailable to the state and the eastern and northern grid connectivity diverting power to the northern states, the state's deficit is expected to cross 4,500 Mw in the approaching agricultural season.