RIL keen to supply gas for Dabhol project

The jinxed Dabhol power project may get another shot at revival, with the petroleum ministry assuring it that Reliance Industries Ltd (RIL) expressed interest to supply LNG to the plant.

"The petroleum ministry has assured us of gas or LNG supplies starting end of March 2007," Power Secretary R V Shahi told reporters on the sidelines of a power ministers' conference.

Sources said RIL had also expressed interest in supplying 6-8 mmscmd of gas beginning second half of 2008.

The gas from RIL is proposed to be supplied through the 1,385 km-long Kakinada-Bharuch pipeline. The government had in September asked the petroleum ministry to evaluate various options, including sourcing gas from RIL for the project, which was shut down in July due to monsoon, besides lack of naphtha to run the plant.

It was re-started on November 1, but only the 740 Mw Block-II of the 2,184 Mw project is being run on imported naphtha as the new promoters, GAIL and NTPC Ltd, have not been able to tie up on natural gas. With naphtha, the cost of generation is likely to be more than Rs 5 per unit.

Petronet LNG Ltd is in dialogue with Qatar for sourcing 1.2 million tonnes per annum of LNG next year, but price remains an issue.

The petroleum ministry has also been asked to tap supplies of gas from ONGC, Cairn Energy and British Gas for the project. The ministry had been given a month to conduct a feasibility exercise, they said.

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Regulator delayed

The setting up of the much-awaited Petroleum and Natural Gas Regulator is likely to be postponed till March 2007. The Act for setting up the regulator was notified in April 2006 and a chairman was expected to be in place by December 2006.

The delay is holding up investments in the gas sector. British Gas, for example, has been waiting for clearance to expand its city gas networks in Gujarat and Mumbai through its subsidiaries Gujarat Gas and Mahanagar Gas.

"There are investments to be made, but we are just sitting and waiting," said Sanjeev Jagtiani, head, regulation, British Gas.