At Rs 1,957 cr, Dabhol to cost twice the estimate

The completion of the Dabhol project has been pegged at Rs 1,957 crore as compared to Rs 878 crore which was originally estimated by Tractable in 2003. The rise is largely due to the increase in service tax and additional interest during construction and delays in the commissioning of gas pipelines.

Ratnagiri Gas & Power Pvt Ltd (RGPPL), which owns Dabhol assets, said that the increase in cost was also because of changes in the work scope. The work scope considered by Tractable was incomplete as it was based on a visual inspection of five days with no definite details of the balance work and procurement and it assumed that all the material had been ordered and delivered on site.

RGPPL sources told FE, "Project lenders will provide the necessary funds needed to bear the additional burden." Sources admitted that the rise in cost was also because of delays in the completion of the project largely due to the slow pace at which the gas pipelines were being laid and the LNG regasification facility.

Sources said that the power ministry recently discussed this issue at length with the empowered group of ministers. RGPPL, which had restarted block II 740 mw from October 31, had indicated that the LNG facility would be completed by March next year. However, it would not include the breakwater which would be completed only in 2009.

Block III 740 mw is expected to be commissioned in March and block I, which was damaged after operating during May 1999-June 2001, will be commissioned in June next year. This would depend upon the availability of LNG.

For short-term LNG supply, Petronet LNG has confirmation from Rasgas of Qatar for 1.2 million tonne per annum from March 2007 to June 2009 at an indicative price of Henry-Hub's 12 months average, which is estimated to be in the range of $8 per million British thermal unit.

Source: The Financial Express, Mumbai
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