Dabhol plant set to see better days this year

The beleaguered Dabhol power plant in Maharashtra is set to start producing cheaper power from the second half of this year. An empowered group of ministers (eGoM) has allowed Petronet LNG to sell gas to Ratnagiri Gas and Power Pvt Ltd at $5.85 per million British thermal unit (mmBtu), translating into a generating cost of Rs 2.87 per kilo watt hour (kwh) from June this year.

At present,only one740Mw unit is functional at Dabhol. Power from the unit is sold at over Rs 5 per kwh, as the feedstock used is naphtha, which is more expensive than gas. "Of the three units (atDabhol), two units totalling 1,500 Mw will start operating on gas from April," Petroleum Secret:aJy MS Srinivasan said on the sidelines of an international energy conference.

Petronet LNG will sell gas to Ratnagiri Gas and Power Pvt Ltd at $5.85 mmBtu, translating into a generating cost of Rs 2.87 per kwh,from June this year of an international energy conference.
Industry players, however, say April is too early a date as GAIL India's Uran-Dabhol feeder pipeline is likely to be ready only by May. Farmers along the route are opposing the pipeline, which has delayed its commissioning. The other pipeline from Petronet LNG's Dahej terminal to Uran is ready.

The cost of gas and power generation was arrived at after the eGoM allowed Petronet to pool the price of its cheaper Qatar LNG with expensive spot cargoes being imported for the power plant. Srinivasan said Petronet LNG would import 1.5 million tonne of liquefied natural gas per annum through 24 spot cargoestwo cargoes a month - for the Dabhol plant.

A senior government official said Petronet customers would have to pay $1.25 per mmBtu more under the poolingmechanism, so that the Dabhol plant could generate electricityatRs2.80per kwh. Petronet currently supplies 5 million tonnes of LNG bought from Qatar's RasGas at a delivered price of $4.60 per mmBtu.

The Qatar supplies, which began in 2004, are priced at $2.79 permmBtu, while the spot purchases are made in the range of $7-8 per mmBtu.

Source: Business Standard, New Delhi
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