Govt may sell Dabhol LNG terminal to Rel, GSPC

Government is considering selling Dabhol power plant's liquified natural gas import terminal to firms like Reliance Industries or Gujarat State Petroleum Corp who can keep fuel cost of the power plant low by pooling costlier imported LNG with their cheaper domestic gas.

"The Empowered Group of Ministers last month considered hiving off the LNG terminal but no decision has been taken as yet," a top official said. Ratnagiri Gas and Power Project Ltd, the new owner of Dabhol, has not been able to tie-up long term LNG supplies as cost of power from LNG costing $10-10.5 per million British thermal unit would be Rs 4.40 per unit.

Considering the present global LNG market, it is expected that the new long term supplies would be at a higher price than what RGPPL can absorb. The LNG terminal can be operated profitably by an organisation which has both low cost gas as well as new LNG import contract so that they can be blended.

The official said the government has brought down the cost of electricity to Rs 2.83 per unit after pooling the $10-10.5 per mBtu price of 1.5 million tons short-term LNG for Dabhol with Petronet's existing imports from Qatar to get a delivered price of $5.84 per mBtu.

"In the long term, gas from Krishna Godavari fields of Reliance and GSPC will cost $4.40 per mBtu (the same price as Petronet's Qatar imports). This can be pooled with imported LNG to give Dabhol affordable fuel," he said.

Reliance has already expressed interest in taking over the LNG terminal of Dabhol while GSPC has intentions to build two import terminal on the west coast. Petronet's Qatar imports are being used to subsidise Dabhol fuel cost as Petronet will be sourcing 24 cargoes of LNG to meet Dabhol plant's short term fuel needs.

Currently, five million tonnes per annum of LNG being sourced by Petronet LNG from Qatar is sold to end consumers at around $4.6 per mBtu.

Source: The Economic Times, New Delhi, February 12, 2007
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