Petronet to feed LNG for Dabhol

Petronet LNG (PLL) will supply 1.5 million tonne liquefied natural gas (LNG) to Ratnagiri Gas and Power (RGPPL), which owns Dabhol project, until September, 2009 at $5.83 per million British thermal unit (MMBTU). The LNG is expected to start flowing from June once the pipeline between Dahej and Uran is completed. PLL will import 1.5 million tonnes of LNG in 24 spot cargoes. The company has, in turn, signed agreement with Oman, Qatar and Nigerian companies to source LNG.

P Dasgupta, CEO and managing director of PLL, confirmed that PLL has signed the agreements to source extra gas for Dabhol. ?LNG will be delivered at $5.83, including sales tax, until September 2009. Once the gas pipeline from Dahej to Uran has been completed in May, the company will start supplying LNG. Before that, RGPPL will have to sign the power purchase agreement (PPA) with Maharashtra State Power Distribution Company (MahaVitaran) for drawing 2,150 MW.?

The PPA is expected to be signed this week as the fixed cost of electricity from the station has been approved by the empowered group of ministers at 98 paise. Accordingly, the per unit tariff is expected to be Rs 3.08 for the power to be drawn by MahaVitaran. MahaVitaran draws 343 MW at Rs 5.10 a unit from Dabhol since the project is being run on naphtha. Sources said MahaVitaran and its parent MSEB Holding are evaluating the price offered by RGPPL and the decision will be taken soon to sign PPA.

RGPPL, a joint venture between NTPC and GAIL India, has been entrusted with the task of running the Dabhol plant. Due to lack of funding, RGPPL is unable to complete the renovation process now. The problems erupted when PFC had stopped the release of the committed fund of Rs 1,400 crore after giving first installment Rs 350 crore. This fund was for the completion of block III, that is supposed to start generation from November.

Subsequently, MSEB Holding had offered Rs 450 crore to RGPPL, but did not disburse the funds. This has delayed the revival of Dabhol?s block-I of 670 MW.

However, the new gas price offered by PLL will give a fresh lease of life to RGPPL, as the international price hovers around $8 per MMBTU. Maharashtra will use 95% of the power produced in Dabhol station and the remaining can be sold to other states as per the mega power project policy.

Source: The Economic Times, March 22, 2007
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