Dabhol power plant to produce electricity at Rs 2.83 per unit

The beleaguered Dabhol power plant in Maharashtra will produce electricity at Rs 2.83 per unit from June this year after the Government decided to use Petronet LNG Ltd's cheaper imported LNG to subsidise the plant's costlier fuel.

The 1.5 million tons (24 cargoes) of LNG being sourced to meet Dabhol plant's short-term requirement (till September 2009) cost $10 to 10.5 per million British thermal unit (delivered), resulting in generation cost of Rs 4.40 per unit.

"Since this is too high a price, the Petroleum Ministry suggested pooling of price of short-term LNG being imported for Dabhol with Petronet's existing import of 5 million tons of LNG from Qatar," a top official said. Currently, 5 million tons per annum of LNG being sourced by Petronet LNG from Qatar is sold to end consumers at around $4.6 per mBtu.

"After pooling the two prices, the delivered cost of gas to Dabhol would be $5.73 per mBtu (without customs duty on imported LNG) and $5.84 per mBtu (with customs duty). The variable cost of electricity generation will be Rs 1.83 per unit and Rs 1.87 per unit respectively," the official said.

Added to this would be Re 1 per unit fixed cost. The Power Ministry wanted to sell electricity generated from Dabhol at Rs 3.40 per unit, using the incremental revenue to fund completion of LNG import and regassiciation terminal, adjacent to the power plant.

The 5 million tons import facility needs Rs 3000 crore to become operational but the Empowered Group of Ministers, earlier this month, shot down Power Ministry's idea. The official said, Petronet has been given the responsibility of procuring 1.5 million tons per annum of LNG on spot basis for 'short term' supplies (lasting up to September 2009).

"Up to September 2009, LNG will be re-gasified by PLL at its Dahej plant in Gujarat and gas would be transported through a new pipeline connecting Ratnagiri to Dahej," he said. Ratnagiri Gas and Power Pvt Ltd (RGPPL), the new owner of Dabhol plant, will source long term LNG for the 2,184 MW power plant.

RGPPL is owned by National Thermal Power Corp (NTPC) and GAIL (India) Ltd. The pool pricing would mean that Petronet LNG's existing customers will have to pay over $1.2 per mBtu more from June/July this year.

Source: The Hindu, New Delhi, January 30, 2007
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