Maharashtra changes stance on Ratnagiri LNG facility

In a major twist to the ongoing Ratnagiri power project (previously known as the Dabhol project), the power starved Maharashtra government, has given its consent for hiving off the LNG terminal and regasification with the capacity of five million tonnes, which is under construction at the project site. Due to the Maharashtra government's backtrack, GAIL India and NTPC, which hold 28.3% stakes in the Ratnagiri Gas & Power Pvt Ltd (RGPPL), Mukesh Ambani controlled Reliance Industries (RIL) and Gujarat State Petroleum Corporation (GSPC) are expected to be front-runners for taking over the LNG terminal and regasification facility.
The facility will enable the owners to generate power and also sell excess gas in the market.

The state government, at a meeting of the empowered group of ministers (EGOM) on March 19 and 20, headed by external affairs minister Pranab Mukherjee, had categorically opposed such a move. Lenders to the project -- IDBI and ICICI Bank --- had initiated this move. The state government had argued that it would pump in about Rs 500 crore for the completion of LNG and regasification facility and thereafter take over control.

Curiously, both GAIL India and NTPC had also offered to take over the facility. The EGOM had directed GAIL India, NTPC and the state government to submit their proposals in this regard.

GAIL India had sought its board's approval to invest Rs. 500 crore and take over the LNG terminal.

RIL and GSPC have been overt in their desire to take over the LNG facility. Now, the issue would come up for discussion along with other matters relating to the project at the meeting of EGOM scheduled for April 27.

Power ministry sources told FE, ?Lenders had first mooted the idea to hive off LNG terminal as it would bring down the revival cost and also the tariff by some extent. However, the state government had opposed it. Of the five million tonnes per annum gas storage facility, 2.1 million tonnes per annum would be needed for the project with full generation capacity of 2,150 mw.

However, the owner of the LNG and regasification facility will have an advantage of selling the balance 2.4 million tonne of gas in the market. GAIL India is eyeing this facility since beginning and with its recent tie up with RIL it can use the LNG and regasification and stand to benefit the most .?

Meanwhile, the EGOM is expected to pull up GAIL India for further delays in completion of the Dahej-Uran-Dabhol pipeline. GAIL India had earlier committed that the pipeline would be complete by March end.

Source: The Financial Express, Mumbai, April 27, 2007
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