Govt to sell Dabhol's LNG to Petronet LNG  

The government is considering selling Dabhol Power Plant's LNG terminal after hiving it off from the electricity generating unit, due to delays in completion of unfinished part of the terminal and huge cost-overruns, a top Power Ministry official said.

Ratnagiri Gas and Power Pvt Ltd, the GAIL-NTPC joint venture which owns the Dabhol plant, had estimated at Rs 710 crore the cost for completing 15 per cent of the balance work on the 2.5 million tonnes LNG import and regassification terminal when they took over the Enron-owned plant last year.

"The terminal needs an additional Rs 1,000 crore," the official said. Together with the transfer cost of Rs 1,790 crore the total cost of the LNG unit would come to about Rs 3,500 crore, a price in which a new 7.5 million tonnes per annum LNG plant can be built.

The official said Cabinet Secretary B K Chaturvedi at a review meeting on August 21 observed that the LNG terminal may be hived-off and sold to Petronet LNG Ltd, which would also be responsible for sourcing of liquefied natural gas.

As per the asset transfer agreement, the Indian lenders were to bear the additional cost for completing the terminal.

"Such a huge cost overrun is not acceptable for the lenders," he said, adding that the LNG plant was to be completed by 2007 but now would only be commissioned in July 2009.

Besides, GAIL has not made much progress in sourcing of LNG for the power plant. At the meeting, the state-run gas utility informed it was close to contracting 1.2 mtpa LNG from Algeria at a price more than 7 dollars per million British thermal unit (mBtu).

Source: The Financial Express, Mumbai, August 24, 2006
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