RIL may buy Dabhol?s LNG unit
1-Jan-1970

Pending the per unit power price war, the Dabhol power project, owned by a NTPC-GAIL joint venture company, Ratnagiri Power & Gas Ltd (RPGL), has now become a bone of contention between the power and petroleum &natural gas ministries. This time the issue is Dabhol?s Liquefied Natural Gas (LNG) terminal, where a high powered group of ministers (GoM) has overruled the objections raised by the power ministry on outright sale of the terminal with support from the petroleum ministry.

Disclosing this, a highly placed power ministry source said, ?Apart from rejecting our objections, the petroleum ministry has suggested during the meeting that Dabhol should buy gas from Krishna-Godavari Basin (KG Basin) owned by Reliance Industries Ltd (RIL) at $5 per mmbtu. This, they say, will reduce the cost of power generation to Rs 2.30 per unit, which was fixed originally.?

The power ministry along with RPGL had originally suggested that to ensure long term supply of LNG to the plant, equity participation in the terminal could be offered to any player interested in supplying the gas to the plant, said the source.

Meanwhile, the source said, since RIL had evinced interest in buying the terminal outright, it had, probably, been the reason for rejecting power ministry?s original proposal.

Moreover, the power ministry contends that if LNG terminal is sold outright, it will affect the synergy of the plant. The ministry also says that outright sale will affect Dabhol?s future revenue stream, as the current terminal has capacity and facility to merchandise 2.9 million ton (MT) of LNG, which can be increased by three more MT.

Under the circumstances, RPGL favours offering around 40 per cent stake in the terminal operation at a cost of Rs 1,000 crore and this could be enough incentive for long term tie-up for LNG supply, said the source.

The power ministry has also argued that if RIL buys the terminal outright and supplies gas to the plant at $5 per mmbtu, it will again raise the gas pricing issue, as both RIL and NTPC are having a spat over gas price, which is sub judice.





Source: The Statesman, New Delhi, October 14, 2006
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