M?rashtra to buy Dabhol power at Rs 5.01 a unit

After a gap of more than four months, the Dabhol power plant will be restarted by mid-November. The Maharashtra government has agreed to buy power from the project at Rs 5.01 a unit following acute shortage in the state.

Ratnagiri Gas and Power Private Ltd (RGPPL), the new owner of the Dabhol project, and Maharashtra State Electricity Distribution Company will sign an agreement for this purpose by Wednesday.

At a hearing on Tuesday, the two sides informed power regulator-the Central Electricity Regulatory Commission (CERC) that Maharashtra would buy up to 700 mw of power from Block-II of the plant, which will run on imported naphtha. The total cost of power comes to Rs 5.01 a unit, which comprises Rs 4.71 as capacity charges and Rs 0.30 as incidental charges.

The agreement will include a mechanism for fuel price escalation. In case naphtha price increases in global markets, the additional cost will be pass-through and the state will buy power even if the tariff crosses Rs 5.50 a unit.

Naptha will be imported by state-owned oil firm, Indian Oil Corporation (IOC) within ?four weeks?. Block-II, which was shut down in July, this year, after being operational for two months during May-June, will generate power from the middle of next month till March 2007.

IOC will have to import 380,000 tonne of naphtha for RGGPL to operate the 740 mw Block-II for five months till march next year. However, as there is lack of adequate storage facility at the project site, IOC may import only 60,000 tonne in the first tranche.

While Block-II of the project will be restarted in mid-November, the other two blocks of similar capacity are likely to be started by April and June next year, when LNG is expected to be made available by Petronet LNG from RasGas of Qatar.

While agreeing to the arrangement arrived at by RGGPL and MSEDCL, CERC also warned the state utility against overdrawing from the national grid at low frequency.

Source: The Financial Express, New Delhi
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