Dabhol project plan in limbo due to inadequate gas supply - Ratnagiri Gas & Power wants to increase generation capacity by 2,100 Mw

The proposed expansion of the Dabhol power project under Ratnagiri Gas & Power Pvt Ltd (RGPPL) by 2,100 Mw from the present capacity of 1,940 Mw has been stalled for want of assured gas supply from the KG-D6 gas field, operated by Reliance Industries Ltd, and adequate number of power procuring states.

Ratnagiri Gas & Power Pvt Ltd (RGPPL), which has been controlling Dabhol power project assets since October 2005, is yet to get a formal nod for the supply of KG-D6 gas for the proposed expansion.

So far, only Maharashtra and Dadra and Nagar Haveli, an Union Territory, have only expressed their desire to purchase 750 Mw and 70 Mw, respectively, after the additional generation capacity is added. On the other hand, Gujarat has refused to draw any power after the proposed expansion. This means, RGPPL, a joint venture company between state-run GAIL (India) and NTPC Ltd, would not be in a position to achieve financial closure.

"As of now, against the total generation capacity of 1,940 Mw, the project is able to generate up to 1,600 Mw. RGPPL expects to generate 1,940 Mw by this October. Several rounds of discussion took place at the RGPPL board for expansion of the project. “Initially, it was expected that the project be expanded by 1,500 Mw but now there is an opinion to increase the generation capacity by an additional 2,100 Mw,” an RGPPL official, who did not want to be quoted, told Business Standard.

The equity holders of RGPPL include GAIL India and NTPC (both controlling 29.65 per cent), banks and financial institutions (25.20 per cent), and MSEB Holding Company (15.71 per cent).

The official also admitted that the operation of the plant on imported gas, which may be procured at $10 per million British thermal unit, is not a feasible option either, as the per unit rate comes in the range of Rs 6.50-7.

Currently, the power is by and large procured by Maharashtra at Rs 4 per unit. The RGPPL board had also explored the option of procuring the KG-D6 gas to bring down the rate to Rs 3.50-4, the official informed.