| Govt allots RIL gas to Dabhol plant | |
| BS Reporter / New Delhi December 5, 2008, 0:59 IST | |
 The government has decided to allot gas to the Dabhol power plant in Maharashtra from the Reliance Industries’ gas block in the Krishna-Godavari (K-G) basin on a priority basis, giving it the same preference as the supplies to fertiliser plants, the petroleum ministry said in a statement.
The ministry also clarified that the gas would be sold at $4.2 per million British thermal unit (mBtu).
Anil Ambani group company Reliance Natural Resources Ltd (RNRL) and Reliance Industries are fighting a case in the Bombay High Court over the supply and pricing formula for the K-G gas. One of the RNRL arguments is that the $4.2 per mBtu price is not a selling price but can only be used to value the government’s share of the gas.
The next hearing of the case is scheduled on December 11.
The government’s allocation to the Dabhol power plant means it will have to buy gas from Reliance Industries at $4.2 per mBtu. This comes at a time when NTPC, a promoter of the power plant, is fighting a case against Reliance Industries for buying gas for two of its plants in Gujarat at a price of $2.34 per mBtu.
The ministry statement said that the policy would be subject to the court’s verdict.
An empowered group of ministers has reworked its earlier gas utilisation policy, which gave top priority to fertliser plants, to allot 1.4 million cubic metres per day (mcmd) of gas to the 2,150 Mw power plant, which is currently generating less than half of its capacity.
The Dabhol power plant, operated by Ratnagiri Gas and Power Pvt Ltd, has never been able to produce electricity at its full capacity due to a combination of reasons, such as lack of gas and failure of its turbines. The plant needs a total of 8.4 mcmd of gas to operate at full capacity but is getting 5.4 mcmd of regassified liquefied natural gas (R-LNG) from Petronet LNG’s Dahej terminal.
“The Dabhol plant is vital for Maharashtra’s power needs. The EGoM (empowered group of ministers) has thus decided to give gas to the plant on priority basis,” said a senior official in the petroleum ministry.
Reliance Industries is scheduled to begin producing gas from the D6 block from January 2009 with initial production of around 15 million cubic metres per day (mcmd). Production would be scaled up to 40 mcmd over the next 3-4 months and then to a peak level of 80 mcmd by the end of 2010.
The gas utilisation policy is for the first 40 mcmd of gas.
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