No immediate relief for Ratnagiri gas and power

There seems to be no immediate respite for Ratnagiri Gas and Power Private Ltd (RGPPL), erstwhile Dabhol project. 

 

Procurement of  imported gas is the  only option for the power project  as the Maharashtra government has not submitted  any plan or consented to purchase power from the plant at higher price. According to officials close to the development, the meeting last week was inconclusive as  there was no  proposal sent from Maharashtra Government. 

 

On the other hand, the power plant could procure costly  imported gas  to generate power only if the state government signs  a power purchase agreement  to buy the power so generated at  the higher price.  The proposal of the power project seeking domestic natural gas at administered price ( APM ) available under priority allocation  to fertilizer sector has not found favour.

 

Meanwhile  the request of the state run State bank of India and ICICI bank  not to turn the account into a non performing asset has also been put on hold. According to officials,  this will require a commitment from the state government to procure power from the said power plant first .

 

An eGoM decided to form RGPPL in July 2005 to revive and operate the assets of Dabhol Power Company, after erstwhile owner exited.

 

There were many options mulled  but  none of them is yet to be conclusive.

 

One of the options was to  include RGPPL along with fertiliser units in the overall gas quota for priority sector. In this case, the power plant may get around 3 mmscmd of gas. Due to paucity of domestic natural gas, the priority allocation was maintained only for the fertilizer sector.

 

RGPPL has been facing shortfall of gas from the Krishna Godavari (KG) D6 block since September 2011. After that, gas allocation was modified and the power station was allocated 0.9 mmscmd from ONGC marginal fields (through GAIL), and another 7.6 mmscmd from KG-D6. From March 2013, there was no supply from RIL-operated East Coast fields.

 

According to reports, the power plant requires gas in multiples of 1.4 mmscmd to be able to run each gas turbine. For ensuring debt servicing and operating and maintenance expenses, RGPPL requires to run at least four out of the six gas turbines on a continuous basis.

 

The other  option was  to pursue with Maharashtra, which buys electricity from the project, to purchase electricity generated from R-LNG (imported gas) for ensuring the project’s viability and pay the corresponding fixed cost. However this is stuck as the state government is yet to finalise the PPA, according to sources. 

 

RGPPL’s annual fixed cost of the power business is about Rs. 2,000 crore and it requires close to Rs. 1,500 crore for debt servicing and operation and maintenance costs.