Power ministry seeks basic minimum gas supply for Dabhol from oil ministry

Move comes at the back of key lender of the project, ICICI Bank, taking up the issue of project's inablility to repay loan

The power ministry has written to its oil counterpart, seeking the minimum gas supply required to operate the beleaguered 1,967-Mw Dabhol power project in Maharashtra, which has been languishing for want of fuel. The move follows ICICI Bank approaching the government over the project’s inability to repay loans.

 

Last month, Chanda Kochhar, ICICI Bank’s managing director and chief executive, had written to Power Minister Jyotiraditya Scindia, saying the Rs 8,500-crore loan to the project could turn sour for lenders, as the plant was running at just three per cent capacity and was unable to pay loan instalments.

 

“We had written to the oil ministry earlier on the issue. Now, we have written again, asking it to find a way in which gas can be made available to this plant so that it can at least operate on a minimum liability basis. We are waiting for the petroleum ministry to respond,” Ashok Lavasa, additional secretary in the power ministry, said on the sidelines of an event on Thursday.

 

He added currently, no gas was being supplied to power plants from KG-D6, the Reliance Industries-operated field off the Andhra coast, owing to the sharp fall in output, and the priority accorded to the fertiliser sector by the government.

 

However, an empowered group of ministers had recently decided to cap supply to the fertiliser sector at the current level. It had also directed all new gas available through the next three years to be supplied to the power sector.

 

The Dabhol project came into existence in 2001, after the government took over US Energy major Enron’s mothballed plants and an adjacent gas shipping terminal that went bust. Now, the plant is owned and operated by Ratnagiri Gas and Power Projects Ltd, a joint venture of state-run gas utility GAIL and power generator NTPC.

 

The project requires about 6.5 million standard cubic metres per day (mscmd) of gas to run at 85 per cent capacity and repay loans. Supply to the plant dropped to 0.6 mscmd, before coming to a grinding halt after March 1, 2013, as it was decided the fertiliser sector would be given priority, compared to the power sector.