Ratnagiri Gas and Power Private Ltd (RGPPL), commonly know as Dabhol project, will supply 500 MW power to Indian Railways at a fixed price of Rs 5.5 per unit for a period of five years beginning April 1, 2017.
This comes as a breather for the beleaguered project as it was earlier supplying power with the support under Power System Development Fund (PSDF).
The government has been providing subsidy to gas-based plants to buy expensive LNG to run their projects till March 31, 2017. The scheme is unlikely to be continued further.
"At the stroke of midnight hour, Ratnagiri gas power plant will breathe a new life with initiation of power purchase agreement with Railways," Power Minister Piyush Goyal tweeted yesterday.
A senior official said that all arrangements for supply of 500 MW power to Railways are in place which includes gas supply agreement with with state-run GAIL for supply of gas at a fixed price for five years.
Besides the power-purchase agreement for supply of 500 MW of power with Railways in five states provides for smooth flow of electricity to the various points.
Railways and RGPPL has signed an agreement for supply of 500 MW of power to Railways at fixed price of Rs 5.5 per unit for five years starting from midnight of March 31, 2017, the official said.
This is win-win arrangement for both as Indian Railways will get assured supply of power at a fixed and firm price for next five years free from any risk of rise in fuel price. Moreover this will also ensure the sustained operation of RGPPL power plant and servicing of its debt, the official said
The official further informed that under new arrangements demerger of power plant and LNG terminal into two separate companies is planned and all the stakeholders have approved that.
The GAIL will supply the LNG to the plant at a fixed price for five years. This will also ensure construction of brake water facility for expansion of capacity of LNG terminal, the official added.
The company has its plant located at village Anjanwel in Ratnagiri district of Maharashtra nearly 330 km from Mumbai. The picturesque project site is spread over almost 1,700 acres of hilly coastal terrain.
NTPC and GAIL are the promoters of the company which hold 25.51 per cent equity each in the RGGPL.