Ratnagiri Gas, electricity board in power purchase agreement

Maharashtra State Electricity Distribution Company Limited (MSEDCL), or Mahavitaran has signed a power purchase agreement with the Ratnagiri Gas and Power Private Limited (RGPPL) around Rs 3.10 per unit of power. RGPPL will sell 95 per cent power generated to Maharashtra and the remaining would be sold to customers outside the state.

While the variable cost of Rs 2.12 has been assumed to be the cost of gas per unit, the fixed cost component is 98.5 paise. The fixed cost, however, is subject to further review and finalisation by the Centre and the state government as both parties disagree on the fix cost.

"Since the supply of gas for the project has been tied up for the next two years, the price of power is not likely to vary largely during the period. However, an annual increase of 5 per cent in gasification cost of liquefied natural gas (LNG) and fluctuation in dollar prices could affect prices. As of now, 1.5 million British thermal unit of gas has been tied-up formally with Petronet. The price of gas for the third unit has not been fixed. This, too, could affect price of power in the long run," said Ajay Bhushan Pandey, managing director, MSEDCL.

These prices will come into effect only when gas would be available to RGPPL. As of now, one unit of one block of RGPPL is running on naphtha, a costlier fuel that has compelled RGPPL to buy power at Rs 5.50 per unit.

Gas is expected to arrive at RGPPL by the end of May this year, once the Dahej-Uran-Dabhol pipeline is in place. Problems near Surat in Gujarat have impeded the completion of this pipeline on schedule, the end of April, 2007.

On the other hand, RGPPL expects to begin production of 750 megawatt of power from gas by beginning of May, 2007.

The remaining units which would produce 700 Mw each, are expected to go onstream on July 1 and December 15, respectively. The total production is expected to be 2,150 Mw by the end of this year, said S B Agarwal, MD, RGPPL.

While MSEDCL has been spending close to Rs 120 crore per month, on an average, to buy power produced from naphtha by RGPPL, the switch to gas would mean an annual bill of Rs 4,500 crore for MSEDCL, at 80 per cent plant load availability, Pandey informed.