Govt finds LNG costly, opts for gas to fire Dabhol
The cabinet secretary has asked the petroleum ministry to explore the possibility of long-term fuel supplies by domestic companies such as Reliance Industries (RIL), ONGC, British Gas to make power generated by the Dabhol power plant affordable.
By Rajeev Jayaswal & Soma Banerjee, TNN |
NEW DELHI: LNG may not fire the Dabhol power plant after all. The cabinet secretary has asked the petroleum ministry to explore the possibility of long-term fuel supplies by domestic companies such as Reliance Industries (RIL), ONGC, British Gas to make power generated by the Dabhol power plant affordable.
The government is now veering around to the view that the plant cannot be sustained on LNG as it would tend to be both a volatile and expensive fuel. Domestic gas on the other hand would be both cheaper and stable in supplies.
With RIL set to begin gas production from the KG basin in ’08, the government has now asked RIL to see if gas can be fed to the Dabhol power plant as well. This is for the first time that the government is now talking of natural gas as a fuel instead of LNG. LNG can, however, be taken as a back up fuel in the short term.
Both the power ministry and Ratnagiri Gas and Power (RGPPL), the owner of erstwhile Dhabol Power Plant, are willing to offer up to 40% stake to any domestic oil firm along with Petronet LNG (PLL) in hived-off LNG terminal to ensure long-term fuel supply. They believe that 40% equity stake in the terminal is enough to incentivise the fuel supplier for a long-term commitment, an official said.
It is estimated that 40% equity stake in the hived-off LNG terminal would cost little over Rs 1,000 crore to prospective partners. It has been suggested that Dhabol should buy gas from KG Basin at $5/mmbtu which translate into a tariff of Rs 2.3/unit.
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RGPPL has said that the LNG terminal is one of the important parts of the power project. It will help the company to generate additional revenue as additional capacity of the terminal could be used for merchandising. Currently, the LNG terminal has a merchandising capacity of 2.9 MT which can be extended by another 3 MT.According to officials the power plant is likely to be completed by ’07. The empowered group of ministers (EGoM), which had taken a stock of the development regarding RGPPL, has been informed that one block of 740 MW power generation capacity would be able to function from November ’06. The plant will use naphtha as fuel. Two other blocks of similar capacities are expected to be completed by mid-’07 and end-’07.
The short-term import of gas for the power plant is also expected to start from mid-’07 through the pipeline connecting PLL’s Dahej terminal to Dabhol. The pipeline will be completed by March ’07.
The EGoM, headed by defence minister Pranab Mukherjee, includes power minister, agriculture minister, petroleum minister and planning commission deputy chairman Montek Singh Ahluwalia.
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