When it does MSEB will buy 80% of the power

Vol 10, PW 4 (15 Jun 06) Midstream & Downstream

Despite hiccups with commissioning, MSEB officials tell us they fully intend to buy the vast bulk of power generated by Dabhol but only if it is gas generated.

Once gas-based generation starts, says a source, we propose to buy 80% of the electricity. GAIL and NTPC-owned Ratnagiri Gas are confidently telling MSEB that Dabhol should begin receiving LNG supplies from November or December this year.

Whether it can meet this self-imposed deadline is far from clear. Whatever, MSEB officials say they plan to enter into a long-term power purchase agreement with Ratnagiri Gas for power from Dabhol in line with similar (13-year) agreements it has with NTPC for power from its other plants.

MSEB has submitted an application to the state electricity regulator for approval to buy electricity from Dabhol at Rs4.25 per KwH. In India, the Dabhol power plant carries mega power status, which means it must meet certain criteria before the regulator can approve the MSEB proposal.

For instance: MSEB must invite competitive bids for power supply; Dabhol should export some of its power outside Maharashtra; and (crucially) the federal electricity regulator should approve the price. Once these criteria are met, the state regulator will define the quantity of power to be purchased from Dabhol on a daily and monthly basis.

If the MSEB proposal passes the regulators, it will buy between 35m and 40m units of electricity every day. On one issue MSEB is emphatic: power must be generated from gas not naphtha.

Electricity produced from naphtha, believes MSEB, would cost Rs7 per KwH whereas from LNG - even if the delivered price of gas is $10 per mmbtu it would be Rs4 per KwH. In preparation for full commercial production, MSEB is gearing up to lay one more line to evacuate power from Dabhol to add to the three present lines.

This fourth evacuation line, we hear, is to take care of the redundancy factor. Work on the transmission line from Dabhol to Nagothane across several hills and valleys will start after the rains.