Dabhol project contractors angry over unpaid bills

Vol 11, PW 1 (17 May 07) Midstream & Downstream

GAIL is hard at work to finish the Dahej to Dabhol gas pipeline but construction activity at the incomplete Dabhol power station and LNG terminal has almost ground to a halt because of unpaid bills to contractors.

Dabhol’s power station and LNG terminal is owned and operated by state-owned Ratnagiri Gas and Power, a joint venture between GAIL and NTPC. In May 2006, Ratnagiri Gas hired India’s Punj Lloyd and UK’s Whessoe to complete the LNG terminal and â€کtopsides’ of the marine facilities.

But an industry source tells us the consortium has completed only 65% of the work it was assigned. “Work has almost halted since December 2006 because Ratnagiri Gas is not paying bills,â€‌ we hear.

Also hit by unpaid bills is Dutch marine contractor Van Oord. One unconfirmed report says Van Oord has issued a â€کwinding up notice’ to Ratnagiri Gas to recover its money.

A Ratnagiri Gas source confirms that Van Oord has completed its work but is yet to be paid. “They have not issued any notice to us,â€‌ says Ratnagiri, “but they have agreed to give us some more time.

â€‌ A Van Oord spokesman in India declined to comment, citing client confidentiality. Dabhol’s unpaid contractors are impatiently waiting for the Rs500cr ($111m) that GAIL was directed by Delhi to contribute to Ratnagiri Gas during a federal cabinet sub-committee meeting on 5th May.

“GAIL has not given the money to Ratnagiri Gas even though contractors have sent in several requests for payment,â€‌ we hear. Even if money comes in now and the unpaid bills are settled, work cannot be resumed because the monsoon rains are just two or three weeks away.

Ratnagiri Gas tells us that early this month the 740-MW Block-II of the power station was completed, “and is now generating â€کinfirm’ powerâ€‌ from naphtha. â€کInfirm’ power is generated to keep a power station running for a short period to meet short-term requirements.