But first they need to revive Blocks I and III

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

Ratnagiri Gas has set itself two key deadlines in June to revive Dabhols Block-I and Block-III.

On 16th June the GAIL-NTPC joint venture plans to issue orders to state-owned BHEL to start revival work on Block-III. The original schedule was to issue the order on 5th June.

However, the 15th June schedule to issue orders to revive Block-I has been deferred. A Ratnagiri Gas source tells us the revival of Block-I has now been linked to the availability of LNG.

So until there is clarity on this, dont expect any action to re-start Block-I. At a review meeting held in Delhi on 19th May, Ratnagiri Gas briefed power secretary RV Shahi on progress to restart both blocks and accused BHEL of missing the 19th May deadline for offers to place orders for spares on both blocks.

BHEL countered that the delay was due to the late arrival of offers from original equipment manufacturer General Electric. GEs offer is expected on 22nd May and thereafter BHEL will submit its offer to Ratnagiri Gas latest by 26th May, we are told.

Ratnagiri Gas should place the Letter of Award for Block-III by 16th June. As for Block-I, GEs offer was expected on 26th May and BHEL was to send this across to Ratnagiri Gas by 30th May.

Ratnagiri Gas plans to run Block-I on LNG but given the present uncertainty about long-term LNG supplies all plans for Block-I revival have been shelved. Ratnagiri Gas had told the review meeting that it has asked BHEL to send in offers on a modular basis for revival of Blocks-III and Block-I.

Offers are being sought on the lines of revival of Block-II as the same was successfully completed within the given targets, we are told. The performance guarantee shortfall shall be reviewed after the revival of Blocks III and Block-I and once the actual performance parameters are known.

Ratnagiri Gas also made a desperate plea at the 19th May review meeting for lenders to release more funds so it could buy additional diesel to fill the gap left by no LNG until early 2007. Ratnagiri Gas said the balance activities of Block-II revival might require Rs162cr ($36m) worth diesel but the lenders have set aside only Rs23cr ($5.1m).

The lenders business plan is based on LNG as start-up fuel, but in view of the current indications of LNG supply and availability by early 2007, a decision is needed to proceed further with the pre-commissioning activities.