No takers for first expensive electricity from Dabhol

Vol 9, PW 18 (15 Dec 05) People & Policy

One of the key issues holding up a formal contract to resume work at Dabhol is who will buy the power produced from liquid fuel used for testing the power station.

Liquid fuel of some kind will have to be used during testing. Fuel is abundantly available but because of current high global oil prices the power produced will be much more expensive than the Rs2.50 per KwH that the Maharashtra State Electricity Board is willing to pay.

MSEB must first agree to buy the power. This will be the biggest expense during the start-up period, we hear.

All other expenses are relatively small. At Dabhol, the power station is about, 99% complete.

The unloading arm of the LNG jetty is incomplete and one of the tanks has no roof. Completing the LNG facility will take, at least one year.

Till then the power station will have to be run on (expensive) naphtha or distillate. GAIL or NTPC cannot afford to produce power at Rs2.50 per KwH with liquid fuel.

Who will pay the difference if MSEB wont pay more than Rs2.50 Indian authorities are accused of bluffing about the true status of the project. They say theyll bring gas to Dabhol right away, we hear.

Will they carry it on their heads to the power station Lack of unanimity also surrounds the start-up date when Dabhol will actually begin generating power. A finance ministry source tells this report that, with some hard work, the first block will be ready for operation by May 2006.

A senior power ministry source retorts that the target to begin power generation from the first block is July 2006. The target remains and we are on schedule.

Elsewhere, we can report some progress in securing LNG for Dabhol. Power secretary RV Shahi led a team to Oman on 19th and 20th November to discuss LNG supply.

Oman has agreed in principle to sell spot LNG to Dabhol, we hear. The quantity and time are still being worked out.

On 9th December, Oman LNG and Ratnagiri Gas & Power signed a confidentiality agreement to enable Oman LNG to pass on spot cargoes to Dabhol as and when they become available.