Gas for Dabhol power station not likely till September

Vol 10, PW 22 (08 Mar 07) People & Policy

Dabhol power station will have to wait several more months before using regassified LNG to generate badly needed electricity for Maharashtra.

This report learns the Enron-promoted power plant will not begin receiving R-LNG supplies from April as originally planned by Maharashtra state authorities and the power ministry. Gas supplies are likely to begin from September this year.

Till then Dabhol has no choice but to continue using expensive naphtha, particularly during Maharashtra’s peak summer demand period from mid-March to early June. Clear indications of this can be seen in a note from power secretary Anil Razdan to revenue secretary KM Chandrasekhar on 19th February.

Razdan wants Chandrasekhar to allow Dabhol to continue using tax-free naphtha beyond 31st March this year. Writes Razdan: “I would request that the notification granting waiver of customs duty and countervailing duty on naphtha for the Ratnagiri Gas project at Dabhol be further extended beyond 31st March 2007 up to September 2007 by which time adequate gas supplies are expected to be available for the plant.

â€‌ Razdan points out that this move “would be a vital stop gap arrangement to avoid shutting down the Dabhol power plant and ensuring uninterrupted power supply to Maharashtra.â€‌ He says, “there would be no extra financial implication as a result of extending the exemption beyond 31st March 2007, since its primary fuel, LNG, has already been exempted from payment of customs duty.

â€‌ Dabhol’s inability to receive R-LNG until September is directly linked to delays in completion of the Dahej to Uran and Dabhol pipeline by GAIL, which should have been ready to carry R-LNG from Dahej to Dabhol by 31st March. Resistance by farmers in Maharashtra and Gujarat has delayed the project.

Razdan defends GAIL by saying it had already warned cabinet ministers overseeing the project that there could be a 60-day delay, forcing Maharashtra to announce that Dabhol will run on naphtha after 31st March this year.