Work on Dabhol LNG terminal losing momentum

Vol 13, PW 11 (05 Nov 09) Midstream & Downstream

With luck, moves to increase installed capacity at the Dabhol power station will boost work at the adjacent LNG terminal.

Under the Ratnagiri Gas joint venture, GAIL is responsible for the LNG terminal, while NTPC oversees the power station. But according to GAIL, work on the LNG terminal, in particular plans to dredge the 8-km long, 300-metre wide shipping channel leading to the LNG tanker berth has come to a grinding halt, because partner NTPC no longer has an appetite for LNG imports.

Back in August, Gammon India won the estimated Rs97cr ($21m) dredging contract, but has still not been formally awarded by the Ratnagiri Gas board. One reason could be that NTPC is happy with D6 gas, which has been fuelling the Dabhol power station since September 30, and no longer wants LNG.

But if installed capacity at the power station doubles to 5000-MW, as recommended by power secretary Brahma (see above) future LNG imports are inevitable. Yet NTPC appears determined to cut corners, come what may.

“The NTPC representatives in Ratnagiri Gas,â€‌ says a source, “are trying to see if dredging of the shipping channel and similar start-up costs can be loaded onto the cost of the first LNG cargo that will be brought in.â€‌ Surprised, GAIL is clearly telling NTPC that industrial customers won’t accept a R-LNG price that includes elements of the LNG terminal commissioning cost! GAIL must also contend with Maharashtra state authorities.

Ajoy Mehta, managing director of state-owned Maharashtra State Power Generation Company, sole customer for Dabhol electricity, wants a fixed upper limit on the value of the dredging contract. This is difficult, we hear, as dredging costs depend on the amount of silt and rock to be removed.

“No bidder will give an upper limit,â€‌ says Ratnagiri Gas, “because nobody knows how much silt and rock needs to be dredged.â€‌

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