Expansion of Dabhol power station on hold

Vol 13, PW 20 (25 Mar 10) Midstream & Downstream

Ratnagiri Gas has delayed plans to expand its 2150-MW capacity Dabhol power station by another 1500-MW until Maharashtra state authorities promise to buy some of the additional electricity that will be generated.

PETROWATCH learns Ratnagiri Gas managing director AK Ahuja met Maharashtra chief secretary JP Dange on March 17in Mumbai to seek an â€کassurance letter’ before moving forward with the Dabhol expansion plans. “Dange gave no clear assurance,â€‌ says a Ratnagiri Gas source, “but said the state cabinet would make a decision within the next few days.

â€‌ Ratnagiri Gas wants a written assurance that the Maharashtra state government will buy between 30% and 50% of the additional proposed 1500-MW to be generated from Dabhol using R-LNG bought at “prevailing market prices.â€‌ In Delhi, the power ministry is heavily backing the Dabhol expansion and wants it to become the largest gas-based power station in India.

“The union power secretary spoke with the Maharashtra chief secretary before Ahuja’s visit,â€‌ we are told. “He advised him to provide the assurance and argued that even though Dabhol would start its additional generation using LNG, those supplies could later be replaced or supplemented by cheaper domestic gas which would lower the costs.

â€‌ Ratnagiri Gas tells us a formal letter from Maharashtra state authorities is crucial for it to receive bank loans for the estimated Rs6000cr ($1.3bn) expansion. Work was to commence this month and the inauguration, which was to be attended by power minister Sushil Kumar Shinde and oil minister Murli Deora, was scheduled for March 22.

But it has now been postponeduntil Maharashtra gives its written assurance. Ratnagiri has also been promised 6m cm/d gas from GAIL to fuel the proposed additional 1500-MW.

This gas will be sourced at “prevailingâ€‌ prices, we learn. Ratnagiri Gas is a joint venture between GAIL, NTPC and the Maharashtra state government.