The Empowered Group of Ministers (EGoM) today recommended a stop-gap solution to fund the remaining work of the 2,150-mw Dabhol power plant, failing which EGoM chairman Pranab Mukherjee suggested that the project be auctioned. The EGoM agreed to extend the revival and addition of power blocks from the end of March to the end of May. It also asked the public sector Power Finance Corporation (PFC) to lend Rs 400 crore for the repair of one unit of the existing power plant and for setting up the second power block of 700 MW.The PFC, which had sought a 25-year power purchase agreement (PPA) and gas supply agreement (GSA) before pledging its money, would be given financial comfort through a backup guarantee from the Maharashtra State Electricity Board (MSEB). For the LNG project, state-run GAIL (India) Ltd has been asked to examine the option of investing Rs 500 crore for the receipt and re-gasification terminal (minus the breakwater). The company, a co-promoter of Ratnagiri Gas & Power Private Ltd (RGPPL), has been given a fortnight for the requisite board approval. The EGOM also decided to peg the fixed cost of power production at 98 paise per unit from the previous 96 paise, instead of raising it to Rs 1.07 per unit, which had become necessary due to the additional cost of reviving the project.To compensate RGPPL, the EGoM has suggested that it sell 80 per cent of the power at 98 paise to MSEB and the balance 430 MW to PTC India for sale to the highest bidder. The EGoM would discuss this and the issue of a back-up guarantee from the MESB with Maharashtra chief minister Vilas Rao Deshmukh tomorrow, according to sources. The state wants to draw the entire power but does not want to bear the additional burden of increased per unit tariff. The state’s approval is necessary as the MSEB has to sign the PPA. In case this fails, however, Mukherjee has favoured the idea of auctioning the project. Sources said GAIL today signed the GSA with RGPPL, which has taken over the Dabhol assets, and the PPA is likely to be signed between RGPPL and MSEB in a week. With this, GAIL has to sell the gas at a pooled price of $4.93 per million British thermal units (mBtu), averaged by mixing a spot buy of 1.5 million tonnes from Algeria (at $8.5 per mBtu) with Petronet LNG’s Qatari gas of 5 million tonnes (at $3.53 per mBtu).
