Naphtha cost for Dabhol power project to decline

In what could be significant relief to the consumers of power in Maharashtra, the finance ministry this week has agreed to waive the customs...

In what could be significant relief to the consumers of power in Maharashtra, the finance ministry this week has agreed to waive the customs and countervailing duties levied on the import of naphtha for the Dabhol power project which is now being run by Ratnagiri Gas and Power. Confirming this, sources said that the notification to this effect reached the company a couple of days back which would now bring the price of imported naphtha down by around $8-9 (per tonne). The present price of naphtha is $572/tonne.

According to sources, this waiver is again a project specific waiver and would not cover other power plants that are also in need of subsidised naphtha for power generation.

The Ist phase of the plant, (740mw) was restarted in the first week of May this year using the residual naphtha that was left behind by the erstwhile promoters of the plant when they exited the project. According to calculations, around 47,000 KL of naphtha (blended with 54% fresh fuel) ensured that there was enough fuel to keep the plant running for just about 50 days running for 8 hours a day.

Sources said that the plant however shut down (in the first week of July) before this fuel was exhausted on account of a pick up in hydel generation in the state. ‘‘There is still some fuel left from the previous stock and if required we can restart the plant with this fuel’’.

However, with sources of LNG supplies, the primary fuel for the plant, still not firmed up for the project, it was imperative to accord these waivers such that the resultant tariff did not become too expensive for the state.

In that regard, at a review meeting taken by the cabinet secretary last week on the status of the project, sources said that it was decided to accord these waivers such that the promoters of the plant could place their orders in the international market and secure deliveries by August, by which time hydel generation begins to reduce.

Sources also said that these waivers fall within the ambit of the cabinet approvals given for import of LNG for the power venture. Officials said that while the final numbers on the exact quantum of naphtha to be imported are yet to be worked out along with the state, they would be sourcing the required fuel through Indian Oil Corporation.