Dabhol: Cab Secy to remove irritants

The Dabhol power project in Maharashtra has run into fresh problems with no consensus emerging on how to bring down revival costs of the project.

The Dabhol power project in Maharashtra has run into fresh problems with no consensus emerging on how to bring down revival costs of the project.

This problem has two aspects. First, NTPC-GAIL is not agreeing to the sale of the LNG terminal and secondly, the state has not agreed for a portion of the power from the project being sold at a premium to other states through power trading. Added to this, Gujarat has not allowed the construction of a 7-km stretch of gas pipeline that would enable gas to flow from Dahej to Dabhol site via Panvel. The empowered group of ministers (EGoM), under the chairmanship of External Affairs Minister Pranab Mukherjee, today gave Cabinet Secretary B K Chaturvedi the responsibility to resolve both the problems.

The Centre would impress upon Gujarat that the Dabhol project cannot be held up on account of completion of a gas pipeline. Sources said the Gujarat government was yet to give some clearances that were holding back the pipeline completion.

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However, the Cabinet Secretary has to find out how to neutralise the increase in project costs that roughly work out to increasing the power tariff by 11 paise/unit (at present the first year tariff is around Rs 3.11/unit).

The committee on financial restructuring for the project headed by banking secretary had suggested a combination of merchant sale of power (trading) along with hiving off the LNG terminal as a possible measure to bring down the power tariff. However, while the state government was neutral to the sale of the LNG terminal, NTPC-GAIL combine, promoters of the project company RGPPL, has opposed this sale. The GAIL board has refused to finance the completion of the LNG terminal as this amounts to one PSU funding another PSU.