New Delhi: More trouble has surfaced for the controversial Ratnagiri Gas and Power Pvt. Ltd, or RGPPL, formerly known as Dabhol Power Co., with one of the project’s insurers declining to pay Rs212 crore claimed as compensation for delays in its commissioning.

The company also plans to raise the power tariff of Rs3.21 a unit by 25 paise due to its decision to scale down the capacity of the project from 2,150MW to 1,844MW.

The power from the project is procured by state-run power utility Mahavitaran, or Maharashtra State Electricity Distribution Co. Ltd. The company decided to lower the capacity on account of faulty equipment.

“Though we have claimed the insurance of around Rs200 crore, the insurer National Insurance (Co. Ltd) is not ready to pay beyond Rs100 crore. The negotiations are on,” said a senior RGPPL executive who did not wish to be identified.

National Insurance officials could not be contacted over the weekend. The other insurers for the project include Life Insurance Corp. of India, Oriental Insurance Co. Ltd and ICICI Lombard General Insurance Co. Ltd.

The project was conceived in the 1990s and was originally promoted by US-based Enron Corp., which went bankrupt in December 2001. It was taken over in mid-2005 by a consortium that included public sector banks, the Maharashtra government, state-owned GAIL (India) Ltd, NTPC Ltd and some financial institutions.

The company has decided to scale down the project’s capacity, a first for any project in India that hasn’t been fully commissioned, as reported by Mint on 14 October.

“Due to the derating of the project, the tariff will go up by 25 paise and Maharashtra will have to pay for it,” the RGPPL executive added.

The derating process will require the approval of the Central electricity regulator.

The gas-fuelled power project is divided into three phases, of which the second and third, with a capacity of 740MW each, are partially operational.

The first phase of the project, with a generation capacity of 670MW, is yet to become operational.