New Delhi: Cash-strapped Ratnagiri Gas and Power Pvt. Ltd (RGPPL) will float a tender by 15 July to lease out a part of its liquefied natural gas (LNG) terminal capacity, aiming to earn about Rs150 crore a year in user charges.
The LNG terminal is part of an integrated power project at RGPPL that has an installed capacity of 2,150MW, but is being scaled down to 1,844MW.
The project is fuelled by natural gas, which is typically transported by ships in liquid form.
The terminal has a capacity to handle 1.2 million tonnes per annum (mtpa), which is to be raised to 5mtpa. While 2.1mtpa will be required for the power project, the remaining terminal capacity could be rented out.
Cash flow: A file photo of Dabhol power station. The power regulator, in a recent order, had said the target availability for the generation station did not justify the proposed tariff for 2009-10. AFP
“When we had floated an expression of interest for tolling (fees to use the terminal), around six to eight companies had responded. The terminal will be commissioned by October, post which the user will have a period of around five to six months before the monsoon to use it,” A.K. Purwaha, director, business development, GAIL (India) Ltd.
GAIL and NTPC Ltd are majority shareholders in RGPPL with a 28.33% stake each. The rest is held by the Maharashtra State Electricity Board and several banks.
Mint had reported on 11 March about private companies such as the Essar group and GVK Power and Infrastructure Ltd being interested in using the terminal. Analysts believe that this is a good strategy as it will provide stable cash flow for RGPPL as there is a robust demand for natural gas in India. In a related development, the firm’s board will meet on Tuesday to discuss the tariff from the project after its proposed increase was rejected by India’s Central Electricity Regulatory Commission.
“The RGPPL board will be meeting tomorrow to discuss the issue,” said RGPPL chairman R.K. Goel, who is also director, finance, GAIL.
The tariff for power generated by the plant is Rs3.60 a unit, which RGPPL had proposed to increase to Rs4.44 per unit due to its decision to scale down the project’s capacity, Mint had reported on 15 October.
“The project currently generates 1,000MW,” Goel said.
The power regulator, in a recent order, had said the target availability for the generation station did not justify the proposed tariff for 2009-10.
The other reason for the increase in tariff is the $75 million (Rs359.25 crore) fee to be paid to General Electric Co. (GE) for the repair of turbines supplied by it. “The tariff may go up by around 17-18 paise taking into account this $75 million fee to GE,” a person associated with the revival of the project had earlier told Mint. He declined being identified.
“The comprehensive service agreement with GE has been finalised. It can be signed anytime now,” Goel said.
RGPPL, earlier known as Dabhol Power Co., was conceived in the 1990s and was originally promoted by Enron Corp.
The cost to build the project was estimated to be Rs10,038 crore at the time of asset transfer to the government in mid-2005. It has since risen by Rs2,594 crore to Rs12,897 crore.