Row set to end: Ratnagiri to pay GE for turbines repair

Row set to end: Ratnagiri to pay GE for turbines repair
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First Published: Thu, Apr 09 2009. 11 56 PM IST

Rising costs: The latest revision pegs the Ratnagiri power project’s cost at Rs12,182 crore.
Rising costs: The latest revision pegs the Ratnagiri power project’s cost at Rs12,182 crore.
Updated: Thu, Apr 09 2009. 11 56 PM IST
New Delhi: Efforts to revive the controversial power plant at Dabhol moved a step closer to resolution, with Ratnagiri Gas and Power Pvt. Ltd (RGPPL) agreeing to resolve a dispute with General Electric Co. (GE) over the supply of allegedly defective turbines.
Rising costs: The latest revision pegs the Ratnagiri power project’s cost at Rs12,182 crore.
In keeping with the terms of the resolution, GE will be paid a $75 million (around Rs375 crore) fee to repair the turbines supplied by it. In return, the company will guarantee the performance of these machines and also absorb part of the cost in the event of any future breakdown. The decision was approved by RGPPL’s board on Thursday.
However, the additional costs that will have to be incurred may increase the price of power paid by state-run Mahavitran (Maharashtra State Electricity Distribution Co. Ltd) in Maharashtra.
“The tariff may go up by around 17-18 paise taking into account this $75 million fee to GE,” said a person associated with the revival of the project, who did not want to be named.
“There have been protracted negotiations with GE for the comprehensive service agreement. Finally, we have a deal with GE. This has paved the way for insurance, proper repair and maintenance of machines. The GE agreement has certain implications. We have to see what implications this has on the tariff,” said Subrat Ratho, managing director, Maharashtra State Electricity Board Holding Co. Ltd, who holds additional charge as principal secretary (energy), Maharashtra.
The current tariff for power generated by the plant is Rs3.60 per unit, which is expected to increase to Rs4.44 per unit due to RGPPL’s decision to scale down the project’s capacity from 2,150MW to 1,844MW as reported by Mint on 15 October.
The project’s cost was originally estimated at Rs10,038 crore, which was revised to Rs11,998 crore. The latest revision pegs the project’s cost at Rs12,182 crore.
NTPC Ltd and GAIL (India) Ltd own 28.33% of RGPPL, and the balance is owned by state-owned banks, the Maharashtra government and some financial institutions. This consortium had acquired the company, then named Dabhol Power Co., after its original promoter Enron collapsed.
The consortium has been trying to revive the plant, but has run into mechanical difficulties; the Union government has claimed that four of the six nine-FA-class turbines supplied by GE to the 2,150MW power project in Maharashtra are defective.
In response to specific queries, raised before RGPPL’s board meeting, on the terms of the resolution, a GE spokesperson said in an email that “GE Energy is in discussions with RGPPL on a possible service agreement that will complete the successful revival of the Dabhol Power Plant. A definite conclusion has not been reached.”
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First Published: Thu, Apr 09 2009. 11 56 PM IST