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Business News/ Home-page / Sell Dabhol electricity to highest bidder: GoM
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Sell Dabhol electricity to highest bidder: GoM

Sell Dabhol electricity to highest bidder: GoM

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A group of ministers has recommended that power generated by the Dabhol power project be sold to the highest bidder to help absorb some of the cost overruns on a project that is six years behind schedule.

Previously, the power generated from this project was meant to be sold only to Maharashtra State Electricity Board. Now, a limited quantity of power may be sold to a ­power trading company.

Dabhol is symbolic of infrastructure bottlenecks in India’s ambitious plans to solve its electricity woes. When the project was unveiled in 1992, it was meant to be a fully functional utility by 2000. However, litigation and squabbles over the project being awarded to Enron Corp. derailed it. The government took over the ownership to revive the project and roped in lenders as stakeholders. It was then renamed Ratangiri Gas and Power Private Ltd. Ratnagiri still has not become fully operational and now faces a higher cost of producing power. The project revival cost has escalated by about Rs2,588 crore to Rs12,891 crore now, which the ministers signed off on.

That will result in power being generated at a cost of Rs3.23 per unit. However, selling it at Rs3.70 will ensure the higher margin will help offset some of the hike in cost.

The government has now set a firm deadline for the plant to be fully operational, using gas to produce power. “All the three units of the project will become fully operational by November 2007," said Anil Razdan, the secretary of power for the government. The meeting was headed by external affairs minister Pranab Mukherjee. The ministers also discussed hiving off an LNG terminal, which was opposed by Ratnagiri.

While NTPC Ltd and GAIL (India) Ltd hold the majority stake in Ratnagiri, Maharashtra State Electricity Board has 15%. The lender banks hold minority stakes. Both NTPC and GAIL had put Rs500 crore each as equity in the project with the lenders collectively pumping in Rs500 crore. The project holds a lot of importance for Maharashtra, economically and politically. Its power demand has touched over 16,000 MW with a daily deficit of around 5,700 MW.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 23 Feb 2007, 12:29 AM IST
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