New Delhi: The empowered group of ministers (E-GoM) for the revival of the controversial 2160MW Dabhol power project, rechristened Ratnagiri Gas and Power Pvt. Ltd (RGPPL), on 20 March decided that the Maharashtra State Electricity Board will sign the power purchase agreement for buying power at a fixed cost of 98.5 paise per unit.
The board had so far refused to sign the deal, saying it was not willing to pay above 96 paise per unit.
E-GoM has also decided that the restructuring of the project will be decided by a committee that will be headed by banking secretary Vinod Rai. The restructuring committee will decide how the cost escalations will be shared among the various stake holders of RGPPL.
While NTPC Ltd and GAIL (India) Ltd hold the majority stakes at 28.33% each, MSEB owns 15% and lender banks hold minority stakes.
One of the options before the panel is to hive off the liquefied natural gas (LNG) terminal, for which there are several takers, and use the proceeds to bridge the cost escalation on the project. The project’s revival cost has escalated by Rs2,594 crore to Rs12,897 crore.
E-GoM, headed by external affairs minister Pranab Mukherjee, also decided that 20% of the power generated from the project can be sold to PTC India Ltd, India’s leading power trading company, provided that 95% of the power generated from the project goes to Maharashtra. In other words, PTC will have to apportion a share of the power to the state. The LNG supply for the project is also expected to be tied up by November this year.
The Centre has set a deadline for the plant to be fully operational, using gas to produce power, by November 2007.
The group met Maharashtra chief minister Vilas Rao Deshmukh to smoothen out the differences between the MSEB and RGPPL over signing the power-purchase agreement for the project.
“Earlier also E-GoM had suggested that the power from one of the blocks of the project should be sold to the highest bidder to absorb some of the cost over runs on the project. PPA will be signed even though the fuel supply agreement is not in place,” said a Cabinet minister who attended the meeting.
Though the Power Finance Corp. had sanctioned Rs1,400 crore to the project, it disbursed only Rs350 crore. It had refused to disburse Rs557 crore of the first tranche adjusting it as the working loan to the project as RGPPL had defaulted on the payments on earlier loans. Due to this, the vendors for the project could not be paid.