New Delhi: The recently revived Dabhol power project has cancelled a dredging contract awarded to Gammon India Ltd (GIL) at their liquefied natural gas (LNG) terminal due to delays in starting the work, a top official said.

Key project: A file photo of the Dabhol power station. RGPPL says the work was supposed to end within five months of the November deal. AFP

GIL and Ratnagiri Gas and Power Pvt. Ltd (RGPPL), which owns the Dabhol power project, had finalized the dredging deal through a bidding process in November. GIL had submitted nearly Rs95 lakh to it as EMD. On 20 April, the RGPPL board decided to call off the deal, and encashed the deposit the next day.

“We have cancelled the contract and encashed the EMD. We now have to re-tender the bid and are looking at all possibilities," said A.K. Ahuja, managing director of RGPPL, adding that GIL’s delay in starting the work was hurting its financial plans.

RGPPL plans to lease out the LNG terminal at the 1,940MW Dabhol power project to companies and earn around Rs150 crore a year in user charges. The terminal has an annual capacity of 5 million tonnes, but is yet to be operational.

Dredging, or deepening the harbour, is crucial for large LNG ships to park at the facility. It involves clearing some 1.8 million cu. m of soft material and 60,000 cu. m of rocks through drilling and blasting. RGPPL says the work was supposed to be completed within five months of the November contract.

GIL, however, claims it was unable to start dredging in the absence of necessary clearances RGPPL was supposed to provide them, and had thus never signed the contract.

“They have cancelled a contract that we never signed in the first place. We will be taking them to court... They should not have bid out the contract without adequate clearances," said Himanshu Parikh, GIL’s executive director.

Mint had reported on 6 April about GIL’s claims that it had written to RGPPL that the 1994 environment clearance it was provided had already expired. The clearance also did not cover the removal of rocks by drilling and blasting. GIL said it had requested RGPPL to obtain a fresh permit at the earliest.

“In order to commence this work, permission of Maharashtra Maritime Board (MMB)—the owner of the water area—is required. For MMB to give this permission, they require Environment Clearance (EC) from ministry of environment and forest (MoEF) since, as per the Environment Impact Assessment Notification of Government of India, capital dredging works require EC granted by MoEF," GIL had said in an email to Mint.

But Ahuja of RGPPL told Mint that GIL had accepted the letter awarding the contract. “The letter of award was accepted by Gammon. They had seen all clearances before submitting the bid and the remaining clearances are under the contractor’s scope of work," he had earlier told Mint.

NTPC Ltd and GAIL (India) Ltd own 29.65% each of RGPPL. The Maharashtra government has a 15% stake in the project, with the balance owned by state-owned banks and financial institutions. This consortium had acquired the company, which was earlier named Dabhol Power Co., after its original promoter Enron Corp. collapsed in 2001.