GAIL for rescuing Dabhol plant

New Delhi, July 14 (UNI) Gas Authority of India Limited (GAIL) which own 50 per cent stake in Dabhol's Special Purpose Vehicle (SPV)-- Ratnagiri Gas and Power Ltd (RGPPL), is currently in talks with Yemen for a stake in the expansion of the country's proposed LNG project from where it would ship this gas for the Dabhol project.

Sources told UNI that the shipment would start from 2009-10. Also a team of GAIL officials are in Yemen for detailed discussions.

GAIL is also in talks with Algerian flagship Sonatrach for a long-term supply contract. The Indian gas major had recently bought a shipment of Algerian LNG from the spot market and is expecting two more similar cargoes. GAIL is also scouting for cargoes from suppliers of South-East Asia, West Asia and North Africa to bridge the gap in the domestic market as well as fire up the Dabhol plant.

The spot cargo was bought by GAIL at double the domestic cost at 9.28 million british thermal units (mbtu) that would be used for Dabhol. However the price is cheaper than the global price of naphtha at 20 dollars per mbtu.

Dabhol is currently shut due to lack of demand from the Maharashtra electricity board and is expected to restart by August.

The three billion dollar project, built by Enron was shutdown due to an expected dip in power demand during June-September and due to lack of fuel--naptha, official sources say.

The plant would require naphtha until supplies of LNG begin in March. Petronet India Ltd is negotiating with Rasgas of Qatar for gas supplies for the plant -- to be delivered through pipelines connecting import facilities and the power unit.

Soon after the Finance Ministry gave its consent to cut the customs duty on naphtha to fire the first phase of the 2,184 MW Dabhol power plant, the Gas Authority of India Ltd also said that it will procure 1.2 million tonne. Liquefied Natural Gas (LNG) per annum from Algeria for 25 years starting mid-2009.

As of date, Dabhol is running on naphtha which is more expensive and influences the tariff of the electricity it produces. The finance ministry last week gave its consent to waive off the customs duty on importing naphtha giving the much needed breather to the three-billion dollar project that was on the verge of closure again this month, five years after its restart.

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