'LNG fuel tie-up for Dabhol from Qatar by Mar 2007'

New Delhi, Nov 7: The government today said that Liquefied Natural Gas (LNG) will be tied to fuel Ratnagiri Gas and Power Private Limited (RGPPL) and will be procured by the end of March 2007 mainly from Qatar and Abdu Dhabi.

''We are very close to tying up the fuel agreement,'' to run Dabhol which is being currently run on more expensive Naptha, Petroleum Minister Murli Deora said on the sidelines of the signing of the Coal Bed Methane (CBM) contracts under third round.

Earlier known as Dabhol, the project has been restarted after nearly four months of lying idle even as the government dismissed all rumours of its sale to a private party.

Power Minister Sushilkumar Shinde said ''the project is generating about 150 MW which will be scaled up gradually''.

The plant is being run on the more costly Naphtha fuel as a stop-gap arrangement till the cheaper tranche of LNG, the original fuel's shipments are expected by the end of the year from Qatar.

Asked about the reported sale of the plant, Mr Shinde said there were no plans to sell the Dabhol project.

The plant was started in May to meet the shortage in Maharashtra but was shut down in early July after the onset of the monsoon.

The 740 MW Block-II of the project is being run on imported Naptha as the new promoters -- GAIL and NTPC Ltd -- have not been able to tie-up natural gas. With Naptha, the cost of generation is likely to be more than Rs 5 per unit.

Earlier, Cabinet secretary B K Chaturvedi suggested spreading the high cost of LNG being contracted for Dabhol by pooling with the cheaper fuel Petronet is importing under long-term contracts. The oil ministry has been asked to examine the proposal and suggest measures "expeditiously".

Mr Chaturvedi recently told the group of ministers, set up to revive Dabhol, that Petronet has contracts wherein it was supplying gas at 2-3 dollars per mBtu (million British thermal unit).

"They should not load the entire high cost on one single contract and attempt should be made to provide LNG to all at an average or pooled price, which is the practice followed by similar firms.'' Petronet is negotiating the price for 1.2 million tonnes of LNG a year, to be supplied by Qatar from March 2007 till June 2009, as a short-term measure to fire the power plant.

Mr Chaturvedi said negotiations should take into account the recent drop in global LNG prices and should not be linked only to Henry Hub, the natural gas exchange point in US, as it did not focus on liquified or regassified fuel.

Qatar had indicated a price based on 12-month Henry Hub average, or in the range of 8 dollars mBtu and is now averaging 5-6 dollars mBtu.

UNI