NTPC and GAIL look at renting Dabhol power plant, as poor gas output from KG-D6 rumbles on

After being forced to shut the Dabhol power plant in Maharashtra due to a natural gas shortage, GAIL India and NTPC are considering renting out the 1,967-Mw unit to private electricity generators.

Ratnagiri Gas & Power Pvt Ltd (RGPPL), a joint venture between gas utility GAIL and the nation’s biggest electricity generator, NTPC, shut the Dabhol power plant in March after gas supplies from Reliance Industries’ KG-D6 fields was stopped.

Finding no buyers for power produced using costlier imported gas (liquefied natural gas), RGPPL is mulling giving out the power plant to private operators on a tolling basis, sources with direct knowledge of the development said.

Two or three power producers, which recently approached GAIL to source LNG for their upcoming plants, were asked if they would be interested in taking Dabhol on rent.

Sources said the proposition is a win-win for RGPPL and private power producers. Renting out the plant would bring steady revenue for RGPPL and would keep the unit operational, preventing rust and other idling-related snags.

The power producers will get a ready-made plant that can be fed from an adjacent LNG import terminal. They would also gain the experience of operating a plant using LNG while their own projects are constructed.

The private firms, which the sources refused to identify because of a confidentiality clause, are said to be keen to source their own LNG, which can be done at the 5 million tonnes per annum import facility adjacent to the Dabhol plant.

The terminal was commissioned by GAIL this year and can be used by private firms on a tolling basis to import LNG. Sources said the power producers are studying the offer.

Dabhol was allocated 7.6 million standard cubic meters per day of gas from KG-D6 but never received more than 3 mmscmd during three years of operations. Fuel supplies stopped in March after output at KG-D6 fell sharply.

Maharashtra bought 95 per cent of the plant’s power, while Goa purchased 1 per cent. The Union Territories of Daman & Diu and Dadra and Nagar Haveli consumed 2 per cent each.

Sources said RGPPL, which has Rs 8,436 crore of debt, would not be able to service the loans in this fiscal unless the plant operates at 68 per cent of capacity. Renting out the power plant would help RGPPL service its debt, they said.

The plant was originally built by US major Enron Corp. It was mothballed after a billing dispute with Maharashtra and Enron’s bankruptcy in 2001. RGPPL took over the plant in September 2005.

GAIL and NTPC hold 32.9 per cent each in RGPPL while the Maharashtra government has a 17.4 per cent stake. Lenders IDBI Bank, State Bank of India, ICICI Bank and Canara Bank hold the remaining 16.8 per cent.