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Home News Power Sector News NTPC proposes to add Dabhol to Telangana package

NTPC proposes to add Dabhol to Telangana package

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DabholTo help the cash-strapped Ratnagiri Gas and Power Pvt. Ltd (RGPPL) tide over the tough times, state-run NTPC Ltd, which owns 32.86% stake in the utility, has proposed that electricity generated from the Dabhol power plant be made a part of the Telangana package.
NTPC, which has invested Rs.974.31 crore in RGPPL, has communicated the proposal to the power ministry. The other stakeholders in RGPPL are GAIL (India) Ltd, which also owns 32.86% in the utility, the Maharashtra government with a 17.41% stake, and state-run banks and financial institutions.

"The project is lying idle. We want Dabhol to be pitched for as a part of the Telangana package. It will take around four years to build a new power project to cater to the demands of Telangana," said an NTPC executive requesting anonymity. "In such a scenario, it makes sense to leverage a capacity which is lying idle."
In its letter to the power ministry, NTPC has said that since its investment in RGPPL is going to be a non-performing asset (NPA), it will affect its market reputation as it is a publicly traded company.
One of the two options proposed by the utility is to run the project on imported liquefied natural gas (LNG) and be dedicated to Telangana to meet its electricity demand; wherein the subsidy portion on account of difference between the domestic gas cost and imported LNG be provided under the package.
According to the power-purchase agreement between RGPPL and Maharashtra State Electricity Distribution Co. Ltd (MSEDCL), in the event of LNG being used as a fuel, MSEDCL has to approve it. With LNG being expensive than domestic fuel, and the uncertainty over the availability of fuel in India, MSEDCL is averse to buying expensive electricity. According to RGPPL, MSEDCL owes it Rs.1,112 crore in electricity dues.
"I am of the view that the plant that has been built should run and the electricity be used. The plant is ready," said B.C. Tripathi, chairman and managing director of GAIL.
The other option suggested by NTPC is to allocate 4.5 million standard cu. m per day (mscmd) of gas at parity with the fertilizer sector. A power ministry official confirmed NTPC's proposal. He declined to be named.
"With no new gas coming, NTPC wants to give power to Telangana as part of the package," said the power ministry official cited above. President Pranab Mukherjee has given time to the Andhra Pradesh assembly to return the AP Reorganization Bill till 23 January.
The Dabhol plant requires 9.7 mscmd of gas, but has been allocated 8.5 mscmd by a panel of ministers, of which it receives only 0.9 mscmd.
There is a danger of the project being classified as a NPA in the backdrop of an ongoing financial crisis. Mint reported on 31 December about RGPPL dipping into its insurance reserves to service Rs.139.12 crore in September dues to its debtors.
RGPPL has a debt of around Rs.8,500 crore, with an outstanding debt service obligation of Rs.837.94 crore for the current fiscal year. While an NTPC spokesperson in response to queries emailed by Mint said, "Yes, the above information is correct," a top power ministry official, who also didn't want to be identified, said "as of now, there is no proposal 'within the ministry' to make Dabhol a part of any such package".
RGPPL, earlier known as Dabhol Power Co., was conceived in the 1990s and originally promoted by the now-bankrupt US energy company Enron Corp. The asset was transferred to the government in mid-2005, with the project fully commissioned on 31 March 2010. As of 30 November, Rs.424.18 crore was paid to the lenders.

Source- Mint


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