Government finally okays Reliance-Dabhol deal

09 May 2009

Maharashtra's Ratnagiri Gas Power Pvt Ltd at Dabhol may at last be able to go on full stream by October, as the union government has decided after months of deliberation to allow RGPPL to buy gas from Reliance Industries' Krishna-Godavari basin output.

A panel of ministers has approved the signing of a gas sales and purchase agreement (GSPA) between RGPPL and RIL. Under this, the Dabhol plant can buy 2.5 MMSCMD of gas a year.

The power plant, largely controlled by the government through its corporate entities NTPC and GAIL, has an installed capacity of about 2,150 MW. But currently, it generates just 600 MW from its two turbines due to several pending issues, including fuel shortage.

As per the agreement signed on Friday, RGPPL would buy the gas from Reliance at the government-approved well-head price of $4.2 per million metric British thermal units. It would also have to pay an additional $1 for transportation charges and taxes.

RGPPL supplies the entire power to the Maharashtra State Electricity Distribution Co Ltd for distribution across the state, except Mumbai. Under its ongoing expansion plans, the Dabhol unit will start generating 1,900 MW by November this year, and India's financial capital may receive some of the output. But for that, it will require a minimum 8.5 MMSCMD of gas.

The Ratnagari Gas board will sign two separate purchase agreements with Reliance Industries' gas transportation arm Reliance Gas Transportation Infrastructure and the Gas Authority of India Ltd.