High gas prices a spanner in the wheel for Dabhol project

30 August 2007

The beleagured Dabhol Power project is stuck again reports CNBC-TV18.

This time due to high gas prices, the Ratnagiri Gas and Power''s only customer, the Maharashtra State Electricity Board has been forced to look elsewhere in the event of failure by RGPL in supplying power at the current rate. MSEB wants RGPL to also bear the burden of the increased costs,

The only buyer of Dabhol Power, Maharashtra State Electricity Board, will soon take a decision on whether it wants to buy high cost power from Dabhol or look for cheaper options elsewhere.

This follows a Supreme Court decision, which has allowed gas suppliers like Petronet, GAIL and BPCL to supply gas to Dabhol at pooled prices, which is currently around $5.86 per mmbtu and is arrived at after combining the spot and the long-terms rates for LNG.

But this is a lot higher than the $3.86 per mmbtu price that customers like Ratnagiri Gas and Power Private Limited and GSPC were earlier paying.

The SC has reversed an earlier decision by the Gujarat High Court ordering the gas suppliers to stop selling gas at pooled prices after consumers like Essar Steel and GSPC raised objections about the high pooled-price of gas.