Dabhol LNG unit may be sold off

The Statesman, New Delhi, February 12, 2007


Government is considering selling Dabhol power plant�s liquefied natural gas (LNG) import terminal to firms like Reliance Industries or Gujarat State Petroleum Corporation (GSPC) who can keep the cost of fuel to the plant low by pooling costlier imported LNG with cheaper domestic gas. �The empowered group of ministers (EGoM) last month considered hiving off the LNG terminal but no decision has been taken as yet,� said a source in the government. Ratnagiri Gas and Power Project Ltd (RGPPL), the new owner of Dabhol, has not been able to tie-up long term LNG supplies as cost of power from the imported LNG, costing $10-10.5 per million British thermal unit (mBtu), comes out to Rs 4.40 per unit. Considering the present global LNG market, it is expected that the new long-term supplies will be at a higher price than what RGPPL can absorb. The LNG terminal can be operated profitably by an organisation which has both low-cost gas as well as a new LNG import contract so that the two can be blended. The official said the government had brought down the cost of electricity to Rs 2.83 per unit after pooling the $10-10.5 per mBtu price of 1.5 million tonnnes short-term LNG for Dabhol with Petronet's existing imports from Qatar to get a delivered price of $5.84 per mBtu.