The Hindu Business Line : High-level team headed for Oman to strike Dabhol dues settlement

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High-level team headed for Oman to strike Dabhol dues settlement — May place firm orders for gas purchase

Alok Mukherjee
Anil Sasi

New Delhi , Feb. 11

WITH the erstwhile Dabhol project's dues to the Government of Oman threatening to derail fresh gas procurement for restarting operations at the station, the Centre has scheduled the visit of a high-level team to Oman next week to hammer out a settlement of the dues to pave the way for a fresh gas supply agreement.

The team to Oman, including representatives from IDBI, ICICI and SBI, is expected to ascertain the terms of settlement for past claims on the erstwhile Dabhol Power Company. The team is also likely to place firm orders for gas purchase by March 15 this year, in line with an earlier decision of the Empowered Group of Ministers.

The Centre has set a May 2006 deadline for re-starting power generation at the Dabhol station's 740-MW first phase. The team's visit to Oman comes close on the heels of a visit to the Sultanate by a delegation led by the Minister of State in the Prime Minister's Office, Mr Prithviraj Chavan, earlier last month.

The erstwhile Dabhol Power Company owes $1.1 billion to the Oman Government as per its take-or-pay agreement for the gas. The Oman administration has sought the settlement of the dues as a precondition to entering into any fresh gas supply agreement.

The Power Ministry has asked the new promoters of the Dabhol station, including NTPC Ltd and GAIL (India) Ltd, to re-start the first block of 740 MW of the Dabhol project by May this year.

Gas requirement: According to NTPC sources, a supply of 0.7 million metric tonnes per annum (mmtpa) of gas is required to kickstart operations, which would rise to about 2.1 mmpta by October 2006 when the entire station becomes operational. With the gas purchase deal likely to take time, the plant is expected to run on a peak-load basis with naphtha on a temporary basis till a long-term fuel deal is in place.

The Petroleum Ministry is also working on initiating discussions with countries other than Oman to source LNG. The issue of domestic re-allocation of LNG for the Dabhol project is also being pursued separately, Government officials said.

Speeding up: While procuring fresh LNG is one of the top priorities for the project, the Government is also considering some special measures to speed up the re-start of the plant. For instance, the Empowered Group of Ministers has before it a proposal to waive the requirement of the Public Enterprises Selection Board (PESB) for the appointment of full-time Directors for Ratnagiri Gas and Power Prvt Ltd (RGPPL) for three years, after which the normal PESB clearance process would have to be adhered to.

(RGPPL is the special purpose vehicle floated by NTPC Ltd, GAIL, the Maharashtra Government and Indian lenders for the project.)

The Ministers are also expected to approve a pay packet for the RGPPL directors, which could be higher than the usual public sector entitlement.