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Our Bureau

Minimising cost overruns

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New Delhi Feb 23 An Empowered Group of Ministers looking into revival of the 2,144 MW Dabhol power project has suggested measures including pruning of interest rates for lenders to the project and return on equity in order to minimise cost overruns in completing the structural works.

The project is currently facing a cost escalation of about Rs 2,600 crore over the original estimated project revival cost of Rs 10,303 crore.

In order to tide over the paucity of funds that has affected revival of the project, Power Finance Corporation has been asked to extend a loan of Rs 500 crore to Ratnagiri Gas and Power Pvt Ltd, the new owner of the station.

The panel, in its last meeting on January 17, had approved Petronet LNG Ltd's proposal to supply 1.2 million tonnes of gas a year for the next two years. The Maharashtra Government, which is facing a growing power shortage scenario, had sought the Union Government's intervention for restarting the project with full capacity of 2,144 MW.

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