Back to life

Mumbai, Nov 20: Reliance Industries has offered to acquire the beleaguered Dabhol power project, which cranked into life just a few days ago.

The Reliance offer introduces a new twist to a chequered saga after Dabhol’s original promoter — Enron Corporation — collapsed after an accounting scandal broke out in the US.

Reliance Industries is keen to acquire not only the power plant but also the adjacent LNG import facility.

RIL is understood to have earlier indicated its intention to supply close to 8 mmscmd of gas from the second half of 2008 to the power plant. This came after the government began to examine various options to run the unit. The 2184-mw Dabhol power plant was shut down in July due to the shortage of naphtha.

Although it was re-started early this month, only 740 mw of the total project capacity is being run on imported naphtha.

The cost of generation of power from naphtha is more than that from gas. With GAIL and National Thermal Power Corporation (NTPC), the two major promoters of Ratnagiri Gas and Power Pvt Ltd (which owns the assets of Dabhol power plant), unable to tie up supplies of natural gas, RIL has now entered the fray.

Industry circles said what goes in its favour is the discovery of large gas reserves in the Krishna Godavari basin in 2002.

Deliveries to consumers from this field are expected to start from the second half of 2008-09.

This coincides with reports which state that the government may consider either hiving off the LNG terminal and selling it to a company capable of sourcing fuel or selling off the entire plant itself in the event that sustained supply of gas to the project cannot be met.

It is also believed that the government may sell off the Dabhol unit if its current efforts to revive the project and generate electricity at Rs 3 per unit fail.

Sources at RIL said the company is interested in taking over the LNG facility which is adjacent to the Dabhol project and also the power plant.

RIL had initially planned to construct an LNG import facility at Jamnagar in Gujarat. But after BP Plc of UK walked out of the project and the company's gigantic discovery at the KG basin, these plans were put on ice.