Qatar has agreed to supply 1.2 million tonnes per annum of liquefied natural gas to fire the Dabhol power plant in Maharashtra, but differences persist over the price.
"RasGas has agreed in principle to supply 1.2 mmtpa of LNG from March 2007 to early 2009," a top official said after Qatar's Second Deputy Prime Minister and Ministry of Energy and Industry Abdullah Bin Hamad Al Attiyah called on Prime Minister Manmohan Singh in New Delhi.
Petroleum Minister Murli Deora accompanied Attiyah.
Petronet LNG Ltd, which has been contracted by Ratnagiri Gas and Power Pvt Ltd - the new owner of Dabhol plant, would import 1.25 mmtpa of LNG at its Dahej terminal in Gujarat and supply it to the power plant through the Dahej-Uran pipeline.
However, the two sides have not been able to agree on the price of gas. While RasGas marginally lowered its earlier offer price of about $10 per million British thermal unit, the Indian firm was willing to pay no more than $5.5 per mBtu, the official said.
"They are still insisting on a price of $7-8 per mBtu," he said.
The official said further discussions on price would be held on Saturday and expressed hope to persuade RasGas to agree at a price of $5.5 per mBtu.
This would translate into a delivered cost of $7.3 per mBtu. At $8 per mBtu burner tip price, the variable fuel cost comes to Rs 2.68 per unit. Together with the fixed cost of Re 1 per unit, the generation cost would be Rs 3.68 per unit.