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Dabhol's LNG facility valued at Rs 2.85 billion

BS Corporate Bureau

The Godbole Committee has valued the LNG regassification facility of the Dabhol Power Company at Rs 28.50 billion. It had recommended that the facility be hived off into a separate entity and sold to the public sector Gas Authority of India Ltd or any other private sector company.

The committee has also recommended that LNG suppliers take a hit of Rs 42.26 billion as a result of the bail-out package for DPC.

The regassification facility of DPC is for five million tonne of LNG per annum, whereas the power plant has contracted for only 2.1 million tonne (of which 1.8 million tonne is take or pay) and even that requires an unreasonably high plant-load factor.

The committee had opined that as a separate facility, it could enter into transactions with other buyers of gas as well. "It is critical that the costs of this facility be distributed over its entire capacity and not just over the amount sold to the power plant, as is currently the case," the committee's report notes.

Similarly, the committee was of the view that the harbour facility could be used by other importers of LNG as well since its capacity is well above what can be used by the Dabhol power plant.

Thus, the committee had requested DPC to hive off the LNG facility into a distinct one, wherein DPC would pay fuel charges in proportion to the extent of fuel utilised by the power plant.

On its part, DPC had contended that hiving off the LNG terminal into a separate fuel venture would not result in any reduction in tariff. As per the power purchase agreement with the Maharashtra State Electricity Board, DPC would reduce the regassification charges if the total LNG volume transported to the power plant and other buyers exceeds 7.5 million tonne.

However, no benefit would be passed on to MSEB for any volume transported between 2.1 million tonne and 7.5 million tonne.

The committee has said that fuel charges would be reduced by Rs 42.66 billion by the LNG supplier due to a reduction in price from $2.7 per mmbtu to $2.3 per mmbtu. The reduction is approximately five per cent of the total payment made to the LNG supplier on a present value basis.

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