Date:18/10/2006 URL: http://www.thehindu.com/2006/10/18/stories/2006101802481900.htm

Business

Maharashtra to buy Dabhol power at Rs. 5.01 a unit

Special Correspondent

Power purchase agreement will be signed today

NEW DELHI: The Maharashtra Government on Tuesday agreed to purchase electricity from the Dabhol power project at Rs. 5.01 a unit to make up for the massive shortfall in power, being faced by the State. With this, the jinxed project, which has been taken over by Ratnagiri Gas and Power Pvt. Ltd. (RGPPL), is expected to resume operations by the middle of next month after a gap of over four months.

To formalise the power purchase, RGPPL will to sign an agreement with the Maharashtra State Electricity Distribution Company on Wednesday. The two parties have informed the Central Electricity Regulatory Commission (CERC) that the State would buy up to 700 MW to be generated by the plant based on imported naphtha as the fuel feedstock.

On account of costly fuel, the total cost of power works out to Rs. 5.01 a kWh (unit). Of this, while the capacity charges account for Rs. 4.71, the incidental charges total 30 paise.

The agreement for power purchase will include a clause for fuel price escalation in that if the naphtha prices go up in the global markets, the additional cost will be a pass-through and the State will continue to purchase electricity even if the tariff crosses Rs. 5.50 a unit.

According to RGPPL officials, the Indian Oil Corporation (IOC) will import naphtha within four weeks and the plant (Block-II) would resume power generation from the middle of November and carry on operations till the end of March 2007.