Government has decided against hiving off the five-million tonne a year liquefied natural gas import facility attached to the Dabhol power plant, even though alternate fuel supply arrangements for the project have been made.
Originally, it was envisaged that the 2,150-MW power plant would shift to imported-LNG once the terminal is completed but now natural gas from Reliance Industries' eastern offshore D6 field is envisaged to fire the plant.
"At the moment, (we are) not hiving off LNG terminal from Dabhol," power secretary Anil Razdan told reporters.
Both the principal promoters -- NTPC Ltd and GAIL India Ltd -- had opposed hiving of the terminal as a tool to cut completion costs and the Government seems to have buckled under their threat to quit the project if the terminal was sold off.
Razdan said all stakeholders would take a collective decision on the future of the LNG terminal.
With D6 gas being committed for the power plant, the LNG terminal, once its becomes operational next year, may be used for merchant sale of imported gas.
Reliance is to begin production from its prolific D6 fields, lying off the Andhra coast, in January 2009 with an initial output of five mmscmd. This will rise to 25 mmscmd by March and to 55 mmscmd by July 2009.
The fertiliser sector would continue to get top priority over D6 gas, with 14 mmscmd being allocated for existing units.
As per the gas utilisation policy approved by the empowered group of ministers, Reliance is to first supply gas to existing gas-based urea plants and then give three mmscmd to LPG plants.
Thereafter, up to 18 mmscmd of gas was to be given to gas-based power plants that were lying idle or under-utilised, or likely to be commissioned during 2008-09.
Dabhol, at present, gets about 5.4 mmscmd of imported gas for two of its three units at $4.98 per million British thermal unit. Petronet LNG imports 1.5 million tonnes a year of LNG from RasGas of Qatar at $8.5 per mmBtu, since this price is too high, the rates are averaged with cheaper long-term LNG imports to arrive at $4.98 per mmBtu.
NTPC and GAIL India hold 28.3 per cent in the project.
More from rediff