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Ratnagiri gas project may be revived to generate power for railways

The power plant — the first to be de-rated to 1,967MW from the original 2,150MW, even before it was fully commissioned — and the LNG terminal at the site, which is among the four operational projects on the west coast, will be de-merged into separate entities.

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CR awaits regulatory approval to be declared as a distribution utility—Representational pic
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The controversial Ratnagiri Gas and Power Private Limited (RGPPL) project, which has come to symbolise the mess in the electricity sector in Maharashtra for almost a decade, may soon be revived.

Promoted by the scandal-ridden Enron Corporation, the project was re-started in 2005 by stakeholders — the National Thermal Power Corporation (NTPC), Gas Authority of India Limited (GAIL), Maharashtra State Electricity Board (MSEB) and financial lenders. However, the plant, which has been shut since January 2014, for lack of gas and power demand and financial woes, may now begin generating power for the railways in October, said senior officials.

The power plant — the first to be de-rated to 1,967MW from the original 2,150MW, even before it was fully commissioned — and the LNG terminal at the site, which is among the four operational projects on the west coast, will be de-merged into separate entities.

The project is located in Ratnagiri district on the Konkan coast. Maharashtra took the major share of power, with a small part being sold to Goa, Daman and Diu.

"We are planning to start the project by October," a senior RGPPL official told dna, adding that they were seeking support from the Power Sector Development Fund, meant to revive stranded gas-based power projects. He said they would participate in the auction in mid-September to get subsidised imported gas, but admitted that the plant could not be revived earlier using the route because of pending issues.

The Central Railways is awaiting regulatory approval to be declared as a distribution utility. "The ball is in the railways' court," he added, stating that no open access will be possible without regulatory approvals.

The railways will purchase 500MW of power, for use in Maharashtra, Madhya Pradesh, Chhattisgarh and West Bengal. It will get power at Rs4.70 per unit, compared to around Rs8.46 per unit that it pays the Maharashtra State Electricity Distribution Company Limited (MahaVitaran). The RGPPL will get additional Rs1.45 per unit subsidy support from the Centre.

The RGPPL requires 1.97 million metric standard cubic meters per day (MMSCMD) gas to generate this power. It will require over 8.5 MMSCMD gas to run at full capacity.

"We will have to waive off entry taxes and VAT on imported gas," said a senior state government official. Transmission charges will also have to be waived off. He added that the MahaVitaran and, consequently, the consumers, would also be hit as "the railways is a MahaVitaran consumer and will lose out on revenue due to cross subsidy surcharge of Rs1.84 per unit being waived off, and this will be passed on to the consumers".

The RGPPL official said the board had approved in-principle the decision to hive off the power plant and the LNG terminal. Promoters will have to infuse another Rs731 crore as equity for infrastructure, such as construction of breakwaters. "This will hike its capacity to handle cargo from around 20-25 now to 80 annually," the officially added, stating that the terminal was among the four such projects on the western coast, including ones at Dahej, Hazira and Kochi. The LNG terminal has handled around 15 cargos so far.

The state official said the terminal would generate enough revenue to pay off its outstanding loans of around Rs8,000 crore.

The official, however, admitted that the project may see some more teething troubles, for instance, Maharashtra, which is already surplus in power, refusing to purchase the electricity due to its higher costs.

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