Ratnagiri plant to be revived, will supply power to Railways

While the Maharashtra cabinet has approved concessions to revive the controversial 1,967 MW Ratnagiri Gas and Power Private Limited (RGPPL) project, the state power distribution utility will not purchase energy from it due to higher cost.

The state cabinet on Tuesday consented in-principle to extend concessions to the project under the Centre's Power Sector Development Fund (PSDF) for stranded gas-based power projects. These concessions include waivers in sales tax (Rs 150 crore) and transmission charges (Rs 176 crore) for two years. The detailed mechanism in this regard will be presented before the cabinet soon.

The project was shut in November 2013 for lack of gas, power demand and financial woes. The Railways will be supplied 500 MW from the project at the rate of Rs 4.70 per unit, not including the subsidy support of Rs 1.30 per unit, for two years. After that the Railways can buy it for Rs 5 per unit.

The Railways will then supply this electricity to Maharashtra (250 MW), Gujarat (50 MW), Jharkhand (100 MW) and West Bengal (100 MW).

Nearly 14,305 MW gas-based capacity in India is stranded due to lack of fuel. The PSDF will provide expensive imported Regasified Liquefied Natural Gas (RLNG) to them at an affordable rate. The RLNG will be sourced by the Gas Authority of India Limited (GAIL) from the international market.

According to sources, this will be a win-win situation – the Railways, which otherwise purchases power at around Rs 8.70 per unit, will benefit from the move and RGPPL'S stranded assets will also be revived. The generation is likely to commence from November 1 onwards.

"This power will not be purchased by MahaVitaran, only Railways. We do not want to pass on the burden to domestic users," said Energy Minister Chandrashekhar Bavankule, pointing to the high power tariff.

Maharashtra had surplus power and electricity was being sourced from open access for as low as Rs 3 per unit. Ironically, the RGPPL was supplying 95 per cent of the power generated to the state and the rest to smaller states such as Goa, Diu and Daman and Dadra and Nagar Haveli. Officials said they could afford the power only if it came at a tariff of around Rs 3.50 per unit.

"Once the project kicks off, we will look at blending it (with domestic gas)… and support through the National Clean Energy Fund," said an official, adding that after two years, they plan to blend imported gas with domestic gas to bring down the cost.

Promoted by the scandal-ridden Enron Corporation, the project located in Ratnagiri district, was re-started in 2005 by stakeholders such as the National Thermal Power Corporation (NTPC), GAIL, Maharashtra State Electricity Board (MSEB) and financial lenders. sThe project costs Rs 11,594 crore, including Rs 3,820 crore in equity and Rs 7,774 crore in debt.

The revival of the project will also strengthen the state grid — while most generating plants are based in eastern Maharashtra i.e Vidarbha, the load centres, which account for bulk of the demand such as the Mumbai, Thane, Pune belt – are located on the western side. The generation from the RGPPL will help stabilise the grid.

The power plant, first to be de-rated to 1,967 MW from the original 2,150 MW, 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 according to the board's decision. The two companies will have the same equity structure as the previous company.

The GAIL and NTPC will contribute Rs 1,022 crore each to augment the capacity of the terminal. Infrastructure works such as construction of breakwaters will enable it to handle more cargo from 24 to 80 annually.

The terminal is among the four such projects on the western coast, including ones at Dahej, Hazira and Kochi and has handled around 15 cargos so far.