Dabhol power project high power cost impedes expansion plans

The plan  to ramp-up the capacity of the Dabhol power plant by another 2,200 MW may be nipped in bud.

It appears that prospects of finding buyers for the plant appear to be dim.

Though the two main promoters of RGPPL-- NTPC and GAIL-- are apparently ready to infuse funds for the expansion project, the Maharashtra government has reportedly expressed its unwillingness to buy power at about US$0.1431 per unit.

This exorbitant power price will be due to the limited availability of domestic gas supply and the consequent makeshift arrangement of importing the required gas quantity for the plant at 14.5 per cent of JCC crude price index. Thus, the variable cost of power from the proposed plant works out to be in the range of US$.0771 - US$0.1431 per kWH.

As per the estimates of RGPPL-promoters, the expansion may cost US$1.94 billion, or US$42 million per MW, and require about 5 MMSCMD gas supply for the initial capacity installation of 1,500 MW.

8In light of these facts, the promoters of RGPPL are giving a rethink on the expansion plan, even though the Board of RGPPL has already approved the feasibility of the expansion project.