The Indian Railways plans to buy electricity from the Dabhol plant, offering a lifeline to the 1,967 megawatt (MW) power project now owned by Ratnagiri Gas and Power Pvt. Ltd. The national transporter will, in turn, benefit from lower tariffs.
The proposal to source 500MW from the Maharashtra-based project atRs.4.70 per unit is part of the railways’ plan to slash its electricity purchase cost to less than Rs.5 per unit from the present average of around Rs.7 per unit. “Railways is a remunerative customer for the utilities. It wants to contain its electricity costs. One of the plans being discussed is to supply 500MW from Dabhol at Rs.4.70 per unit,” said a government official, requesting anonymity.
Ratnagiri Gas has lurched from one crisis to another, including high debt and shortage of gas, since the power plant was commissioned in March 2010 after the government took over the assets of Dabhol Power Co., a unit of the now bankrupt US energy firm Enron Corp. Maharashtra State Electricity Distribution Co. Ltd’s refusal to buy power generated by Ratnagiri is one of the many setbacks faced by the firm. The railways power purchase proposal, if approved, is likely to help revive the firm, which is teetering on the brink of collapse. “The proposal makes sense. It is a win-win for both,” said Sambitosh Mohapatra, partner (power and utilities) at consulting firm PricewaterhouseCoopers in India.