Dabhol power project in equipment trouble | business | Hindustan Times
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Dabhol power project in equipment trouble

business Updated: Mar 03, 2009 21:21 IST
Anupama Airy

Dabhol power project has once again run into trouble. Faced with frequent failure of the machinery supplied by General Electric of the US, the plant’s operations have “turned unreliable”.

A financial viability package is now being discussed by the ministries of power and finance with Reserve Bank of India (RBI), as Rs 7,012 crore of loans extended to the project by financial institutions (FIs) and banks for the project run the risk of being declared as non performing asset (NPA).

The implementing project agency —Ratnagiri Gas and Power Project Ltd (RGPPL) — has sought immediate government intervention. RGPPL has requested the government to ask GE to provide “guarantees on the machines supplied by it and also to reduce cost of spares and repairs of gas turbines and compressors of the power plant.”

The repair and maintenance costs are huge and need to be reduced as it has a direct impact on the tariff from the power project. “Reliability of spares is essential for arriving at any business plan/tariff figures as current operations have been unreliable and have resulted in projections in the past not holding good in the absence of a long-term service
agreement from GE,” said a note of the power ministry.

The note said “an urgent fool proof business case be presented to RBI as loans to the project run the risk of being termed as the NPA.” Canara Bank’s loan to RGPPL has already been classified as NPA.

A GE spokesperson said, “GE continues to support the Dabhol Power Plant revival project. We are committed to continue working closely with our customer to complete the revival of the plant as quickly as possible.”

The power ministry has constituted a group of lenders to work out a package for long-term viability of the project.