The government is unlikely to sell the Dabhol power plant's LNG receipt facility as state-run utility, NTPC, has been asked to pump in Rs 500 crore to bail out the project from defaulting on payments to contractors.
The Empowered Group of Ministers headed by External Affairs Minister Pranab Mukhejree, at its meeting on Thursday, decided against hiving-off the LNG unit and instead asked joint promoters NTPC and GAIL to run the power plant and LNG terminal as integrated project, official sources said.
Government was earlier mulling buying gas for the power plant from a local producer like Reliance Industries instead of importing costly LNG and selling the five million tons LNG import and regasification terminal to bring down debt.
However, the valuation of the import terminal, together with cost of completing the unfinished portion and building a breakwater, came to over Rs 4,400 crore, much more than the Rs 2,800 crore needed to build a similar sized new facility.
Sources said NTPC will infuse an additional Rs 500 crore into Ratnagiri Gas and Power Pvt Ltd (RGPPL), the owner of the Dabhol assets, for completing the 2,150 MW power project.
While NTPC would operate the power plant, gas utility GAIL (India) Ltd would source five millions tons of LNG for the plant. The power plant requires 2.1 million tons of LNG, while the remaining will be sold to other consumers.
Sources said the additional investment would enable RGPPL to clear dues of Punj Lloyd and its British partner Whessoe, the contractors for completing the LNG terminal. The Punj Lloyd-Whessoe joint venture was hired in May 2006 but work came to halt in December as RGPPL was not paying bills.
RGPPL needs Rs 450 crore for reviving power plant and Rs 565 crore for LNG works, but it does not have the money to pay the contractors, the sources said.