The laying of gas pipeline to feed the 2,150-Mw Dabhol power plant owned by Ratnagiri Gas and Power Private Ltd has been delayed again.

The new deadline for the completion of the project is now June-end, instead of the earlier deadline of May-end.  The commercial supply of gas will begin a few weeks after the completion of pipeline work.

"Since the mechanical completion of the gas pipeline has not yet been done ...this would automatically delay the supply of gas," said Chandan Roy, chairman and managing director, RGPPL. Company officials said the gas is likely to be available at Dabhol  by July-August.

GAIL (India) Ltd is laying the 576 km long Dahej-Panvel-Dabhol pipeline at an estimated investment of Rs 3,200 crore (Rs 32 billion). The pipeline will carry gas from Petronet LNG Ltd's [Get Quote] terminal at Dahej to Dabhol. "GAIL is confident of supplying the gas to the plant by June-end," said S K Jain, project director, GAIL.

The Dabhol plant comprises three blocks. Currently, only Block II (740 Mw) is running, using naphtha as fuel to supply power to the Maharashtra State Electricity Distribution Company Ltd or Mahavitaran. Naphtha is a costlier fuel for which RGPPL has to pay Rs 6.75 per unit, while Mahavitaran buys the power from RGPPL at Rs 5.50 per unit.

Once Blocks I and III start running on gas, then Mahavitaran would pay around Rs 3.20 per unit, for which an agreement between Mahavitaran and RGPPL was signed in April this year. But if the state agrees to reduce the value added tax once the gas becomes available, then it could buy the same power at Rs 2.90 per unit, said Roy.

Meanwhile, the empowered group of ministers has asked NTPC to infuse Rs 500 crore (Rs 5 billion) in the plant as a loan amount for the LNG terminal, while deferring the decision to hive off the terminal.

NTPC would get the first right of refusal in case the LNG terminal is hived off. "Getting the right of refusal is the biggest benefit that NTPC has got after agreeing to pump  in Rs 500 crore," said Roy.

GAIL and NTPC had initially contributed Rs 500 crore each to take equity stake of 28.33 per cent in the plant.

The overall revival cost of the plant (LNG terminal and break waters) has escalated by about Rs 2,600 crore (Rs 26 billion) to Rs 12,895 crore (Rs 128.95 billion) and it is still not clear who is going to pay for it, added Roy.

The Power Finance Corporation [Get Quote] has committed Rs 1,400 crore (Rs 14 billion) to revive the plant. It has released Rs 350 crore (Rs 3.5 billion) so far.