Dabhol Power Company: A Comprehensive Overview

The Dabhol Power Company is a significant player in India's energy sector. It was established in 1992.

The company's main objective is to generate electricity through various means, including thermal and renewable energy sources.

Located in the Ratnagiri district of Maharashtra, the Dabhol Power Plant is one of its key facilities. It has a capacity to produce 1,900 megawatts of electricity.

The company has also invested in other projects, such as the Dabhol-Belgaum transmission line, which plays a crucial role in transmitting power to other parts of the country.

The Dabhol Power Company faced numerous challenges and controversies since its inception. One of the major controversies was the displacement of people that would take place due to the construction of the plant, which led to protests and a riot in May 1995.

The project was also criticized for its lack of transparency, alleged padded costs, and environmental hazards. The Maharashtra state government ordered the project to be halted in August 1995 due to these concerns.

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Enron had invested around $300 million into the project by then, but it was unable to recover its investment due to the project's cancellation. The company eventually sought $300m in compensation through arbitration proceedings.

The project's cost was a major point of contention, with the price of power from the Dabhol plant being four times higher than what Maharashtra could afford. The Maharashtra Government subsequently stopped paying for Dabhol, leading to an unpaid bill of $22m by December 2000.

The project's history is marked by a series of disputes and arbitration proceedings, with Enron and the Maharashtra Government unable to come to an agreement on the price of power. The project's cost eventually escalated to $2.9bn after RGPPL took over to own and operate the plant in 2006.

India's gas shortage has had a significant impact on the country's power generation. The Dabhol power plant requires 8.5 million standard cubic meters of natural gas a day to operate at full capacity.

The shortage of gas supply from the KG-D6 gas field, operated by Reliance, has severely affected the plant's operations. Output from the KG-D6 field fell by more than 55% from 2010 to 2011.

The Dabhol plant has not been able to operate at full capacity since then, with its power generation sinking due to the fall in natural gas supply. The plant was receiving less than 3mscmd, reducing its operational utilisation to one-third of its installed capacity.

The plant was closed for five years before RGPPL took over in 2006, but its troubles continued until 2015. It resumed operations in 2015, after a two-year hiatus, following a restructuring of the company into two firms: Ratnagiri Power and Konkan LNG.

Ratnagiri Power manages the power plant, while Konkan LNG operates the LNG facility.

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The Dabhol power project was met with fierce opposition from the start. The project was criticized for alleged favoritism, corruption, and a lack of transparency in its award.

Protests broke out in 1995 when hundreds of villagers swarmed over the site, leading to a riot. The security forces guarding the project were later accused of human-rights abuses by Human Rights Watch and Amnesty International.

Enron, the company behind the project, invested around $300 million before construction was halted. The Maharashtra state government ordered the project to be stopped due to concerns over transparency, padded costs, and environmental hazards.

The project was also criticized for its high payment for power compared to other projects. The risk of currency fluctuation was another major concern.

A committee set up in 1995 recommended scrapping the Dabhol project, but Enron sought $300m in compensation through arbitration proceedings.

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The Maharashtra Cabinet has given the green light to revive the Dabhol Power Project, which will restart on November 1. This is a significant development for the project, which has been shut since 2013 due to a lack of fuel.

The project will be split into two separate companies, one to manage the power plant and the other to operate the Liquefied Natural Gas (LNG) facility. This decision was made to revive the project.

Ratnagiri Power Pvt will have the same shareholders as RGPPL, with NTPC and GAIL holding 25.51% each, MSEB holding 13.51%, and financial institutions holding the remaining 35.47%. This is a crucial aspect of the project's revival.

Ratnagiri Gas will be an equal joint venture between NTPC and GAIL, with MSEB being offered a small stake. If MSEB does not pick up equity, the two companies will be equal partners.

The State has agreed to provide special concessions to revive the project, including waiving of VAT, CST, and Octroi. This is a big relief for the project, which has been struggling to stay afloat.

GAIL will provide a 50% concession on pipeline and re-gasification rates, making it easier for the project to operate. This concession is a significant help for the project.

The project will generate 500MW of electricity, with Railways buying 250MW for Maharashtra, 50MW for Gujarat, and 100MW for Jharkhand and West Bengal respectively. This is a significant amount of electricity that will be generated by the project.

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The Dabhol Power Company's construction and operation were marred by controversies. The project was initially completed in 1999, using naphtha as fuel.

The price of power from the Dabhol plant was significantly higher than what Maharashtra could afford, with the cost being four times higher than that offered by domestic power producers as of 2001.

The Maharashtra Government stopped paying for Dabhol, with an unpaid bill of $22m as of December 2000.

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The Dabhol power plant's construction costs are a prime example of how things can go awry. The estimated project cost at the time of asset transfer was $1.82bn.

This figure, however, was only the beginning of the story. The project cost further escalated to $2.9bn after RGPPL took over to own and operate the plant in 2006.

The Dabhol power plant is a combined-cycle plant that spans an area of 2.02ha.

It has three blocks, each designed with a multi-shaft combined-cycle module, consisting of two gas turbines and one steam turbine provided by GE.

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The plant uses regasified liquefied natural gas (R-LNG) as its primary fuel, transported through the Dahej-Panvel-Dabhol pipeline.

Water from the Vashisthi River is used for the plant, supplied through a 50km inlet line from Chiplun.

Seawater is used for cooling the plant.

The plant's electrical output is transmitted through two 400kV double-circuit lines, namely Koyna 1 & 2 and Nagothane 1 & 2.

A long-term service agreement worth Rs6bn ($108m) was signed with GE in 2009 to revive the generating units of the plant.

The plant took a year to become capable of operating at 100% of its installed capacity, following the repair works in 2010.

As of 2012, RGPPL had invested Rs38bn ($689m) in setting up additional infrastructure for the project since 2005.

The Dabhol Power Company has a complex and fascinating history. The project was first proposed in 1992, with Enron approaching the government of Maharashtra to set up a 2,184 Megawatts LNG powered plant at Dabhol, Ratnagiri.

The project was initially intended to be financed by the World Bank, but it refused to give a loan due to feasibility issues. This led to the project being financed by a consortium of companies, including Enron, Bechtel, GE, and five major lenders.

The financing of the project was a significant undertaking, with a total investment of over $700 million. The breakdown of the financing is as follows:

The project was also notable for its power purchase agreement, which was signed between DPC and MSEB in December 1993. Under this agreement, MSEB would buy 90% of the power produced by the plant and receive 30% of the DPC profits annually.

As of 2016, the Dabhol Power Company was operating at a colossal loss, selling expensive electricity to either the state-owned MSEDCL or India railways for survival.

The company's financial struggles were severe, with a total debt of nearly Rs. 10,500 crore in September 2015.

In an effort to revive the loss-making plant, the company was split into two separate entities: one to manage the power plant and the other to manage the import of LNG.

The power plant, which was previously known as Ratnagiri Gas and Power Pvt Ltd (RGPPL), had started operation in May 2006, but ran into problems soon after due to a lack of naphtha supply.

The plant was shut down on 4 July 2006, but was made operational again in April 2009 with a 900 MW RLNG fired running capacity.

As of 2016, the company's operations were still heavily dependent on political developments and the performance of newly repaired rotors.

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