Power ministry requests for duty waiver on naphtha to be extended up to September

26-Feb-07

India’s ministry of finance had exempted till March 31, naphtha bought for Ratnagiri Gas and Power Project (earlier known as Dabhol Power Project) from custom duty, earlier last year. The exemption was by way of an interim arrangement till such time that LNG for the plant was made available and is valid till March 31. Gail, which is a promoter of Ratnagiri Gas and Power Project, was to have completed the Dahej-Dabhol gas pipeline and ensured supply of LNG for the plant by March 31. However, Gail has requested for a two-month extension to complete the gas pipeline, start up of which could get even further delayed. This implies that the Dabhol Power Project will have to be run on naphtha beyond March 31. This continuing uncertainty of tying up LNG supplies for the project have prompted the power ministry to ask for an extension of the duty waiver on naphtha up to September 30, 2007. Electricity from Dabhol power plant, which is currently being fuelled by naphtha, comes at Rs 5.01 per unit even with a duty waiver. If the custom duty on naphtha is restored the price per unit of power could go up to as much as Rs 8.