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Dabhol: Ministry seeks duty sops for naphtha

Rahul Wadke

Ratnagiri Gas facing depleting naphta stocks and no LNG supplies

Mumbai , June 28

The Ratnagiri Gas-run Dabhol power plant in Maharashtra is in a state of limbo, faced with no LNG supplies and depleting naphtha stocks.

The Union Power Ministry has written to the Cabinet Secretariat seeking exemptions on customs duty, state surcharge, VAT (Value-Added Tax) and other levies on fresh naphtha, which would be used for the plant. It has sought Cabinet Secretariat directions to the Petroleum & Natural Gas and Finance ministries for compliance on the issue.

Ratnagiri Gas & Power Pvt Ltd (RGPPL) sells power at Rs 4.25 per unit to the Maharashtra State Electricity Board. It has sought intervention from the Cabinet Secretariat regarding the issue of `import parity', which is used by oil companies while calculating naphtha price for the plant.

`Opportunistic approach'

The letter states "Oil companies have been adopting the principles of import parity pricing for arriving at the final price to supply naphtha to the indigenous users including thermal power plants. This basically is an opportunistic approach in a shortage market."

It draws attention to the fact that final price borne by RGPPL is Rs 34,810 per Metric Tonne (MT) of naphtha on a base price of Rs 23,628 per MT. The central tax and duties component in the final price is Rs 5,509 per MT and State taxes component is Rs 3,884 per MT. The final price also increases by another Rs 1,294 per MT due to ocean freight, landing charges and wharfage.

`Unviable electricity cost'

The letter also states that "The above price (Rs 34,810 per MT) of naphtha leads to a per unit electricity cost of Rs 5.93/kwh which is unviable. In case the Central and State taxes and duties are waived, the energy price works out to Rs 4.32/kwh"

As there is a delay in the completion of the LNG terminal at the plant, the letter also seeks concession on naphtha till January 2007 or till the terminal becomes operational.

Sources close to MSEB have said that old stocks of naphtha have depleted and if not replenished the plant is likely to be shut.

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