The gas-starved Dabhol power plant in Maharashtra will receive gas at $5.84 per million British thermal units (mBtu) from June this year. This translates to a generating cost of Rs2.80 per unit.

Rantagiri Gas and Power Pvt Ltd, an NTPC-Gail joint venture, own the Dabhol plant.

The cost of gas and power generation has been arrived at by allowing Petronet LNG to pool the price of the cheaper Qatar LNG with the costlier imported spot purchases.

An empowered group of ministers yesterday approved the pooling mechanism under which Petronet's existing customers for 5-million tonnes will pay $1.25 per mBtu more, enabling Dabhol power plant can generate electricity at Rs2.80 per unit.

Petronet LNG currently supplies five million tonnes of LNG bought from Qatar's Rasgas at a delivered price of $4.60 per mBtu. Though these supplies cost $2.79 (ex-ship), the spot purchases are around $7 to $8 per mBtu.

From June this year Petronet will import 1.5-million tonnes of LNG in 24 spot cargoes at two cargoes a month.

Pooling the prices between the two sources has made imported LNG affordable for the Dabhol plant and has also made it competitive with the expected supplies from K-G basin field.

The EGoM also approved a fixed cost of Rs0.93 per unit and a variable cost of Rs1.81 per unit based on a gas price of $5.84 per mBtu.

Petronet will get the LNG at its Dahej terminal in Gujarat and move it to the Dabhol plant through a pipeline network. While the Dahej-Uran pipeline is ready, the Uran-Dabhol pipeline is expected to be ready by May this year.