Gail India, an equal promoter in Ratnagiri Gas and Power Pvt Ltd - the firm that owns the Dabhol power plant, on July 10 transported the first ever gas to the plant through a newly built 577-km pipeline from Dahej in Gujarat, but the plant could not take gas supplies as RGPPL could not provide guarantees for payment for the fuel.

"The agreements are being signed today and gas supplies (to the power plant) will begin in a day or two," Gail chairman and managing director UD Choubey told reporters in New Delhi. Gail had withheld gas supplies pending RGPPL furnishing a Letter of Credit (a sort of payment guarantee) of Rs 33 crore (Rs 330 million).

RGPPL could not furnish the LC as it had not got a similar guarantee from its sole customer Maharashtra State Electricity Board for purchase of power. "MESB has now got approval from the state government and LCs are being opened," RGGPL head Chandan Roy said.

He said the 740-MW Block-II would switch to gas in about two weeks time while a similar capacity Block-III would come on gas after eight weeks. The 670-MW Block-I is scheduled to go on gas from December 15, he said.

Petronet LNG Ltd is importing gas in liquefied form in ships from RasGas of Qatar at its Dahej terminal under a short-term deal. After re-gassification, the gas is transported through the Gail's pipeline to the power project.

Choubey said Gail was in talks with Sonatrach of Algeria for import of 2.5-5 million tons of LNG on long-term basis from 2010 once Dabhol plant's LNG receipt facility is fully completed.