Wednesday, February 8 2006 15:19 Hrs (IST) - World Time -

New Delhi: The beleagured Dabhol power plant in Maharashtra will be initially run on naphtha when it restarts in the second half of 2006 as its new owners - state-run GAIL and NTPC - have not been able to tie-up LNG for the 2,184 MW plant.

"It looks like it will have to be run on naphtha. We are 4,500 MW short of power and we have requested that the plant be run (on naphtha) for 3-4 hours everyday to at least meet the peak demand," Maharashtra Chief Minister Vilasrao Deshmukh told sources after a 40-minute meeting with Petroleum Minister Murli Deora here.

Naphtha costs at least double the landed cost of LNG and will push up the cost of electricity generation from the plant, the single reason for the plant to shut down 4 years ago.

"We know that the cost of power will be more than Rs 2.80 per unit (kWh) agreed earlier. But there is no alternative. We are currently buying power from (NTPC's) Kawas plant at Rs 7.50 per unit," he said, indicating the Maharashtra State Electricity Board (MSEB) will subsidise Dabhol power.

According to estimates, MSEB - which is to buy the Dabhol power - will have to bear a loss of about Rs 190 crore if the plant was to run on naphtha for 3 months.

While Deora admitted that LNG was hard to find in global markets, Deshmukh said there might be slippage of couple of months from the early June start-up date earlier decided by the Government. "It looks like the start-up will be delayed," he said.