Sunday, February 26 2006 10:21 Hrs (IST) - World Time -

Mumbai: The first phase of the troubled Dabhol power plant will resume production on May one, using Naphtha for fuel, but the generation cost would be lesser than the Rs 5.50 per unit that Maharashtra pays for overdrawing electricity from the central grid, Power Minister Sushilkumar Shinde said yesterday (Feb 25,2006).

"Due to unavailability of Gas, we have no option, but to run the project on Naphtha, which is costlier than LNG. However, considering the present price of Rs 5.50 per unit, which the state is paying for overdrawing from the grid, this cost would be lesser," he said here.

The Centre had planned to restart the entire 2,184 MW Dabhol project by December last, providing a major relief to the state, 70 per cent of which continues to face load shedding up to 12 hours a day.

But now only the first phase with a generation capacity of 740 MW would resume production. The project was built by US-based Enron Corp but was closed after a billing dispute with the Maharashtra Electricity Board.

The state, which is facing a shortage of about 3,000 MW of power every day during peak hours, is forced to overdraw excess electricity from the grid, for which it is being charged Rs 5.50 per unit.

State-owned Gas Authority of India Ltd, now a stakeholder in the project, has not been able to secure long-term natural gas supplies to run the project, forcing the government to use naphtha as fuel.

But Shinde said naphtha would be used only for the first three months.

Speaking at the function, Power secretary R V Shahi said that the government was looking forward to purchase morenaphtha to meet the demand of the project.