Amid possibilities that power giant National Thermal Power [Get Quote] Corporation may bid to acquire the 'defunct' Dabhol Power Plant, the government on Tuesday said a resolution was 'in sight' to restart the over $3 billion project in Maharashtra.

"We are in sight of a solution and there is no deadlock now," Union Power Minister P M Sayeed said. He said the Centre had been keenly monitoring the progress on Dabhol and was eager to restart it at the earliest.

"The UPA government is serious about it. The empowered group of ministers constituted to look into the issue is having regular interactions and discussions have reached final stages," he said.

Asked if the centre was targeting to restart the project by June next year, Sayeed declined to give any details and said the government was keen that the project restarts generating power as soon as possible.

On whether NTPC could acquire the project once it is operational and other issues between promoters GE and Bechtel on the one hand and Indian FIs, with over Rs 5,000 crore (Rs 50 billion) exposure in the project, are resolved, he said , "NTPC is a Navratna public sector undertaking. It has huge resources and can take big decisions. It is already running a 3000 mw plant in Singrauli."

As of now, NTPC has been asked to make the project operational and the Corporation had sent a team of experts to Dabhol two months ago to assess the status.

Sources in the power ministry said NTPC and ministry officials were meeting on a weekly basis to monitor the progress.

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Sources said a call on whether or not NTPC would make a bid to acquire the project would be taken after the issue was referred to debt recovery tribunal by the FIs following a settlement with GE and Bechtel.

C P Jain, chairman, NTPC declined to comment on queries relating to Dabhol saying they were just looking at making the plant operational.

For the purpose of operating the plant, NTPC and GAIL would create a special purpose vehicle and a joint venture would run the plant, NTPC officials said.

Earlier, there were reports that corporate giants like Reliance [Get Quote] and Tatas could be interested in acquiring the 2,184mw power project. GE has already announced joining hands with NTPC and BHEL to restart the project.

GE and Bechtel effectively hold 85 per cent stake in the DPC. IDBI, ICICI Bank [Get Quote], State Bank of India [Get Quote], Canara Bank [Get Quote] and others have an exposure of over Rs 5,000 crore in DPC.

Set up in two phases, DPC's Phase-I of 740 MW was earlier based on naptha but was to be switched to LNG, while Phase-II of 1,444 MW was based on LNG from the outset.

The union cabinet had recently given a go ahead to the government to stand guarantee to the domestic financial institutions to settle the foreign debts of the power company.

Indian lenders also wanted to buy back the equity of GE and Bechtel and settle their contractual payments, totalling $460 million. A 'take-or-pay' power purchase agreement between MSEB and DPC obliged MSEB to purchase 90 per cent of the power generated by DPC.

Due to commercial disputes between the state government and Dabhol over pricing, Maharahstra had stopped buying electricity from Dabhol and a major dispute erupted between the two.

The process to resolve the DPC issue was speeded up after the UPA assumed office. The new government set up an e-GoM and asked the cabinet secretariat to look into the issue.

The effort to restructure and restart Dabhol power plant comes in the wake of concerns raised by foreign promoters and the $6 billion claims filed by them in international arbitration at London for alleged breach of bilateral investment protection agreement.

According to the finance ministry's earlier estimates, restarting the power plant would entail a cost of about Rs 1,800 crore (RS 18 billion) or $390 million. This was required to complete the Liquified Natural Gas terminal, finish Phase-II and pay contractual charges to GE and Bechtel.