The Maharashtra State Electricity Board (MSEB) has indicated it will be willing to buy power from Ratnagiri Gas and Power Ltd's Dabhol plant at around Rs 5 per unit, which will be the price if naphtha continues to be used as fuel.

The operations of the plant will commence in October after a three-month shutdown beginning July 1. The plant will stop production not only because of its naphtha stock being exhausted but also the MSEB's unwillingness to buy its costly power.

The views on the likely pricing of power purchased by MSEB from the Dabhol plant were expressed today by power sector officials from Maharashtra at a meeting organised by the Central Electricity Regulatory Authority in New Delhi.

"MSEB pays Rs 4.30 per unit at present. Maharashtra may buy power at Rs 5.25 to Rs 5.30 per unit when the plant is run on naphtha, in October. Rs 5 is a good price," a government official said. MSEB also planned to buy 1,400 Mw from the Dabhol plant at base load, if the second phase was operational by December, an official said.

As for fuel supply to the plant, RGPL may buy gas from the spot market when the plant starts operations in October.

"The CERC has suggested that Ratnagiri Gas and Power Company Limited (RGPL) should buy gas from the spot market instead of waiting for costly naphtha or LNG (liquefied natural gas) supplies," the official added.

Shell recently approached RGPL for sale of natural gas at rates lower than naphtha and the company is studying the offer. If the Dabhol plant is run on natural gas, there will be a significant fall in the price of power.

RGPL is constructing a terminal at Dahej, located adjacent to the plant. The terminal may be completed by March 31, 2007. It is also expected that gas sourced from Qatar will be available to RGPL by March 2007.

In the mean time, the CERC has advised NTPC Ltd [Get Quote] (RGPL's parent company), and other stakeholders to discuss the price and base load and come up with a petition by June 2006, for approval.