Mumbai, Oct. 9: Dabhol Power Company (DPC) will switch on generation as Ratnagiri Gas and Power Private Ltd with a 30 per cent cut in costs made possible through a slew of government sops and lenders’ write-offs.

The cost of the project, now owned completely by Indian entities, is pegged at Rs 10,303 crore, down from Rs 13,000 crore estimated earlier by Enron, DPC’s original promoter. The reduction was achieved after the original lenders and promoters took a hit on their exposure. Interest costs are halved to 7 per cent from 16-17 per cent. MSEB has agreed to buy power at Rs 2.33 per unit.

Ratnagiri Gas and Power hopes to restart the first phase (740 mw) by May-June 2006 in power-starved Maharashtra. “Our assessment is that one of the blocks should be available for power by next summer,” Union power secretary R.V. Shahi told reporters here today.

General Electric and Bechtel, the original project contractors fighting for dues from the Indian lenders and the government till a few months ago, have made peace. They have promised to help put the project, where operations have been stalled since May 2001, back on track.

A contingent of government officials and senior representatives from NTPC, GAIL, Bhel and senior bankers from IDBI and ICICI Bank flew down to Dabhol today for an on-the-spot study of the ground realities at the site 300 kilometres away from Mumbai. The late-evening press conference followed their return from the site.

Shahi said he has asked the new owners ? NTPC, GAIL, State Bank, ICICI Bank, IDBI, Canara Bank and MSEB ? to accommodate the local workers laid off when operations were suspended. The biggest question-mark before experts is whether the project will be viable. Officials say 25,000 kilolitres of naphtha is stored in tanks, which is enough to sustain generation for 25 days. In the long term, however, naphtha is not a viable proposition since it is a costlier input than coal and LNG.

So, would it be a case of d?j? vu? When MSEB had stopped buying power from Dabhol, high naphtha prices had pushed up the cost per unit of power to around Rs 3.

Only 5 per cent of the power produced can be sold outside Maharashtra. “Our mandate is to buy at Rs 2.33,” said Jayant Kawle, managing director of MSEB. LNG is the favoured feedstock. GAIL, one of the main shareholders, is in talks with a couple of suppliers, company chairman Proshanto Banerjee said. “When we sign a contract for 15-20 years, the rates get evened out,” he said, adding high feedstock prices might be a non-issue.

Already, Shahi and others have indicated that the costs could go up to Rs 2.50. LNG prices are soaring worldwide as the US, Japan and South Korea have shown great appetite for the feedstock to fire their power plants.