MUMBAI: The Mahavitaran (Maharashtra State Electricity Distribution Company) and the Ratnagiri Gas and Power Private Limited (RGPPL) signed a 25-year power purchase agreement on Tuesday, paving the way for quicker revival of the Dabhol plant.

As per the terms, the cost of power from the plant — revived by RGPPL last April — is pegged at Rs. 3.10 per unit. Also, 95 per cent of the power will be available to Maharashtra and five per cent can be allocated to customers outside the State. The plant is expected to reach its maximum capacity of 2,150 MW by December 15.

The agreement was signed between the managing directors of Mahavitaran and RGPPL, Ajay Bhushan Pandey and S.B. Agrawal, in front of a large media contingent.

Mr. Agarwal said the gas supply of 1.5 million metric tonnes per annum of LNG had been arranged through Petronet LNG Limited.

The contract period was 27 months from July 2007 to September 2009. The long-awaited agreement could also pave the way for a loan of Rs. 450 crore from the Power Finance Corporation (PFC), which would contribute towards repairs at the plant located in Ratnagiri district.

It would ensure a quick revival of the power plant and already certain targets were set for commercial operations.

The plant, generating about 350 MW and running on naphtha, was beset by problems of turbine failure. However, this would be sorted out by May 1, when block two would generate about 700 MW. Maharashtra would get an additional 1,400 MW of power by July when block three was expected to become operational.

However, the gas availability was only for two blocks, he said. The Centre had assured RGPPL that gas would be made available for the third block as well. The cost of power at Rs. 3.10 was based on the price of gas Rs. 2.12 per unit.

The fixed cost was raised to 98.5 paise from the earlier 96 paise. However, certain components of the fixed cost were under review by the Empowered Group of Ministers.

Mr. Agarwal did not say where Petronet was sourcing gas, but admitted that gas was in short supply.

The variable costs would depend on the cost of gas. Since the gas supply was tied up for two years, the price was not likely to increase and there would be less chances of a major variation.

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