Maharashtra government has decided against paying Rs2,381 crore arrears of Ratnagiri Gas and Power Project Limited (RGPPL), commonly known as Dabhol power project.

An announcement in this regard was made by chief minister Devendra Fadavis on Thursday. This has further diminished the chances of revival of this power plant anytime soon, which has been stalled since January 2014 due to the tussle over power cost.

Fadnavis on Thursday said: "We will not pay the arrears worth Rs 2,300 crore, though we believe the project is a national asset and while it should be revived, we can't afford to buy from them."

Fadnavis, along with union power minister Piyush Goel and state power minister Chandrashekhar Bawankule took stock of the power situation in the state during a five-hour marathon meeting with the energy department officials. A separate meeting with the bankers was held to discuss the fate of the Dabhol project.

The LNG-based plant was procuring the gas from GAIL, but switched to the Krishna Godavari Basin, obtaining gas at higher prices, leading to higher power cost. This infuriated the state, which was buying 95% of the power generated at RGPPL. The rest is supplied to Goa and other union territories.

A top official of Mahavitaran, the power distribution arm of Maharashtra energy department said: "We have been purchasing 95% of the power generated at RGPPL. We discontinued purchasing it July 2013 as it was Rs5.5 per unit, while we were getting Rs3.3 per unit from other plants. Though we ceased to be their buyer since January 2014, the company still wanted us to pay the capacity charges worth Rs2,381 crore, which is irrational."The matter is pending in the supreme court. RGPPL's version could not be immediately obtained.

Dabhol Power Station is located near Anjanwel village in Ratnagiri district, about 160kms south of Mumbai. The power station was a built by the Dabhol Power Company (DPC), which was a joint venture of Enron, General Electric, Bechtel and Maharashtra Power Development Corporation.

At the start of its construction in 1992, the power station was the biggest foreign investment in India.

Due to controversy related to the pricing of power, and owing to the Enron bankruptcy and disputes between Enron's creditors and the government of Maharashtra at the time, the operation of the plant was interrupted on several occasions.

State asks Centre Rs10,000 crore for power infra

Fadnavis on Thursday said that the state would seek Rs10,000 crore from the Centre under Deendayal Upadhyay Gramjyoti Yojna, to strengthen the power infrastructure in the state. After taking stock of situation at Mahagenco, the power production arm of the Maharashtra government, Fadnavis said: "Reforms are needed to cut down the power tariff for industries, which is needed to improve investors' sentiments. With the funds, we hope to streamline the work and complete the basic infrastructure related work within two years. This includes improvement in plant load factor and feeder separation to improve efficiency and cost factor." He also said that government would ask the Centre to increase the coal supply from 20 lakh metric tonnes to 25 lakh metric tonnes.

Electrical engineers to be hired as "Feeder Managers" to recover the power dues

Improving the efficiency of three major companies is the key to reduce the power tariff for industries, said Fadnavis on Thursday. To achieve the efficiency of distribution and transmission companies, which exert big losses due to power theft and unpaid bills, the government has decided to hire 'feeder managers' across Maharashtra, who will be entrusted with maintaining the feeder, recovering the dues of bills from people and coordinate with the district offices. Fadnavis added:"This will not only decentralise the process, making it much more effective and transparent, but also provide jobs to electrical engineers."