Despite a severe power shortage, the Maharashtra government is holding out for lower tariffs from the mothballed Dabhol Power Company (DPC) plant.

According to officials, Maharashtra faces a peak power shortage of 3,200 MW during peak hours and the DPC could help tide over the shortage in a big way.

But the state government, which is working on a revival plan for the project in consultation with international lenders to the project, set up by US-based Enron Corp, is still pitching for lower tariffs.

According to sources, the state government continues to be keen on pricing electricity from the plant at around Rs.3 per unit though lenders to the project are bargaining for higher prices.

Representatives of the state government met with foreign lenders in the US to revive the plant a few weeks ago, Maharashtra Chief Minister Vilasrao Deshmukh had told reporters here earlier this week.

The DPC project, originally worth $3 billion, suspended operations after the
Maharashtra State Electricity Board stopped buying power saying it was too costly.

The cash-strapped Maharashtra government was keen on buying power from the plant at around Rs.2.80 per unit, far lower than the Rs.4 to Rs.7 demanded by DPC's promoters.

The project's revival would depend on Indian lenders to the project buying out the debt of the foreign lenders which amounts to Rs.31.5 billion ($720 million). A Special Purpose Vehicle has been floated for the purpose.

DPC was to have a capacity of 2,184 MW after both its phases are completed. Till it was shut, Phase I of the plant was operational while the second phase was nearing completion.