Mumbai: Irked by Maharashtra government's offer to buy the almost defunct Dabhol Power Company's (DPC) power at Rs 2.25 per unit, Industrial Development Bank of India (IDBI), the lead financial institution to the $ 3 billion project, on July 11 said, "it will reject the offer as it is absolutely unviable and uneconomical".

"We have no option but to reject the offer as it is unviable and uneconomical. We had made several representations to the senior officials of Maharashtra government explaining them that after several concessions the least rate arrived at for sale of DPC power was around Rs 2.50 per unit and not less than that," IDBI chairman P P Vora said.

He said with an effort to convince the state government and its electricity board (MSEB) to recommence off take of power from DPC's phase one, the FIs had explained the rationale behind the Rs 2.50 per unit figure stating that it had already encompassed several concessions with it.

"Our insistence was to stop DPC's bleeding immediately and hence put forward this purely ad hoc arrangement wherein the tariff will include only the interest which is to be served to the lenders," Vora said.

He said in the tariff put forward by the FIs, certain specific concessions like lower excise duties on the fuel, in this case it would be naphtha for phase I, are also included.

IDBI led Indian FIs have an exposure to the tune of Rs 6,200 crore in the mothballed project which has been lying idle for over a year now ever since MSEB rescinded the power purchase agreement over an $ 640 million non-payment of dues.

"We also have waived principal and capital related payments, all this has been conveyed to the state government," Vora explained.

However, the IDBI chief clarified that the FI had not yet received any formal proposal from the state government but said it will reject the proposal after seeing it.

"Once it comes in our hand, we will officially communicate to the state government of our rejection of their offer," he added.

Asked what will be the FI's alternative if the state government refuses to budge from its stand, Vora said, "We are looking at various options which will be made public at a later stage."

He also remained non-committal over a query that in absence of Maharashtra government's co-operation, whether IDBI will request the Union power ministry to route DPC power through the Western Grid.

On July 10, Maharashtra Cabinet okayed decision to allow MSEB to draw 50 per cent power produced by DPC's Guhagar-based project's 658 mw phase one at Rs 2.25 per unit.

"As a temporary arrangement, government has agreed to buy 50 per cent of energy produced by DPC at a non-negotiable rate of Rs 2.25 per unit. The decision has been endorsed by the Cabinet," the government said.

However, in its proposal submitted before the state Cabinet two months ago, MSEB had stated that it was ready to draw the power from the idle power plant at a price "not more than Rs 2.50 per unit and 60 per cent plant load factor for a period of five years".

PTI