Unable to procure natural gas on long-term basis for running the Dabhol power plant, the government now plans to operate another unit of the project on naphtha from May to partly tide over the massive electricity shortages in Maharashtra during summer.

"The second unit of Ratnagiri power project would begin operations from May end and due to shortage of gas, the two units might run on naphtha. Government has already exempted the fuel from excise duty," Power Minister Sushilkumar Shinde said at a Federation of Indian Chambers of Commerce and Industry conference in New Delhi.

The third unit would only begin in November as it was in considerable state of disrepair, he said. Ratnagiri Gas and Power Pvt Ltd, the new owner of the 2,150 MW project, had restarted one unit of 740 MW in May last year on naphtha after a five-year gap.

All the three units were to be switched on gas earlier this year, but the plan had to be postponed due to non-availability of gas.

Besides the existing unit, another unit of equal capacity would be utilised for generating power as Maharashtra is facing acute shortages of up to 5,000 MW in peak hours.

Shinde also said the issue of funding the revival scheme, power purchase agreement as well as gas supply agreement would be finalised on Tuesday.

"The EGoM meeting was held on Monday and the ministers will meet on Tuesday. Then it will be finalised," he said.

The empowered group of ministers suggested on Monday that Power Finance Corporation could lend the power plant Rs 400 crore (Rs 4 billion) for repair of one unit and setting up the second block of 700 MW. PFC, which asked for a 25-year PPA and GSA, will be given financial support by Maharashtra government.