The controversial Dabhol power project, which recently received a fresh lease of lease of life, is expected to start operations in a year's time.

Announcing this at a press conference here on Tuesday, National Thermal Power [Get Quote] Corporation Chairman and Managing Director C P Jain said towards this end the government has set up a special purpose vehicle (SPV), Ratnagiri Power and Gas.

NTPC, GAIL and financial institutions such as IDBI will each hold Rs 500 crore (Rs 5 billion) equity in the proposed SPV. He said the government was ready to go ahead with the revival of the power plant as all outstanding issues with the foreign lenders and Bechtel and GE have been resolved.

He said the Indian financial institutions will soon approach the courts to invoke the mortgage on Dabhol Power Company's assets so that they can be handed over to the new company.

GE will continue to be involved in the Dabhol project as an equipment supplier, the NTPC chief said. Jain said the new company will sell power at Rs 2.30 kwh. Of this, Rs 1.10 is the fixed cost and Rs 1.20 variable fuel cost. He added GAIL is trying to source fuel at a cost as close to the Rs 1.20 benchmark as possible.

Jain said the final cost of power would, however, be dependent on the cost of fuel. But he refused to comment on how much beyond the benchmarked figure wuld be acceptable. He reiterated that GAIL was trying to source gas at a price close to the benchmarked price as possible.

He also said the inspection of the plant had led the NTPC team to believe that the plant in a good condition but said that actual condition would become known only when the plant machinery is inspected after the opening of the plant.

Jain also said NTPC has allocated 2050 mw of additional power to the state. Part of this, he said, will be available by 2007. This includes 338 mw from the Vindhyachal project and 344 mw and 319 mw, respectively, from Sipat 1 & 2. An additional 950 mw is also expected to become available from other projects in eastern India, Jain said.

Speaking about NTPC's plans, he said the NTPC has adopted a multi-pronged growth strategy to become a 45,000 mw company by 2012.