The centre had earlier given the linkage to about 12,000 mw capacity liquid fuel-based power projects all over the country as a one-time measure in view of their short-gestation period and lack of alternative fuels. The new guidelines allow states to contract new power projects based on FO/LSHS beyond the existing linkages.

In the case of Maharashtra, the fuel linkage was for 940 mw capacity of which the state had allocated 410 mw to the Reliance powerproject at Patalganga, 300 mw to the Dolvi captive power project of Ispat Industries and the balance to other small projects.

In line with the new guidelines, the Maharashtra State Electricity Board (MSEB) has asked developers of these projects to shift to other fuels if they so desire. "Some of the developers have already approached the board with a proposal to shift the fuel," MSEB officials said, adding that a few were also planning to use alternatives to naphtha.

MSEB is considering allocating some of the naphtha, if released by the earlier allocated projects, to the seven short-gestation liquid fuel-based power plans announced last year. The projects, ranging from 100 mw to 180 mw, are to be located in various districts of Maharashtra. The state has already received bids from local and foreign power companies and is planning to shortlist these proposals by the end of this year.

The new projects, based on FO or LSHS, are however required to use integrated gasification combined cycle (IGCC)technology. They can also use other non-traditional fuels like condensate and orimulsion subject to actual user condition. The ministry of power has also provided the state electricity boards a study analysis for use of orimulsion as liquid fuel as resorted to in other countries. The analysis was carried out by the Central Electricity Authority (CEA) and NTPC.

However, there would be no obligation on the part of oil companies to give fresh linkages for any new projects, except naphtha-based ones within the ceilings already communicated, and projects based on other fuels for which linkages have been issued.

The centre has permitted high speed diesel (HSD) for power plants only as a special case in inaccessible and isolated areas where small diesel-based capacities are sought to be set up and where the use of other fuels is not feasible.

All the existing projects, which have given the fuel linkages, are asked to obtain financial closure by October this year.

As per the notification, if the states wantto reallocate the existing liquid fuel linkages, they should send their proposals to the ministry of power, which in turn would make recommendations to the petroleum ministry for conveying such approval.

If the state needs time to identify new developers for allocation based on competitive bidding, six months would be given and another six months thereafter for these projects to achieve financial closure.