Reliance Power was asked to select distribution areas from various locations in Konkan, Sangli, Satara, Ratnagiri and Vidharbha districts. The company has to state its choice of areas in advance. The identified distribution areas will not be attached to an escrow commitment of any other power company.

However, before exercising the option RPC will have to give the state some time--cure period--to make the payment. If the payment is not made the power company may sell directly to the third party.

The option is also linked to the amount due to the electricity board. This means that the power companywill be able to use the option only to the extent of payment due to the board.

Reliance Power, which is setting up a 447-mw power plant at Patalganga, has been given the option of third pary sale in lieu of the escrow facility. Escrow account facility is usually demanded by financiers of projects.

The power company is yet to give its nod to the MSEB proposal. According to experts there are still some gray areas in the proposal which need to be sorted out. These include: accounting for growth in demand in the identified distribution areas, right to sell power at discount, whether the third party option could be used for future or pending payments and whether the power company would be allowed to generate revenue after the state's default and it would be compensated for arrears due to the MSEB.

Although the proposal is being examined by the power company, industry experts feel that lenders will not be content with the terms of the proposal. The company is yet to identify distribution areas of itschoice.

If implemented this will be the first time that the state would have allowed such a trade.