Declaring Dabhol phase-II as mega power would also entitle it to income-tax holiday for 10 years in the first 15 years of operation of the plant. Apart from customs duty exemption on the plant equipment, the project would also get reliefs from sales tax and other local levies. The MSEB, which is unable to pay full power bill to theDPC since January, had purchased power at Rs 7.80 per unit as per the October bill.

The state government's request achieves special significance now. The state energy minister Padmasinh Patil had sought the union power minister Suresh Prabhu's intervention and appealed to him to consider Dabhol phase-II as a mega project.

Mr Patil had invited criticism from some political parties when he said the government would review the project, but ruled out the possibility of either reconsideration or scrapping of the phase-II. The government will have to make a huge payout to the DPC in that case, the minister said.

The state government and the MSEB have demanded that the Power Trading Corporation (PTC) be asked to purchase power and sell it to state electricity boards (SEBs) across the country. This would lead to the establishment of an inter-state power sale so that, ``in future, power transfer from one state to another will become easier and the MSEB will be in a position to sell surplus power to other states also,'' they said.

The state government and the MSEB have pointed out that as per the mega power project policy, the capacity of the thermal plant should be 1,500 mw or more and the hydel plant 500 mw or more. The plant should have inter-state sale of power, and the states to which the power is sold should have set up electricity regulatory commission. The state government and the MSEB have said the DPC's gross capacity comprising phase-I and phase-II would be 2,450 mw ISO. The DPC is having a power purchase agreement for phase-I (740 MW) and phase-II (1,444 MW).