Tata Power has also evinced interest to set up another unit of 500 mw in the second phase.

In a letter addressed to chief minister Vilasrao Deshmukh, Tata Power managing director Adi Engineer said: "With a past experience of being a low-cost energy provider, we could work out the most competitive proposal, which will be to the advantage to the state government and the public at large."

Mr Engineer appealed to the chief minister to give an in-principle approval for the submission of a detailed proposal in this regard. He further said that since the state may be considering such projects currently, the company would like that "Tata Power is also given a fair opportunity in this regard."State government sources told The Financial Express that it would look into the proposal and later give its approval.

Mr Engineer, who had dispatched the copies of this letter to state energy minister Padmasinh Patil, his deputy Rajendra Darda, chief secretary Arun Bongirwar and energy secretary UK Mukhopadhyay, emphasised the need for such projects especially in the wake of "current scenario of load-shedding and peaking power shortages in the state." He added that the need for power generation through the coal-based projects become inevitable, in view of the fluctuating prices of petroleum-based fuels. The obvious reference was to the ongoing Enron drama, wherein the loss-making Maharashtra State Electricity Board (MSEB) was compelled to purchase power from the Dabhol Power Company at low capacity, in view of high per unit cost in the wake of high naphtha price.

Mr Engineer said that Tata Power, during its various presentations to the state government, had expressed its desire to "play an increasing role in the state's power sector." This is in reply to its rival BSES' plan to go a big way in the co-generation projects and set up 495-mw combined cycle project at Saphale and another 500 mw coal-based project in Amravati district in the Vidarbha region.

Mr Engineer said that Tata Power had recently synchronised a 120-mw coal based unit at Jojobera in Bihar and added that another 180 mw unit would be commissioned in due course of time. "Thus, we could work out a proposal for a coal based power plant in Maharashtra," he added.

Tata Power's proposal deserves special significance, especially when the Maharashtra Electricity Regulatory Commission is going to start a day-to-day hearing from January 11, on a writ petition filed by BSES on the issue of standby charges. Tata Power had taken strong objection while questioning the MERC's authority to decide upon this issue, which had already been resolved by the state government through its order dated March 22 this year.

Furthermore, Tata Power's proposal is also crucial, as state government is yet to clear its proposal to re-power 450 mw of Trombay plant.