"The government, which wants cheap power for farmers, will review the Dabhol phase-II and later renegotiate. Hoever, the scrapping will be the last option," the state chief minister Vilasrao Deshmukh and deputy chief minister Chhagan Bhujbal told reporters after the weekly Cabinet meeting. Mr Deshmukh and Mr Bhujbal said the issue would be taken up at the Cabinet soon.

Mr Deshmukh said the government would seek legal advice before taking any formal action in this regard. He added that so far there has been no formal communication from either side.

Mr Deshmukh said another option could be roping in the state-run National Thermal Power Corporation (NTPC) to pruchase Dabhol power and incorporate it in the national pool. He, however, added that no formal request has been made by the state government to the NTPC or the Centre in this regard though the state energy minister Padmasinh Patil had raised this issue during his meeting with the union power minister Suresh Prabhu. Also, the government may consider the option of increasing its stakes in the DPC.

Mr Deshmukh and Mr Bhujbal said neither the state government nor the loss-making Maharashtra State Electricity Board (MSEB) would be able to bear the additional burden in the wake of high power purchase bill. "Today, the per unit cost, which has reached to Rs 8 may reach to Rs 20 or Rs 25 and this cannot go on," Mr Deshmukh added.

The chief minister said the MSEB has been purchasing power at low capacity and making the monthly payment of nearly Rs 97 crore towards fixed charges to the Dabhol Power Company (DPC). He informed that there had been slippages in the payment of monthly bills to the DPC.

Mr Deshmukh debunked the claim that the previous Sena-BJP government's renegotiation had cut in the per unit cost by Re 1. The reality is far from different, he added. The chief minister said the government was not sure whether the previous government's claim of per unit cost of Rs 1.86 after the commissioning of phase-II would become a reality taking into account the fluctuations in the fuel prices and rupee devaluation.

To a question, Mr Bhujbal reiterated that the government was deseparately in need of cheap power, which would not be available from Dabhol phase-II. He said the government's priority was to provide power at an affordable rate, especially to the farmers.