The group, which is likely to be headed by former Union home secretary Madhav Godbole, would also have to assess the financial burden on MSEB on account of the power purchase from phase-I and II and whether the Dabhol Power Company (DPC) can be forced to cut the tariff by reduction in the internal rate of return and a cut in interest rate by Indian financial institutions.

Top government sources told The Financial Express that these would largely be the terms of reference for the proposed expert group to be set up shortly to review the Dabhol phase-II. For these, the state cabinet has authorised chief minister Vilasrao Deshmukh, deputy chief minister Chhagan Bhujbal and minister of power Padmasinh Patil to appoint the chairman and members of the expert group.

Mr Deshmukh has already announced that scrapping of the Dabhol phase-II would be the last option. However, he had made it clear that the Dabhol phase-II would be reviewed and renegotiated by the proposed expert group.

Mantralaya sources said that the expert group would be made available comparative data on capital cost, variable cost, financing charges and various other aspects. The group would be provided the detailed month-wise information on purchase of power from DPC and its monthly bills alongwith the price trend of naphtha/distillate oil during phase-I.

According to MSEB, the per Kwh tariff during the Dabhol phase-I since May 1999 upto October 2000 had been Rs 4.94 comprising an average capacity charge of Rs 2.60 per Kwh and energy charge of Rs 2.34 per Kwh. This was based on the power purchase at 60 per cent availability.

However, in case of MSEB's power purchase at 90 per cent capacity from DPC, the Kwh tariff would have been dipped to Rs 4.02 comprising capacity charge of Rs 1.80 per Kwh and Rs 2.22 per Kwh.

MSEB has to bear a fixed charge of Rs 95 crore per month and if it purchases full energy, it would need an additional Rs 255 crore per month. "The expert group would have to look into the various possibilities wherein the DPC would be forced to cut the variable cost," a senior minister said.

The expert group would assess whether the third-party sale allowed to DPC would result in the latter reducing the per unit cost in Maharashtra. The expert group would have to look into whether DPC had fulfilled its promise to maximise the Indian component of the project in phase-II to the extent technically feasible and financeable. It would also assess whether DPC had gone for a global bidding of the equipment in phase-II and whether it had intentions to make appropriate adjustments to the tariff following cut in the total project costs of phase-II.