People familiar with the matter said the proposal for selection of these venture partners for implementing the project has already been submitted and is under the consideration of the Cabinet Committee on Economic Affairs for its approval.

A detailed feasibility report for putting up the plant has been forwarded to the Central Electricity Authority. The project report is expected to be ready only after six months and will be submitted on behalf of the joint venture company once it is formed.

Sources said the proposal envisages use of the integrated gassification combined cycle (IGCC) technology using vaccuum residue as fuel from its refinery. After securing all statutory clearances, this will be the first cycle-based power project in the country.

The cost of power from the plant has been put at Rs 2.69 perkilowatt hour (6.3 cents per kilowatt hour), while the gestation period will be 42 months.

Sources said that the proposal came up for discussion at a pre-Public Investment Board meeting held last month, in which it was decided that the board would take up the proposal after the Central Electricity Authority clears the project.

Cochin Refineries has also sought approval from the ministry of petroleum and natural gas for incurring an expenditure of Rs 19.5 crore for pre-project activities.

On the issue of residual fuel transfer price from the refinery to the proposed power project, it has been decided that the price could be based on import parity basis for which CRL could work out the exact formulation in consultation with the oil co-ordination committee and concurrence of the ministry and send to the power ministry for its acceptance.

Power ministry sources said that this formulation is yet to be received from the petroleum ministry.

The modified pricing policy for petroleum products to be used forpower projects says that in case of products for which petroleum ministry has a well defined system and the prices are notified, such prices could be adopted.

However, in the case of non-standard products, the matter could be refered to BICP based on import parity prices which means linking such transfer prices to the price of similar products traded in the international markets after considering the quality aspects, calorific value, sulphur content and viscosity.

Oil firms' power plans under microscope

Five proposals from leading national oil companies for putting up 2640mw power plants based on refinery residue are under the consideration of the government.

In a recent meeting between the power secretary, senior officials from the petroleum ministry, Central Electricity Authority (CEA) and Bureau of Industrial Costs and Prices, it was decided that since all these oil companies have their own captive generating units to support their power requirements, the 2640mw capacity could be madeavailable to the state grids.

The oil companies that have proposed to put up the power plants include Indian Oil Corporation, Hindustan Petroleum, Bina Refinery, Madras Refineries and Cochin Refineries.