The Sena-BJP alliance government had approved the company's proposal to shift the project site from Kelwe-Mahim to Saphale in the face of strong opposition from locals and various political parties.

BSES, which proposes to complete the project in 30 months on 250 hectres of barren land, proposes to sell the output at Rs 2.60 per unit. In the 67:33 debt equity ratio, the company plans to raise the share capital through public issue and right issue.

Mantralaya sources told The Financial Express that the state energy minister Padmasinh Patil had referred the file to chief minister Vilasrao Deshmukh and his deputy Chhagan Bhujbal last week for further action. Patil's move is in accordance with the democratic front's resolve to review various decisions taken by the Sena-BJP government during three months before the completion of election process last year.

Incidentally, the Sena-BJP alliance had cleared the BSES proposal at a time when the model code of conduct was in place (July, 1999). Moreover, the incumbent regime is also suspicious of the saffron alliances' intention in clearing the BSES project, especially when a TEC proposal to set up 450mw project at Bhivpuri was kept in the cold storage. Villagers from Saphale and the deputy chairman of Maharashtra Legislative Council, Vasant Davkhare, have also threatened to launch a stir against the BSES project.

The proposal is likely to be sent to the Maharashtra Electricity Regulatory Commission which has recently concluded public hearing on MSEB's proposal to introduce 10 per cent power tariff hike in the state.

The Kukde committee, set up in 1998, had strongly recommended that power project should be split and accordingly 250mw for TEC and 2X105mw for BSES be cleared in the first year. Moreover, capacity addition should be phased and demand projection be reviewed preferably every two years.

The Kukde committee had recommended that the surplus power would have to be sold outside of the state. However, MSEB has pointed out that there were no takers for the excess power in the neighbouring states.

MSEB is likely to lose considerable potential for cross subsidisation (4,000 million units) following a go-ahead to BSES. The BSES project will make a severe dent in MSEB revenues and it may not be possible for the government to make up for the loss through subsidy, government sources said.