With the new promoters (Gail India and the National Thermal Power Corporation of India) still unable to source LNG for Dabhol, the plant was only able to resume operations on November 1 by using naphtha as fuel. But sources say it may have to close for a third time because of the high cost of using naphtha. India’s gas shortage means that the combined-cycle gas turbine plant was forced to use the fuel for a 55-day supply contract with the Maharashtra State Electricity Board, which ended on June 24. The 740MW phase-one capacity at Dabhol ran at full utilization for a few days of the 55-day contract’s time period, but on average used only 350MW. Naphtha costs around $20 per million Btu, about twice the cost of the most expensive natural gas. Generation using naphtha costs about $0.09 per kilowatt hour.

India’s state-owned Petronet LNG consortium has been talking with Qatar about supplying 1.2 million tons of LNG per year to the plant starting in 2007, but price remains an issue. Further, the regasification terminal still isn’t finished. A $95 million contract to complete the job has been awarded to a consortium of engineering groups led by India’s Punj Lloyd and Whessoe of the U.K.

Many analysts doubt the project’s viability even if it restarts and operates at full capacity. According to Abhay Mehta (author of the book Power Play, which dissected Dabhol and Enron’s involvement in the project), even if it were possible to restart the plant, pay off past costs, and find new financing, the plant would still not be economically viable.