Reliance Power has evinced interest in setting up a 1,500-2,000 mw gas-based power plant at the port town of Kakinada in Andhra Pradesh which will utilise its gas find in the Krishna-Godavari Basin.

According to D K Panwar, principal secretary (energy) to the state government, representatives from Reliance met chief minister Y S Rajasekhara Reddy on Thursday and mooted a proposal on the lines of their proposed mega 10,000 mw power project at Dadri in Uttar Pradesh.

"Reliance actually wants to scale up the capacity of the project up to 8,000 mw over a period of time," Panwar told the media today. Reliance is yet to submit a detailed project report to the state government.

He said a further round of discussions between the government and Reliance on the proposed project would soon be held.

The Reliance representatives have submitted the policy statement of the UP government with regard to the proposed mega power project in that state to the chief minister Y S Rajasekhara Reddy and expected the same package to be extended to the company in Andhra Pradesh too.

"Well, the state government is very much interested in the project and we welcome their decision. After all, the gas has been found off the Andhra coast and we want the state to be benefited most out of it," he said adding cautiously that a lot depended on the cost of the power generated.

"It is up to Reliance to decided whether they want to go through a PPA (power purchase agreement) route or through the bidding route," according to him.

"Reliance has already set a bench mark on power cost announcing power supply at Rs 2 per unit from the Dadri project and the cost of power from the new project proposed in the vicinity of Kakinada could also be worked out on the same lines," he said.

Reliance, which stumbled up on the biggest gas find in the KG basin has already made gas supply commitments to various projects from the first quarter of the year 2007.

Panwar said the government would also keep in mind the shortage of gas supply to the existing power projects while allowing new projects and utilising the new gas find for the state's requirements.

The proposed power project is more or less a quick response to the invitation by the chief minister Y S Rajasekhara Reddy on using the Reliance gas for the state's energy requirements, though Reliance is yet to come up with a concrete proposal.

The Reliance representatives also indicated that the company planned to lay gas pipe lines all over the state to supply gas to households and industries directly from their gas wells.