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Dabhol Power: Indian lenders agree to Rs 2.60/unit

Subhomoy Bhattacharjee & Sidhartha

The government has indicated that the Indian lenders to the Enron-promoted Dabhol Power Company will negotiate a tariff of Rs 2.60 per unit as part of a revival strategy that is being drawn up by a committee headed by IDBI executive director AK Doda.

Senior officials told Business Standard that the government has asked the Indian lenders to the $3 billion power project to first arrive at the cost of power and then work backwards.

The lenders are slated to meet officials from the Central Electricity Authority and ministries of finance and power on Friday to take the process of working out a revival blueprint forward.

The committee of Indian lenders to the project, which met finance secretary Ajit Kumar and power secretary AK Basu apart from other senior government officials in Delhi last Friday, were asked to submit a revival plan for Dabhol in a fortnight.

Sources said that the government has asked the Indian lenders to first work out a package that is acceptable to both Enron and Maharashtra State Electricity Board so that the project can be revived.

In case the two parties still continue to be at loggerheads, the lenders have been asked to initiate a dialogue with other parties, which would be interested in taking over the management of the power plant.

"Several companies have shown interest in the project. But even for other parties to take over Dabhol, the new tariff structure will remain the key issue," said an official. Sources also said any sale of DPC cannot be considered before this assessment is done "as it will just transfer the problem to the new owner".

Sources said that DPC is agreeable to reduce power tariff to Rs 3.20 per unit while the lenders had earlier proposed that after the completion of the second phase, the cost of power be brought down further to Rs 3 per unit.

But even at this tariff level, substantial power offtake may not be possible and there is a need to reduce it further, officials said.

The lenders have also agreed to reduce the interest rate on the loans extended to Dabhol if the company agrees to cut tariff further. They have also said that the Centre and Maharashtra would also have to provide some tax concessions if the power project is to continue.

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