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CCEA allows Enron to buy 30% more in Dabhol; nods delinking of GIC from arms

Tara Shankar Sahay in New Delhi

In a significant step, the Cabinet Committee on Economic Affairs on Wednesday permitted US power company Enron to pick up an additional 30 per cent stake in Dabhol Power Project Phase II for $685.75 million in the wake of Maharashtra State Electricity Board's inability to take its equity share.

Parliamentary Affairs Minister Pramod Mahajan told reporters that the Cabinet Committee on Economic Affairs has permitted Enron Development Corporation to enhance its equity investment from $886.9 million to $1119.9 million in Dabhol power project.

In the enhanced foreign equity participation of Enron, $434.2 million would be for Phase-I of the power project and $685.75 million would be for Phase-II of the power project at Dabhol, he said.

Enron presently has 50 per cent stake in the $1.87-billion Dabhol Phase-II, while the remaining is with Bechtel Enterprise and General Electric.

As per the decision MSEB would have the option to pick up the 30 per equity at a later stage at a mutually agreed price, he said.

With the enhancement of the equity of Enron, the share of MSEB holding has been diluted to below 30 per cent.

Mahajan said the government had earlier allowed Enron to invest up to 100 per cent but under the renegotiated agreement it was decided that the MSEB would pick up 30 per cent stake in both Phase-I and Phase-II of the power project.

While MSEB picked up 30 per cent stake in Phase-I it expressed inability to do so for Phase-II.

Oman-India Fertiliser Project approved

In an important decision, the CCEA approved action on outstanding issues relating to the Oman India fertiliser Project including provisions for compensation payable by the Sultanate of Oman in case of failure to supply gas.

"We have also approved provisions relating to compensation payable by Oman India Fertiliser Company to the government of India in case it fails to deliver urea," said Mahajan.

He underscored that the it was also decided to no longer consider the issue of tax exemption on dividend income of the Indian sponsors as outstanding issue.

He pointed out that it was decided that the total equity investment by the Indian sponsors would be without the condition of ensuring that goods and services worth an estimated $110 million be procured from India subject to reliability and competitiveness.

The Oman India fertiliser Company was incorporated in1998. IFFCO and KRIBHCO are the Indian sponsors of the project.

Mahajan said that the committee had approved the setting up of a Unified Load Despatch and Communication Scheme for the western region. Estimated to cost Rs 2.62 billion, it is was being set up by the Power Grid Corporation of India Ltd, said Mahajan.

"This project would help monitor the grid's operation on the basis of real time data and would be essential for minimising blackouts," the minister contended, adding that it would help monitor and control " inter-regional power exchanges."

Cabinet approves delinking GIC from subsidiaries

The Union Cabinet on Wednesday approved amendment of a legislation to delink General Insurance Corporation from its four subsidiaries.

The Cabinet decided to bring in a bill, expectedly in the budget session, to amend certain provisions of General Insurance Business (Nationalisation) Act of 1972, Parliamentary Affairs Minister Pramod Mahajan told reporters.

The Act would be amended to delink GIC from its four arms -- Oriental Insurance, National Insurance, New India Assurance and United India Insurance -- with the ownership transferred back to the Centre.

The role of GIC would be limited to reinsurance business only and the powers of the corporation will therefore be transferred to central government and Insurance Regulatory and Development Authority.

The government on Wednesday approved a number of investment proposals including setting up of a Rs 22.50 billion project by Digital Future Investments of Netherlands.

Briefing reporters on the decisions taken by the Cabinet Committee on Economic Affairs, Parliamentary Affairs Minister Pramod Mahajan said Digital Future Investments would set up a wholly owned subsidiary with an investment of $500 million over five years.

The subsidiary would design, install, operate and maintain engineering facilities and third party technical services to duly licensed broadcasters, telecommunication operators and public authorities, he said, adding that initial investment would be Rs 2.70 billion during the first six months.

It would use India for providing technical services to global markets in broadcasting and telecommunication sectors.

The subsidiary would neither produce nor own content, he said.

The subsidiary would also undertake research and development in the field of technical services for broadcasting and telecommunication.

Traditional Knowledge Digital Library for Ayurveda

According to Mahajan, the CCEA's approval for the establishment of a Traditional Knowledge Digital Library for Ayurveda was an important step because" this would cover 35,000 formulations."

TKDL would be established within 8-10 months with the help of 30 Ayurveda experts and scientists and five patent examiners. Five information technology specialists would also be provided for the purpose, he said.

Recently, a large number of medicinal uses of plants routinely and commonly used in India are being patented with the claim that such uses are cures for a variety of diseases.

Mahajan pointed out that the objective of TKDL is to make all documented information easily available to the patent examiners to prevent " grant of patents on non-original inventions."

The CCEA on Wednesday approved a total of 15 decisions.

Additional inputs: Agencies

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