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Maharashtra, Enron want Centre's active role to resolve DPC tangle

Priya Ganapati in Bombay

"Unless the Centre plays an active role in the Dabhol power project issue, the payment controversy between MSEB and Enron-promoted DPC will remain unresolved," said Maharashtra Chief Minister Vilasrao Deshmukh on Tuesday, after a meeting with Kenneth Lay, chairman of Enron Corporation, in Bombay.

He said that Enron on its part "must use its good offices to persuade the Centre to actively consider the project and find a good buyer for DPC power - like the NTPC or the Power Trading Corporation - so that an amicable solution to the problem can be arrived at".

"We are not interested in piecemeal solutions," said Deshmukh.

Meanwhile, Kenneth Lay, speaking to reporters after the meeting, too stated that the meeting was constructive, with both the parties showing strong desire to reach an amicable solution to the vexed issue. He said: "We think that the Dabhol project is great and is offering power at competitive prices."

"Maharashtra's power needs are growing by the day and it needs DPC power. It is, thus, in the interest of the government to resolve the issue as soon and as amicably as possible," Lay added.

"Our tariff is globally competitive and once the use of liquefied natural gas begins, it will be lower," Lay said.

"The country and its state need Dabhol Power Company's power and we are seeking active participation from the Centre," he said.

He said that one of the issues discussed at the meeting was also "to look for an alternative, as the Maharashtra State Electricity Board obviously cannot be the only buyer of power generated by the Dabhol Power Company".

"I am optimistic that a solution keeping in mind the interest of the country and investors would be found soon," he said.

Asked about the outcome of his meeting, Lay said: "We think that one meeting is not enough to come to any conclusion. More work is required by us and the government to review the project."

He said, after much difficulty the Union government nominated its representative on the Godbole renegotiation panel, but nothing had come out of it.

Deshmukh said that from day one, the state has been categorically stating that MSEB cannot absorb DPC's costly power and a good buyer should be found for the energy major's 1,444 MW phase-II.

"We would like to draw power from the Phase-I at reduced prices, but for the second phase, Centre should allow Power Trading Corporation, National Thermal Power Corporation or any such alternative company to pick up the remaining power," he said.

MSEB chief Vinay Bansal said DPC was willing to reduce its tariff by 10 per cent only if MSEB agreed to draw 100 per cent power from its 2,184 MW power station.

"It is most important that the Centre should play a role beyond being just a mere facilitator," he added.

Discordant note

However, amidst all the talk of the meeting being amicable, constructive and forward-looking, some senior MSEB officials chose to strike a discordant note stating that the state power utility does not require DPC power.

They suggested that MSEB is doing quite well and does not require power from the Dabhol project.

They said that the board's cash reserves were getting severely depleted in paying off DPC's bills and this was hurting the state power utility.

Giving figures designed to bolster their contention that the state power utility does not need DPC power, the MSEB officials stated that the DPC had suggested that MSEB undergo reforms.

These reforms could basically be in the form of privatisation of the utility, restructuring of the tariff, etc, they informed. However, MSEB officials said these reforms would not benefit DPC in any way.

They said that the board had tabled a proposal before the MERC asking for a 30 per cent increase in tariff. The proposal has been pending before the MERC since past one year, they said. They agreed that it is not possible to change a power tariff that has by and large remained unchanged over the many years.

The MSEB officials also said that the the state utility has shown excellent performance over the past few years showing record generation, good plant availability, and better distribution and has also received the government's cash award for the same.

They said that this year the board's revenue collection has gone up by Rs 16.33 billion over the last year, primarily due to better grid control and admirable management.

They informed that 1.6 million disconnections were effected during the year in the industrial, commercial and residential sectors and the arrears collections too had risen by 59 per cent, as against -13 per cent the last year.

No specific proposal submitted

They went on to say that apart from the reiteration of earlier stands of the state government and the DPC, the meeting was by and large inconclusive.

They stated that no specific proposal to solve the problem was tabled by either party at the meeting, and neither was any time-frame agreed upon to bring the controversy to an end.

They, however, agreed that they did not expect much to come out of just one meeting.

Lay to meet Thackeray on Wednesday

Meanwhile, it was learnt that the Enron chief Kenneth Lay is scheduled to meet Shiv Sena supremo Balasaheb Thackeray at Matoshri at 1100 hours on Wednesday.

The Godbole panel too is to submit its report to the Maharashtra government on Wednesday morning.

The Maharashtra Cabinet too will meet on Wednesday to discuss the vexed DPC issue, and later in the evening the co-ordination committee of the government will meet to review the situation.

Enron-promoted Dabhol Power Company and MSEB are locked in a payments dispute which provoked Enron to serve a preliminary termination notice to the utility, which in turn stopped buying power from 740-MW phase-I of Dabhol project.

MSEB, the sole buyer of Dabhol power, has defaulted on payments of $48 million to DPC complaining about high tariff.

The US energy giant, which hold 65 per cent interest in DPC, has stopped construction of the 1,444-MW second phase of the project after completing 85 per cent of the work.

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