Search the Internet          Tips  Sites: Finance, Investment

Enron offers lower price: Jayawanti Mehta

Enron Corp's Indian unit has offered to charge much less for power from the second phase of its troubled $2.9-billion Dabhol project, raising hopes of an end to its bitter row with a local utility, a minister said.

But a spokesman for the Dabhol Power Co in which Enron holds a 65-per cent stake said it was too early to talk about specific tariff cuts as they would depend on the plant load factor, the exchange rate and the prevailing oil price.

"Representatives of Enron have said they can reduce the cost of power to Rs 3.50 a unit for the second phase of the plant," Junior Power Minister Jayawanti Mehta told Reuters on the sidelines of an energy seminar on Wednesday.

"They are ready to reduce the cost and I'm very hopeful that the problem will be resolved," she said.

The DPC spokesman said it was "too early at this stage of discussions to talk about specific tariff reductions".

But "we have maintained in the past that phase two with LNG as fuel would cost in the range of Rs 3.30-3.70 a unit assuming a 90 per cent plant load factor, the current rupee-dollar exchange rate and the prevailing international oil prices", he said.

The dispute with the Maharashtra State Electricity Board erupted late last year after the cash-strapped utility defaulted on its payments to Dabhol.

At its peak operating rate, power from the Dabhol plant cost about Rs 4.75 per kilowatt hour, which was more than the cost of electricty from state-owned plants.

But after the MSEB defaulted, Dabhol scaled down the plant to 25 per cent of its capacity and charged Rs 7.1 which was more than triple the rate of other power suppliers.

MSEB said late in May that it had stopped drawing power from Dabhol after the firm served a preliminary termination notice to the utility complaining that it had defaulted on its bills. Enron's Indian unit is building a 2,184-MW plant, the world's largest gas-fired plant, at Dabhol The first phase of 740 MW began operations in May 1999 and the second phase is nearly complete.

MSEB has already said it will not buy electricity from the second phase but Mehta said surplus power could be sold to other states. A central body was already studying the feasibility of selling DPC's power to other states, she added.

ALSO READ:
The Enron Saga