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May 4, 2001
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Money > Business Headlines > Report May 4, 2001 |
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DPC agrees to meet govt panel as a 'courtesy'; Godbole terms of reference not acceptableBS Corporate Bureau The Enron-promoted Dabhol Power Company has virtually ruled out negotiations with the Maharashtra government-appointed Godbole committee to renegotiate the tariff for the power project-and perhaps set the stage for terminating the controversial $3-billion power project. In a statement released on late Thursday evening, DPC said that it was prepared to meet the Godbole committee as a matter of courtesy but would not present any proposals. Significantly, the company said, "the published terms of reference of the Godbole report do not represent an acceptable basis for further discussions". It also added: "This meeting should in no manner be construed as an open offer from DPC to renegotiate the terms of the contract." The Godbole panel's terms of reference are to bring down the tariff of the 2184-mw power project. As a part of the agreement with the Maharashtra State Electricity Board, DPC is planning to set up a 5-million-tonne LNG facility of which only 2.1 million tonne is meant for the power project. The terms of reference of the Godbole panel include negotiations for delinking the LNG facility from the power plant. The panel has also been armed with powers to negotiate on DPC's oft-voiced demand that it should be allowed to sell power not needed by MSEB to third parties. A senior MSEB official said that, "We will hear out what they have to say. However, as long as they have armed themselves with powers to issue the termination notice, nothing can be ruled out." On April 25, the DPC board at a meeting in London authorised Enron India MD Wade Cline to serve a termination notice on MSEB whenever he deemed fit. Reuters adds: DPC said it had constantly maintained that it was open to maintaining a dialogue towards resolving issues. "(But) This meeting should in no manner be construed as an open offer from DPC to renegotiate the terms of the contract," it added. DPC and the government of Maharashtra have been locked in a payment battle for months, with the state's electricity board balking at paying Enron what it considers too high a rate for electricity. At present, Maharashtra's State Electricity Board owes the DPC, of which Enron is a 65 per cent stakeholder, some $48 million for power. The Maharashtra government last week announced the formation of a panel of experts to re-negotiate its contract with DPC and lower the cost of power sold to MSEB. Largest foreign investment The Dabhol project, the single largest foreign investment in India, consists of two phases, the already-built 740 megawatt power plant and a 1,444 MW plant that is expected to be finished this year. Last week, Dabhol's board authorised the plant's managing director to issue a preliminary notice of termination of service to MSEB. The notice, which has not been issued, would be the first step for Enron to pull out of the project. Earlier, a source familiar with the project said that Indian lenders, who have provided millions of dollars to Houston-based Enron to build DPC are lobbying with the government to act quickly and end the crisis. "We have asked the government for help. We are awaiting their reply," the source, who is employed with a large financial institution, said. The domestic lenders to the project are Industrial Development Bank of India, ICICI Ltd, Industrial Finance Corporation of India, Canara Bank and State Bank of India. If Enron pulls out of the project, the source said, the lenders would have no choice but to seek an alternative buyer. "The plant is good, Maharashtra needs power and I am sure buyers can be found," the source added. Powered by YOU MAY ALSO WANT TO SEE:
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