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DPC issues pre-termination notice to MSEB

US energy major Enron-promoted Dabhol Power Company on Saturday issued a preliminary termination notice to Maharashtra State Electricity Board.

"This initiates the process of terminating the power purchase agreement with MSEB," DPC said in a statement in Bombay.

"Even though it was necessary to issue the PTN, we are still open to constructive discussion on the solutions," the statement said.

DPC said it looks forward to a "specific proposal from MSEB, the state government and the Centre encompassing the above requirements, which we believe should form the basis for any future discussions and not the Godbole Committee report."

In the absence of such a proposal and active participation by the Centre, such as purchase of power or providing credit support behind other purchasers of power, "further meetings will not be productive," it specified.

While a lasting and feasible solution to this issue may be possible, it could only occur if the parties contractually bound to purchase DPC power (MSEB with guarantees from the state and Central government) are willing to either purchase it themselves or find "other" creditworthy entities, DPC said.

DPC said after months of working with MSEB, the state government and the Centre to find solutions, it was apparent that the first two parties are "unwilling" to honour their offtake commitments for the entire 2,184 mw power station.

"The Centre has clearly communicated its unwillingness to assist MSEB and Maharashtra in either buying power or providing credit support," the statement continued.

"In fact, the Centre did not even bother to send a representative to the May 11 re-negotiations meeting, although this date was known several days in advance," DPC said, adding the union government also failed to respond "positively" to the written requests for assurances by the multinational's lenders.

DPC said it had continued to meet its contractual obligations, including enforcing its rights under contracts and taking various disputes to the resolution process. This it said would continue.

"We also expect our counterparties to continue to meet their contractual obligations, including appropriate planning to ensure future ability to meet their obligations," it added.

The company said, given the failure of MSEB, the state and the Centre to meet their contractual obligations, "DPC had no choice but to issue the PTN."

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