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Centre to lose upto Rs 28.50 billion if Dabhol is terminated

The Centre may have to pay upto Rs 28.50 billion if the Dabhol Power Company, which has issued a preliminary termination notice to the Maharashtra State Electricity Board, shuts down its operations.

"Our (Centre's) liability, if Dabhol power project is terminated, will be one year's electricity bill and a termination fee of $300 million," power ministry sources said.

Contractually, the Government of India will have to pay one year's electricity bill totalling, at present prices, about Rs 14-15 billion, and take over Dabhol Power Company's debt, which is about $300 million, if the project is terminated, they said.

The process of terminating the agreement with the state government began on Saturday when DPC issued the preliminary notice to the MSEB.

Power Minister Suresh Prabhu and Secretary A K Basu could not be contacted as they were out of town.

Both the Centre and the Maharashtra government had earlier said they would not be able to absorb the costly DPC power and had constituted a renegotiation committee headed by Madhav Godbole to discuss the matter with DPC.

DPC had earlier slapped one conciliation notice on the Centre and three arbitration notices on the state government over non-payment of dues amounting to Rs 2.13 billion plus interest towards the bills due for the months of December 2000 and January 2001.

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