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DPC serves asset transfer notice to MSEB

US energy major Enron's Dabhol Power Company on Monday served an asset transfer notice to Maharashtra State Electricity Board moving a step further towards final termination of the power purchase agreement, with the board refusing to take cognisance of the development.

"This notice formally sets in motion the valuation process of Dabhol's assets in connection with the termination of the PPA," DPC spokesperson said in a statement in Bombay.

Following the transfer notice, the final termination notice was likely to be served in the near future to continue the legal process against MSEB, he said.

MSEB chairman Vinay Bansal said that the board had indeed received the notice but "will not take cognisance of the notice as the PPA has been rescinded by us six months ago."

On the other hand, justifying the move, the DPC spokesperson stated "consequently, DPC is left with little choice other than to serve the transfer notice to MSEB, which draws us closer to the final termination of the PPA and the ultimate recovery of damages as allowed under the project documents."

He said the notice follows more than two years of payment dispute between the two.

He said an independent expert would be appointed to value the assets of the $3billion power plant, including its five million tonne Liquified Natural Gas facility located in the coastal town of Guhagar in Maharashtra.

DPC said the transfer notice was an important step in the asset valuation process agreed to by all parties to the PPA, and was necessary to protect the interests of the sponsors, lenders, and other stake holders of the 2,184 mw plant.

Expressing discomfort over DPC's ongoing discussion with the Centre and Indian financial institutions, the spokesperson said these discussions were yielding no significant progress for a fair and reasonable solution.

He said the energy major would prefer to resolve the USD 640 million plus payment dispute with MSEB 'amicably' through a negotiated purchase by the Government of India and the Indaian financial institutions

DPC's foreign lenders had approved the asset transfer notice in the last week of September.

Meanwhile, state government sources said that in view of the termination of the contract, as per the PPA, Maharashtra would have to cough up approximately Rs 170-180 billion as an upfront payment to the US multinational.

Sources said, the government may also refuse to recognise the asset transfer notice.

"The state government will also put forward MSEB's view that the notice is meaningless due to repudiation of the PPA," a senior state government official said.

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