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Centre to keep off Dabhol spat

BS Economy Bureau

The Centre is unlikely to intervene directly in the Dabhol problem despite Enron's willingness to sell its interest in the 2184 mw project to the government.

Power ministry sources said the government has made its intentions very clear on this issue on several occasions that any direct intervention by the Centre was highly unlikely as it would face severe opposition from other states.

"There is absolutely no change in that stance at present," said an official.

The Centre was inclined to play the role of facilitator only in arriving at a solution to the problem, and the central government's representative in the re-negotiation committee set up by the Maharashtra government had already been asked to expedite the proceedings, he said.

Enron in a statement on Saturday said that as the largest shareholder in Dabhol Power Company, the company believed that selling its interest either to the central government or to the project's lenders was the best approach to resolve the protracted dispute between DPC and the Maharashtra State Electricity Board.

It stressed that any sale would need to be on terms providing a complete recovery of capital costs and related expenditures.

The company pointed out that the Dabhol issue was clearly having an adverse effect on the confidence of potential foreign investors to India.

"Pursuing a buyout option could help resolve the dispute in a timely manner protecting India's investment climate and interests of DPC's stakeholders," said the statement.

The company said that while DPC remained open to discussing other viable solutions, it had serious concerns about getting embroiled in a series of re-negotiations.

It pointed out that no realistic proposal was offered to the company as yet, and no progress had been made in securing creditworthy buyers that can purchase power at a price that was reasonable for new-generation plants.

The statement said that until the issue was resolved DPC intended to continue pursuing all other remedies under the PPA, such as international arbitration, to resolve the issue in a way that protected the rights of DPC sponsors, lenders, fuel suppliers and LNG ship owners.

Pressure tactic: lenders

Lenders to DPC are unmoved by the company's demand that they take over the project and dubbed it as a pressure tactic.

The company had said in a press release on Saturday that the best solution would be for the Union government or the lenders to take over the project.

"We need to run our banks and institutions and not a power project," said one senior banker involved in the project. The lenders however accept the fact there is a sense of urgency and the government must get into the act faster.

At the London meeting last week, DPC showed its willingness to run Phase- II of the project on naphtha but MSEB is not willing to give its nod to commissioning of the Phase II

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