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May 9, 2001
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Money > Business Headlines > Report May 9, 2001 |
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Centre awaits Maharashtra decision on Dabhol's futureFakir Chand in Bangalore Union Power Minister Suresh Prabhu said on Wednesday that the Centre would wait for the final decision of the Maharashtra Government on the future of the Dabhol power project. "We are waiting for the outcome of the scheduled meeting in Bombay on May 11, when the key partners in the DPC are expected to deliberate on the Madhav Godbole panel's recommendations, including renegotiating the power purchase agreement," Prabhu told rediff.com on the sidelines of a CII meeting in Bangalore. The proposed meeting -- expected to be stormy -- will be attended by Enron's executives, officials of the Maharashtra government and the Maharashtra State Electricity Board, and the Solicitor General of India as a nominee of the Centre. "Let us see what they will decide on the renegotiations of the PPA. As you may be aware, the counter-guarantee of the Centre was applicable only to the first phase of the power project. The meeting will have to decide at what rate the MSEB could afford to purchase the power generated by DPC when its second project goes in stream in the next few months," Prabhu affirmed. It may be recalled that Enron was mulling to pull out of its beleaguered project owing to payment delays by the bankrupt MSEB. If the agreement is scraped and Enron is forced to pull out of the project, then both the state as well as the Centre will to pay heavy penalties to the DPC promoter. According to sources in the power ministry, on a conservative estimate, the penalties will be to the tune of Rs 15 billion towards electricity bill for a year, and around Rs 14 billion for termination fee. On the contrary, experts fear that if the PPA is continued even after its renegotiations, the Centre will stand to cough up not less than Rs 15 billion per year for the next 10 years. "It's a Catch-22 situation for both the partners." Asked whether the project would become viable after the PPA was renegotiated, evading a direct reply Prabhu said it depended on what purchase rate they would arrive it. "Insofar as the Centre is concerned, we have decided to stand by the state government on the issue. So the meeting has to take a decision that will be viable for all the parties involved." Worried over the fate of Dabhol's future, even leading Indian financial institutions and banks, which have taken a large exposure (around Rs 22 billion) to the project on a long-term basis for handsome returns, are also waiting with their fingers crossed over the outcome of the proposed meeting as the counter-guarantee of the Centre does not cover their exposure to the DPC. YOU MAY ALSO WANT TO READ:
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