Sunday, May 20, 2001, Chandigarh, India


M A I N   N E W S

Enron serves notice on MSEB

Mumbai, May 19
In an unexpected move, the Dabhol Power Company today served a preliminary termination notice (PTN) to the Maharashtra State Electricity Board (MSEB) under the power purchase agreement, setting in motion a possible end to India’s first major fast track power project, two days before a final decision on such a PTN was awaited.

Enron promoted DPC despatched the PTN to MSEB at 11 a.m., two hours after NCP chief Sharad Pawar, who had initiated the project way back in 1992, and Chief Minister Vilasrao Deshmukh discussed at a closed-door meeting the state’s future strategy over a “possible” issuance of the PTN.

In a statement, the DPC said given the failure of the MSEB, state and Central governments to meet their contractual obligations, the US energy major had no choice “but to issue the PTN”.

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

At his meeting with Mr Deshmukh, Mr Pawar was updated on the DPC’s stand on the PTN and that of the MSEB with reference to the Rs 401-crore penalty, which the US energy major has refused to even recognise, let alone pay, a state government official, who attended the meeting, said.

The official said MSEB chief Vinay Bansal briefed Mr Pawar and Mr Deshmukh that “the situation will further worsen after the DPC commissions its phase-II on June 6 and that the loss-making board was in no position to pay the Rs 200-crore plus fixed charges henceforth”.

The DPC, which is to commission its 1,444 mw phase-II on June 6, said it was looking forward to a “specific proposal from the MSEB, state government and the Centre, which the company believed, 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, the statement said, proposals like the purchase of power or providing credit support behind other purchasers of power, “further meetings will not be productive”.

When contacted in Pune, Mr Madhav Godbole, who is heading the renegotiations panel declined to comment on the PTN, but said “I am confident that the DPC will come for the next meeting scheduled for May 23”.

Meanwhile, the Indian financial institutions termed the DPC’s decision as a hurried one and that the clock had started ticking now for the state, Centre and MSEB having six months to decide either to save or terminate the 2,184-mw project.

They questioned the need for such a hurried move on the part of the DPC and strongly felt that “it was at the behest of the DPC’s foreign lenders, that the PTN was issued”.

“The inevitable has happened and the DPC has gone ahead despite the London meeting”, the sources said.

“This proves that the DPC had already made up its mind over the PTN, but such a hasty step will not deter us and the Indian lenders from voting against the PTN”, they said. PTI 

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