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Hopes soar for revival of Enron power project
Thursday, 03 October 2002, 19:30 IST
MUMBAI: Maintenance and overhauling work at Enron's power plant in Dabhol may begin shortly as there are fresh hopes of the controversial project going back on stream.
The $3 billion plant in western India, shut for more than a year, needs extensive maintenance work and repair before it can generate power, say officials in the Maharashtra State Electricity Board (MSEB).
There are fresh hopes that the project would be restarted after General Electric and Bechtel, two major stakeholders in the Dabhol Power Company (DPC), gave their go ahead for a revival package being formulated by Indian financial institutions led by IDBI.
According to the officials, the two investors with 10 percent stake each in the project are amenable to a negotiated settlement and are keen to have the plant back on stream. The companies had taken away critical software needed to run the plant after the project was locked in dispute 15 months ago.
The National Thermal Power Corporation, the state-owned generation and transmission agency, has offered its services to run the plant provided IDBI and MSEB agree on the price of power.
While MSEB is the main purchaser of DPC's power, IDBI is protecting the investment of a number of financial institutions that have funded the project.
The Enron project went into limbo after the MSEB, its sole customer, refused to buy power saying it was too costly. The restarting of the project therefore depends on how negotiations between MSEB and the financial institutions go.
The state electricity board has rejected an offer to price electricity from DPC at 
2.75 to 2.86 per unit. The board is bargaining for the power to be priced at 2.25 to Rs 2.50 per unit.
The Maharashtra government is also pressing for concessions like a reduction in interest payable to financial institutions by the DPC from 13.5 percent to 10 percent. It also wants central government's permission for DPC to sell power to other states.
Other demands include linking of the prices for naphtha to coal instead of crude oil to bring down the costs. The state government also expects the financial institutions to help delink DPC's liquefied natural gas (LNG) terminal from the power plant so it can be used to earn revenue independently.
So far MSEB has refused to guarantee offtake from the Dabhol plant as it fears its own generation units being shut down during periods of slack demand. The board's plants generate power at 1.80 per unit.
The financial institutions are demanding a guaranteed purchase of 75 percent of the power generated by DPC.
Maharashtra faces a shortfall of electricity between 800 megawatts (MW) and 1,200 MW during peak periods. The state is expected to face power shortage from November onwards.
Source: IANS
2.75 to 2.86 per unit. The board is bargaining for the power to be priced at 2.25 to Rs 2.50 per unit.
The Maharashtra government is also pressing for concessions like a reduction in interest payable to financial institutions by the DPC from 13.5 percent to 10 percent. It also wants central government's permission for DPC to sell power to other states.
Other demands include linking of the prices for naphtha to coal instead of crude oil to bring down the costs. The state government also expects the financial institutions to help delink DPC's liquefied natural gas (LNG) terminal from the power plant so it can be used to earn revenue independently.
So far MSEB has refused to guarantee offtake from the Dabhol plant as it fears its own generation units being shut down during periods of slack demand. The board's plants generate power at 1.80 per unit.
The financial institutions are demanding a guaranteed purchase of 75 percent of the power generated by DPC.
Maharashtra faces a shortfall of electricity between 800 megawatts (MW) and 1,200 MW during peak periods. The state is expected to face power shortage from November onwards.
Source: IANS