Maharashtra no to Enron power

Wednesday, 04 September 2002, 07:00 Hrs
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MUMBAI: The Maharashtra government Tuesday formally declined to restart purchasing power from bankrupt U.S. energy firm Enron Corp's Indian unit.

The $2.9 billion Dabhol power project, 65 percent owned by Enron, has been inoperative for more than a year after the state utility refused to pay its bills, saying they are too high, and rescinded its power purchase agreement with Enron.

The Maharashtra State Electricity Board (MSEB) formally rejected an offer by financial institutions like IDBI, which have lent money to the project, to price electricity at 2.75 to 2.86 per unit following a decision taken by the state cabinet, according to government sources.

Maharashtra Chief Minister Vilasrao Deshmukh had earlier said that the government wanted a more acceptable price for power generated by Dabhol Power Company (DPC).

Among the measures suggested by the state government to lower price includes a waiver of central taxes and a sharp cutback in interest on loans provided by the financial institutions for the project.

Observers here say with its refusal to start repurchasing power from Enron's unit, the state government has effectively rebuffed attempts by India's new Power Minister Anant Geete and others for off-take of power at higher prices.

Geete, like his predecessor Suresh Prabhu, was keen on Maharashtra sorting out a purchase price with financial institutions that have effectively taken control of DPC, say state government sources.

While MSEB is keen on buying power at 2.25 per unit, the financial institutions led by lead-lender IDBI are pressing for 2.71 to 2.86 per unit.

Officials fear MSEB's own power plants may have to be shut down during periods of slack demand if 75 percent of the power generated by DPC has to be purchased as required by the financial institutions.

A number of agencies like the Maharashtra government, the state utility and the Maharashtra Electricity Regulatory Commission will play a major role in finalising tariffs with DPC.

During peak periods Maharashtra faces a shortfall of electricity of between 800 MW and 1,200 MW.

Source: IANS
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