Portent on power front

Sir, - This has reference to the article ``Banana republic?'' by C. Rammanohar Reddy (The Hindu, Feb. 17). The author has rightly expressed his anguish over the helplessness of the Centre and Maharashtra implicit in their act relating to the recent happenings on Enron (DPC) power front.

What has happened to the Maharashtra Government in the Enron deal is likely to be faced by other State Governments as well if they fail to exercise utmost care in the assessment of their power needs prior to the finalisation of PPA with independent power producers (IPPs). More importantly, time is running out for them to get their act together and implement the overdue reforms lest the SEBs continue their existence as bottomless pits. The first option mentioned by the author, namely nationalisation, is clearly ruled out since it would only amount to shifting the burden of the conditions resulting in the bankruptcy of the Maharashtra State Electricity Board to the State Government.

The second option of ``renegotiation'' apparently has been deliberately left out of the agenda of the Expert Committee for the reason that, in the event of the DPC agreeing to a significant reduction (of, say, 25 per cent) in the price spelt out in the PPA, it would show (the then) Maharashtra Government in poor light (as either a poor bargainer or for taking a ``hidden cut'' from the DPC) while the DPC will be accused of unconscionable padding of (fixed) cost.

The third option - that the DPC be allowed to sell its power outside Maharashtra (also) - has rightly been deemed by the author to be unfortunate. For, why should the DPC power at an exorbitant price become a millstone round the neck of the National Thermal Power Corporation? That would be another incarnation of the politically-backed NPAs of our public sector banks!

N. K. Suryanarayanan,

Bangalore

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