MSEB petitions Enron panel to set aside PPA

By Mahesh Vijapurkar

MUMBAI, MAY 25. In a quick follow up to its notice rescinding the power purchase agreement with the Enron-sponsored Dhabol Power Company(DPC), the Maharashtra State Electricity Board today filed a petition with the Maharashtra Electricity Regulatory Commission (MERC), seeking damages and relief from DPC for misrepresentations on its power generation capability. It wanted the PPA to be set aside forthwith.

Hearings will start on May 29, the day the Godbole Committee on renegotiation is to discuss with DPC the tariff reduction issue. Given the anxieties of several individuals and entities, it is possible that quite a large number of them may seek to intervene against the DPC and in favour of the MSEB. MERC can hear the petition since it is a dispute between two licensees and utilities. Appeal would lie with the High Court and then the Supreme Court.

The thrust of the contention before the MERC is going to be that DPC misrepresented on the capability in the PPA but when confronted with its inability to meet the generation levels required under the contract, it actually ``acknowledged and admitted'' that performance did not conform to the schedules in the PPA. In short, the quality of equipment was suspect.

This admission came from the DPC on the first recorded incident when the power supply did not conform to the norms prescribed. Within 180 minutes of the cold start, the ramp up was not to the level of 658.56 mw on January 28, 2001. Similar defaults occurred on February 13, and March 29 as well. Sources said DPC even sought a post facto declaration certifying that all was well.

The notice rescinding the PPA, issued on Thursday, and the 200- odd page petition with about 800 pages of supportive documents to MERC today are substantively similar. The DPC is accused of ``not bonafide conduct'' and ``a campaign'' of confusion and obfuscation by wrongful withholding of rebate payments, pressuring MSEB to make payments not due, invoking guarantees, arbitration and declaring political force majeure without justification.

It was only on Thursday that DPC was served a two-page notice by the MSEB voiding its contract, holding the latter guilty of misrepresentation, following serious lags in supply of power. MSEB has accused the independent power supplier that ``capability of Dabhol Power Station was materially different from the contractual parameters mentioned in the power purchase agreement.''

In today's petition to the MERC, seeking to set aside the PPA, the contention is more or less the same except that some historic details including the flurry of arbitration notices by DPC have been listed. Now it is for the MERC, which follows transparent procedures, to make the details of the petition public, perhaps after the weekend.

The notice rescinding the contract and the petition today points out DPC's admission that the power plant does not conform to the PPA stipulations and was not capable of meeting the contractual terms in respect of the crucial operating characteristics and dynamic parameters.

Mr. Vinay Bansal of the MSEB had written to the DPC's Mr. Wade Cline on Thursday, ``you have acknowledged and admitted that the actual performance and capability of the power station does not conform to the start up and loading profile curves of schedule 6 of the PPA.'' Therefore, the PPA is ``void and/or is voidable at our option.''

No to 'protest payment'

PTI reports:

Irked by the legal notice slapped by MSEB, the DPC today refused to accept the board's ``protest payment'' of Rs. 139 crores towards the April bill. ``We had sent the bill today, but they refused to accept it nor have given any reasons for the same,'' a senior MSEB official told presspersons at Mumbai.

He said the board would now directly deposit the amount in DPC's account and also send a letter to this effect to the multinational stating the circumstances under which the payment was done.

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DPC seeks Centre's help

By Our Special Correspondent

NEW DELHI, MAY 25. The Managing Director of the Enron-promoted Dabhol Power Company (DPC), Mr. Wide Cline, today met the Union Power Secretary, Mr A. K. Basu, here and apprised him of the latest situation on the dispute with the Maharashtra State Electricity Board (MSEB).

Power Ministry sources, confirming the meeting, said the DPC was advised to appear before the Maharashtra Government- appointed re-negotiating committee headed by Dr. Madhav Godbole and present its case.

The sources said the Centre's representative in the panel, Mr. A.V. Gokak, had been fully briefed about the issues involved and would try to find common ground between the disputing parties. The Centre has also made its stand clear that the two parties should come to an understanding before it could do anything in the matter.

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