DPC ready to sell power, MSEB says `no'

By Mahesh Vijapurkar

MUMBAI, JUNE 16. Lenders, especially the international ones, have forced the Enron-sponsored Dabhol Power Company (DPC) to backtrack on its stand that selling power to the Maharashtra State Electricity Board or accepting payment of bills under protest would amount to an affirmation of the power purchase agreement (PPA) despite it being rescinded by the latter. The lenders have made the DPC to offer power for sale and agree to seek the pending bills to be paid.

Friday's discussions between the lenders - ABN Amro, Citibank, Bank of America and the Indian financial institutions - and the MSEB, where the DPC was suddenly brought in, showed lenders' anxiety to complete the 1444 MW phase II and mothball it till a new buyer was found with the Centre's help for energy to be produced by it. Sources familiar with the developments said their ``anxiety was pronounced'' as by resuming the sale of power, ``they want the cash flows to resume''.

In a letter delivered in the presence of the lenders on Friday, the DPC told the MSEB that it was willing to pick up the due payments and also sell power from Phase I, suspended since end- May, because it had ``changed its position''. But the MSEB, under legal advice, declined. The MSEB requires no power with the current zero-level load shedding but is worried that once it agrees to buy power again, then DPC might take the situation back to square one. The power producer could then possibly seek the activation of the escrow and demand a letter of credit as soon as Phase II is completed. The implications are not lost on the MSEB, which feels that any response at this juncture could be risky.

The lenders, along with the DPC and the MSEB have also decided to approach the Centre to intervene and find a buyer for the power generated by DPC. At their meeting on Thursday, it was felt that the Centre should come into the picture with a buyer in tow and not be just a mere facilitator. Unless this happened, nothing much could be achieved by way of dispute resolution.

This step, however, does not mean that a solution is imminent. The DPC and the MSEB, through the Madhav Godbole Committee, would have to work out a deal to make power cheaper and attractive enough for a third party.

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