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Godbole report tabled; moots renegotiation with Enron

Expressing serious concern over numerous infirmities in the process of approvals granted to Enron-promoted Dabhol Power Company, the high-powered energy review committee has stressed the need for a concomitant action to address critical issues through negotiations with DPC so as to bring down the cost of power.

The report of the committee, headed by former bureaucrat Madhav Godbole, was tabled in the Maharashtra Legislative Assembly by Energy Minister Dr Padamsinh Patil in Bombay on Thursday.

The report says arguments in support of approvals granted appear 'unconvincing' and prima facie against public interest.

The committee said: "It is troubled with the failure of governance that seems to have characterised almost every step of the decision-making process on matters relating to DPC.

The failure of governance has been broad, across different governments at different points of time, at both the state and the central level, and across different agencies associated with examining the project, and at both administrative and political levels, the committee has observed.

The report, however, says though development of DPC has been fraught with infirmities, its existence cannot be wished away and it now stands as a near completed project on Indian soil.

It has strongly recommended restructuring of DPC.

The report has strongly recommended that negotiations with DPC be carried out between parties' signatory to the various agreements.

It, however, cautions that unless the concerned parties proceed on broad guidelines, the ultimate result is likely to be as infructuous as the earlier re-negotiations in 1995.

Godbole and E A S Sarma -- one of the members of the committee -- were of the view that it should recommend the state government to appoint a judicial commission of inquiry in order to find satisfactory answers to the questions raised by the various sections of the people in Maharashtra.

However, three other members of the committee -- Deepak Parekh, Dr R K Pachauri and V M Lal were of the view that the terms of reference did not provide the committee with any reason to suggest a commission of inquiry.

Noting that the dollar linkage in the project increases the rate of growth of tariff since the effective equity is the base return plus depreciation, the committee recommended that the equity return for the redefined DPC tariff be defined in rupee terms rather than in dollar terms.

In order to remove capacity with respect to DPC's tariff and its non-transparent nature, the report has suggested that DPC tariff be redefined using the principles contained in union government guidelines and the availability-based tariff order of Central Electricity Regulatory Commission to convert it into a two-part tariff but limit equity return substantially.

The committee also recommends that the LNG facility be separated into a distinct facility, whose capital costs are reflected in the fuel charge, not as take or pay, but only in proportion to the extent of fuel re-gasified for power generation, compared to the total re-gasification capacity.

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