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DPC invokes counter-guarantee again

For the second time, Enron-promoted Dabhol Power Company (DPC) invoked the Government of India's (GoI) counter-guarantee following Maharashtra State Electricity Board's failure to clear the outstanding December bill of Rs 1.02 billion.

Invoking the counter-guarantee was necessary as the Maharashtra government had failed to pay this same amount after the GoM guarantee in favour of DPC had been invoked on February 8 last.

"Although we could have invoked the GoI guarantee earlier, we delayed taking this decision as long as possible in order to give the MSEB more time to pay their December bill," DPC managing director Wade Cline said in a statement in Bombay on Thursday.

Wade said the bill was now overdue by 41 days as neither MSEB nor the state government had paid the outstanding balance, "We have drawn on the GOI guarantee to cover the outstanding amount."

DPC has obligations to lenders that it must honour its operating expenses which was why "we have made use of the security measure at this time", he said.

MSEB sources, when contacted, said that the outstanding bill for December was to be adjusted against the Rs 4 billion penalty slapped on DPC last week for 'non-performance and misrepresentation'.

They said with the invoking of counter-guarantee, GoI would now have to pay the amount in a month's time.

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