rediff.com: FIs-MSEB negotiate to restart DPC phase-I

The Enron-promoted Dabhol power project (phase-I) may start power generation in the next two to three weeks after a gap of about a year as a result of renewed negotiations between financial institutions -- led by the Industrial Development Bank of India -- and Maharashtra State Electricity Board.

File photo of an engineer at the Dabhol power plant. Photo: Reuters/Savita Kirloskar

Both, MSEB and the IDBI-led consortium, have expressed keenness to restart the operations immediately to expedite the process of revival of the project and to stop the deterioration in the condition of the plant, highly placed sources said.

The financial institutions have also suggested that power generated from DPC phase-I can be sold at a lower rate now and the arrears, if any, could be settled once the final deal for the project was struck, they added.

When contacted, Union Power Secretary R V Shahi said, "the Centre has no role to play in the Enron issue. But speaking on technical grounds, it will be desirable that lenders and MSEB decide on running of the phase I of the project as soon as possible."

In case the negotiations fructify, either MSEB or National Thermal Power Corporation could be asked to operate the 740 mw plant till a solution was found to the financial crisis of the project.

Private companies including Tata Power and BSES are in the fray for buying stake in Enron for which the process of due diligence was halted due to litigations, sources said adding that at this juncture priority should be to restart the plant.

Gurucharan Singh, technical director for corporate planning at the Maharashtra State Electricity Board, said firing up the Dabhol plant would alleviate a power shortage that daily prompts power cuts in India's most industrialised state.

"The subject is under discussion with the (state) government and lenders," Gurucharan said.

Houston-based energy trader, Enron, which filed for bankruptcy in December, owns 65 per cent of the facility, the world's largest gas-fired plant and bankrupt Enron's largest asset in Asia.

GE, which made the plant's turbines, and privately held Bechtel Corp, the main contractor on the project, each own 10 per cent with MSEB the remainder.

Nearly 30 banks and foreign government-run financial agencies lent $1.9 billion to build the plant, and are trying to recover their money by selling it.

A spokesman for the creditor group declined to comment when asked if there were plans to restart the plant. Dabhol Power Co, the company Enron set up to build and run the plant, no longer has any employees and has virtually ceased to exist.

Gurucharan said the MSEB, a nearly bankrupt state-run power distribution monopoly, resorted to load shedding, or cutting supply, in some areas almost daily recently because it could not meet demand.

"It's a seasonal phenomenon," Gurucharan said, referring to the yearly spiking of demand in May, when daytime temperatures regularly top 40 degrees Celsius throughout much of the state, where the industrialised cities of Mumbai, Pune, Aurangabad and Nashik are located.

Gurucharan said load shedding occurred during two periods each day when demand surged: from 7:30 a.m. to 11 am, and in the evening from 6 pm to 10 pm.

He would not say how much power was available to distribute, but said MSEB was meeting some demand by drawing power from the National Power Grid Corp, and added only two to three plants were out of operation for "planned maintenance."

The shortage will disappear when the monsoon season arrives next month in southern India.

"As soon as the rainy season begins, demand will drop by about 2,000 MW," Gurucharan said.

The 740 MW first phase started operating in May 1999. The 1,444 MW second phase was nearly complete when construction was halted last June after the MSEB fell $240 million behind in payments.



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FIs, MSEB keen to restart DPC phase-I