Search the Internet          Tips  Sites: Finance, Investment

Maharashtra announces panel to review Enron project

Swati Kulkarni in Bombay

The Maharashtra government, on Wednesday, announced the setting up of a committee to review the entire Enron project. The committee has been given one month to recommend measures that the state government should take with regard to the project.

Meanwhile, Union Power Minister Suresh Prabhu indicated that the Centre may not default on its counter-guarantee to Enron-promoted Dabhol Power Company and was likely to pay the outstanding bill of Rs 790 million for November 2000 due from the Maharashtra State Electricity Board.

The review committee that the Maharashtra government announced will be headed by former MSEB chairman, Dr Madhav Godbole, and consist of six to seven more members whose name they will be announced in a day or two.

Speaking to reporters on Wednesday evening, Maharashtra Chief Minister Vilasrao Deshmukh said, "The committee will study the entire Enron project and suggest guidelines to streamline the tariff structures. They will also tell us as to how to come out of the mess as the state government is finding it difficult to come out of the payment crisis,"

Interestingly, this is the second review committee formed by the Maharashtra state government for the Enron project. The earlier panel was headed by Dr Kirit Parikh when the BJP-Shiv Sena government was in power in Maharashtra.

The Enron power project was scrapped by the BJP-Shiv Sena government as the combine alleged that the previous Congress government had 'received kickbacks' to sign this project.

However, the project became operational after the committee headed by Dr Kirit Parikh gave its go-ahead after reviewing it. Enron had then agreed to reduce the tariff rate.

Interestingly, the new committee will also look into how to streamline and strengthen the MSEB in the future.

"I have written a letter to Prime Minister Atal Bihari Vajpayee stating that it is financially not possible for the state and the MSEB to bear this burden. I have asked him to find a way out," said Deshmukh.

"You have larger set-ups like Power Trading Corporation and National Thermal Power Corporation which can absorb the power from Enron. At a later stage, if there is a shortfall of power, we can always ask the Centre for it," Deshmukh said in the letter to the prime minister.

He also said that the central government should come to the rescue of the state. "Free us from Enron yoke," Deshmukh said.

Meanwhile, Maharashtra Chief Secretary, V Ranganathan and senior state government officials from the power ministry have rushed to Delhi to meet the Union finance minister, finance secretary and energy secretary to help resolve the crisis.

"I have also given full freedom to MSEB to recover outstanding dues from defaulters," Deshmukh concluded.

Centre not to default on counter-guarantee to DPC

Union Power Minister Suresh Prabhu indicated that the Centre may not default on its counter-guarantee to Enron-promoted Dabhol Power Company and was likely to pay the outstanding bill of Rs 790 million for November 2000 due from the Maharashtra State Electricity Board.

"We will look at the proposal... but this cannot go on for month after month," Prabhu said.

A day after DPC invoked the Central government's counter-guarantee to claim payment for outstanding bills, the power minister also hinted at working out a new arrangement with the US energy giant to settle the issue.

"We are looking at options to resolve the current problem," he said.

DPC had decided to invoke the Central government's counter-guarantee after Maharashtra refused to pay its November bill.

Under the contract with Enron, if the Government of Maharashtra defaults, there is a contractual obligation on the central government to make the payment.

Besides the November bill, an amount of Rs 1.52 billion under the December bill is also due to DPC.

Prabhu is holding consultations with finance minister Yashwant Sinha to resolve the present crisis and a possible reworking of power purchase agreement (PPA) is on the cards, ministry sources said.

Additional inputs: PTI

SEE ALSO:

Enron invokes Union govt guarantee

Maharashtra govt raps Enron; CRISIL

Money

Business News

Tell us what you think of this report