The long running dispute over the cost of power generated by the Dabhol power project in India has taken another turn with the announcement by Maharashtra Chief Minister, Vilasrao Deshmukh, that a high level committee will be formed to renegotiate terms. The committee will include representatives from the federal government, Maharashtra government and the Maharashtra State Electricity Board (MSEB).

The committee’s main objective will be to reduce the cost of power being produced under the terms of the Power Purchase Agreement (PPA). It will be hoping to head off any legal challenge from DPC, which has not been paid for electricity production.

The proposal for negotiations with the Enron supported Dabhol Power Company (DPC) followed a meeting between the Chief Minister Deshmukh and Finance Minister, Yashwant Sinha.

Deshmukh indicated that the committee would be formed within the next few days. A spokesperson for Enron said that no formal approach has been made to them to date concerning renegotiation of the PPA.