11 July 2002 – The electricity board for the Indian state of Maharashtra has offered to start accepting power again from Enron’s Dabhol power plant but is offering a rate unlikely to be acceptable to the lenders currently controlling the mothballed plant.
The Maharashtra State Electricity Board (MSEB) was the plants sole customer until a dispute over payments led to closure of the plant and the cessation of work on the second phase of the 2184 MW project. MSEB as offered to buy half of the plants output at 2.25 rupees (46c) a unit, a statement from the state government said on Wednesday.
“The state cabinet decided to communicate to the Industrial Development Bank of India that it (MSEB) is ready to buy 50 per cent of the power from the first phase,” said a spokesman for the Maharashtra state government, but did not say when it would start purchases.
An official at one of the lending institutions who declined to be identified said, “The government’s proposal is part of a reconstruction plan, but prima facie, the proposed rate is far too low for a naphtha-based plant, – We are still actively considering seizing the assets.” The official indicated that a price of around 2.60-2.70 would be needed to allow for the current cost of oil.
The Industrial Development Bank of India (IDBI) is the lead creditor to the $2.9bn Dabhol power project, which consists of a two-phase power plant and an adjacent LNG tanker jetty and storage facility.
IDBI along with the other domestic and foreign lenders, asked the provincial government in June is it were willing to let the state-owned MSEB resume buying power from the idle and rusting Dabhol plant.
Meanwhile, Tata Power Co Ltd., India’s largest private sector utility is seeking shareholders approval to borrow up to $1.7bn for investment opportunities which could include a bid for Dabhol in which Enron’s has a 65 per cent stake. A notice was sent to shareholders ahead of next months Annual General Meeting. Tata Power is one of six companies that in January indicated interest in bidding.
“This is an enabling resolution to raise money to fund investment spending and take advantage of any opportunities that come along,” said A. Charan, Tata’s vice president for finance.
Along with Enron, who built the plant, GE and Bechtel both have a ten per cent interest with the MSEB owning 15 per cent.