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Maharashtra will have to pay Rs 300 bn to DPC if PPA is terminated

The Maharashtra government said on Friday that it will have to make an upfront payment of Rs 250 to Rs 300 billion to the US energy major Enron's troubled Dabhol Power Company if the multinational terminates the PPA, facilitating its exit from the $3 billion project.

"It is for Enron to decide whether to continue or not. If they pull out by terminating the contract, then the project will fall in Maharashtra State Electricity Board's lap and payments will have to be made to that effect," state principal secretary for energy Vinay Mohan Lal told reporters after a seminar on 'Power Sector Reforms in Maharashtra' in Bombay.

He said since Enron chairman Kenneth Lay had already publicly stated that 'it wants out' of the 2,184 mw project and would like to sell its stake to 'appropriate buyer' as to them the imbroglio seems to be unsoluble, another company would have to buy Enron's stake in DPC.

"The state government has asked an explanation from DPC over Lay's statement and are expecting a reply from them on August 6," Lal said.

"There is no point in renegotiating now if the owner himself is not interested in running the project," Lal said.

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