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Maharashtra govt to bail out MSEB in Enron issue

Swati Kulkarni in Bombay

The Maharashtra government has decided to bail out the beleaguered Maharashtra State Electricity Board with the part-payment of dues amounting to Rs 1.14 billion payable to Enron's Dabhol Power Company.

Speaking to newsmen at Mantralaya in Bombay on Tuesday, state minister for finance Jayant Patil said that the MSEB had informed the state government of its inability to pay its dues for the month of October 2000 in time, because of a horde of problems.

The minister disclosed that the high-powered committee to be appointed to review the project shall go into the details of the billing payment also. But until then the government will support the MSEB and pay the dues to DPC.

The minister admitted that the last date for payment to DPC had expired. He said that the MSEB had also paid Rs 2.45 billion to the National Thermal Power Corporation (NTPC) recently.

He said that DPC had not issued any threat to the state government or the MSEB over the delay in payment.

Sources disclosed that the matter had been temporarily resolved following a meeting between Enron executives and state minister for energy Padamsinh Patil, other state government officials, Nationalist Congress Party leader Sharad Pawar, and MSEB chairman Vijay Bansal at Sahyadri Guest House on Monday.

The October DPC bill was for an amount of Rs 1.14 billion, for November was Rs 1.48 billion, and for December it was Rs 1.59 billion. Of this the October-November bill totalling Rs 2.62 billion is due for payment.

Earlier reports said that Enron had threatened to invoke the letter of credit, if MSEB failed to pay the dues by the due date.

Unable to comply with the bill schedule, the MSEB had requested the state government to bail it out by allocating a part of the total dues of Rs 4.32 billion to DPC in order to avoid the invocation of the letter of credit and the state guarantee.

MSEB sources said that the MSEB does not have the required funds to clear the dues and has sought the government's help in clearing the dues in installments.

The board also requested the government to make a monthly provision of Rs 1.30 billion towards meeting the electricity bill of DPC.

Sources said that the MSEB has offered two proposals to the state government whereby it could pay the DPC's dues.

One, it argues that the government could force the BSES to cough up the Rs 1 billion payable to it as standby charges out of the Rs 3-billion dues, as per the directions of the MERC.

The BSES is yet to comply with the MERC directive. Sources said that the government could force the BSES to pay up its dues to the MSEB by threatening it with the cancellation of its licence.

Second, the MSEB wants the government to allocate Rs 8.22 billion by way of subsidies which it has given to the powerloom and irrigation sectors. Sources claim that if the government makes a part-payment of the amount then it can be in a position to pay its dues to the DPC.

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