Search the Internet          Tips  Sites: Finance, Investment

MSEB to pay Rs 1.13 billion Feb bill to DPC 'under protest'

S Ravindran

The Maharashtra State Electricity Board (MSEB) has decided to pay the Rs 1.13 billion February bill to the Enron-promoted Dabhol Power Company (DPC) "under protest". The bill had become due on March 25.

MSEB has protested primarily about how much power was despatched by DPC on demand. "We have decided to pay the bill but we have disputed the despatch figures given by DPC," said a highly placed MSEB official.

The decision comes even as the Union law ministry has lobbed the ball back in the MSEB-DPC court over the disputed Rs 1.02-billion December 2000 bill.

The electricity board had to pay about Rs 1.02 billion to DPC as the unpaid portion of its December bill. DPC first invoked the state government guarantee and then the central government's counter guarantee.

MSEB had retaliated by slapping a claim of Rs 4 billion on DPC for non-supply of power at various points between October 2000 and January 28, 2001.

The state government and MSEB had told the Centre to adjust the December bill from the Rs 4 billion (claim) as this was allowed under the power purchase agreement (PPA). Their contention was that payment disputes spread over a four-month period on non-despatch of power can be adjusted in the December 2000 bill.

DPC contended that the four-month period expired on January 25, 2001, when the December 2000 bill fell due. MSEB on the other hand was claiming damages primarily for non-despatch of power on January 28, 2001.

The finance ministry has now referred the matter to the law ministry. It is now learnt that attorney-general Soli Sorabjee has contended that there is merit in the argument of both sides. If the two parties cannot come to a mutually acceptable solution, they can go in for arbitration as stipulated in the PPA.

Maharashtra has incurred an expenditure of Rs 31 billion to revive the financial condition of the loss-making Maharashtra State Electricity Board (MSEB).

"The deterioration of MSEB's financial position during Shiv Sena-BJP government has necessitated an infusion of Rs 23.71 billion in the current year's revenue account," Finance Minister Jayant Patil said while presenting his second Budget in the state assembly.

Patil said the provision would enable MSEB to achieve the statutory three per cent rate of return on its fixed assets for 1997-98, 1998-99 and 1999-00.

The government loans, amounting to Rs 19.86 billion advanced to MSEB over the years, had been converted into equity, Patil said. This step would enhance the loss-making Board's capacity to borrow from other sources, he added.

Powered by

ALSO READ:
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report