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March 30, 2001
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Money > Business Headlines > Report March 30, 2001 |
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Centre urged not to honour DPC guaranteeS Ravindran The Maharashtra government has, in a communication despatched to the Centre on Thursday, reiterated that the counter-guarantee invoked by the Dabhol Power Company (DPC) for the December bill of Rs 1.02 billion need not be honoured. This follows close on the heels of the Union law ministry taking the stand that the dispute between the Maharashtra State Electricity Board (MSEB) over Rs 4 billion could be interpreted either way. "Since the dispute can be interpreted either way, the state government has taken the stand that the Union government need not honour the counter-guarantee," sources close to the state government said. DPC had earlier in the month invoked the counter-guarantee as MSEB had not paid Rs 1.02 billion of the December bill. MSEB had retaliated by slapping a bill of Rs 4 billion on DPC. This, it claimed, was for non-supply of adequate power during the October 2000-January 28, 2001 period. The board contended that the December bill should be adjusted against this account. DPC had agreed that under the provisions of the power purchase agreement (PPA) such bills could be adjusted over a four-month period. This period however lapsed on January 25, while MSEB was claiming damages for non-supply of power mostly on January 28. The matter was referred to the Union law ministry, which in its ruling said that both sides had a point. This has sparked off the latest missive to the Centre from the state government. If DPC and the board do not arrive at an amicable settlement on this issue, the matter could be referred to the London Court of Arbitration as per the PPA provisions. Maharashtra finance minister Jayant Patil told the state assembly on Thursday that Nationalist Congress Party (NCP) president Sharad Pawar was making fervent request to ensure the power from Dabhol Power Company (DPC) was taken into the Central grid to resolve the imbroglio. Patil also alleged that Crisil downgraded the state to force the government to pay the bills to the power major, though the state had informed the agency that the payments were being consciously withheld to arrive at a consensus. He further went on to say that a solution lies with the Centre.
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