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DPC serves 3rd pre-termination notice on Maharashtra

Dabhol Power Company, a joint venture power producing firm promoted by the US energy major Enron Corporation, has served its third pre-termination notice to the Maharashtra government in connection with the outstanding monthly payments owed to DPC by the Maharashtra State Electricity Board.

According to DPC spokesperson, the company has commenced additional arbitration proceedings with the Maharashtra government for non-payment of monthly bills amounting to Rs 6.52 billion from April through July 2001. Earlier, another arbitration notice was issued to the state government in April this year regarding MSEB's unpaid December 2000, and January 2001, bills.

Besides, DPC had served two separate notices to MSEB for breaching the agreement related to state support, which was signed at the time of the power purchase agreement in 1993-94 and the supplementary support agreement after renegotiations.

DPC has set up a mega power plant of 2184 mw at Ratnagiri district of Maharashtra to supply electricity to MSEB, the sole consumer and minority partner in the project.

However, after one-year of operation of the phase-I plant (840 mw), the project came to a standstill as the state-owned electricity board turned financially sick and could not make payment for the cost of power offtake from the plant since December 2000.

The failure to pay the monthly bills led to legal disputes between the two parties.

DPC sources said, the arbitration notices issued by the company and related actions are necessary steps to protect the interests of DPC's stakeholders as the Maharashtra government continues to consistently breach its obligations and guarantees by failing to honour MSEB's unpaid monthly bills including amounts related to accrued interest, shortfalls in monthly payments and interest on shortfall payments.

These are also the initial steps that would govern the final arbitration proceedings to be held in London under the provisions of the United Nations commission on international trade law as agreed earlier between DPC and government of Maharashtra, sources added.

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