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DPC dismisses MSEB's Rs 8.08 charge as 'grossly misleading'

Priya Ganapati in Bombay

The Enron-promoted Dabhol Power Company has said allegations hurled by Maharashtra State Electricity Board officials that DPC power is 'an expensive proposition at Rs 8.08 per unit' are baseless.

K Wade Cline, managing director, DPC said: "DPC's tariff is not expensive, nor is it Rs 8.08 as claimed by MSEB, if operated optimally. Given that MSEB currently faces a daily shortage of 800 MW to 1500 MW and DPC's Phase I capacity is 728 MW, it is clear that MSEB is well in a position to draw power at 90 per cent Plant Load factor, as contemplated by the power purchase agreement. This results in a competitive tariff of Rs 4.40 per KW."

Cline added that if DPC's naphtha fuel supply for its power plant is exempted from state and central levies the tariff would be even lower at Rs 3.80 per KW.

DPC's strong reaction came as a response to a remark made on September 9, by MSEB chairman, Vinay Bansal. Bansal has been quoted as saying that while MSEB is in favour of an amicable solution to the Dabhol issue, the interests of the consumers should not be sacrificed.

"The DPC power is costly at Rs 8.08 per unit as against the power supplied to agricultural consumers at a paltry 42 paise," Bansal is reported to have said.

DPC refutes these allegations.

"It is ludicrous to say that MSEB's inability to collect more than 42 paise prevents it from affording DPC power. 42 paise is MSEB's realisation from agricultural consumers whereas DPC power is absorbed by all categories of consumers, including industrial, commercial and agricultural segments. This results in a much higher revenue realisation for MSEB and so is illogical for it to suggest that MSEB bears a loss of Rs 13.40 billion on DPC power," a DPC spokesperson said.

While warning that off the cuff remarks can only jeopardise and strain relations between the two parties further, DPC has said, "The MSEB chairman is also a member of the DPC's board of directors and is well aware of DPC's tariff. We find it highly surprising that in spite of holding a responsible position he has opted to misrepresent facts and present DPC's tariff completely out of context."

Meanwhile, power blackouts in Maharashtra are expected to get worse as MSEB grapples with a power shortfall fluctuating between 800 to 1,200 megawatts.

Maharashtra is able to draw only 1,500 MW of the 2,356 MW allotted to it. A 500 MW natural gas plant is lying idle as the Central government had not allocated enough natural gas for it and the DPC plant which is another source of power has been switched off thanks to the ongoing dispute.

The $3-billion project ran into trouble after the MSEB defaulted on payments for the power it purchased from DPC. MSEB officials have said that they cannot pass on DPC's high tariffs to its users, the result being financial bankruptcy for the board.

DPC officials say that they understand the fiscal challenges before MSEB but there are other ways for MSEB to make up for its deficit.

"MSEB's efforts must be warranted towards rationalising tariff structure, metering all their power, preventing theft and collecting judiciously from every consumer. For instance, MSEB's arrears itself amount to over Rs 50 billion," the DPC spokesperson said.

Extrapolating on Bansal's statement, DPC has said that MSEB also purchases power from other gas, liquid fuel and nuclear generating units, with tariffs greater than 42 paise and sometimes close to Rs 3.75.

"The direct application of MSEB's current logic suggests the need to stop purchase of power from any such utility who's cost of generation is in excess of 42 paise, leaving MSEB with virtually nil MW for the state's needs," DPC alleged.

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