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September 26, 2001
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Maharashtra accepts Godbole panel recommendations

Swati Kulkarni in Bombay

The Democratic Front government in Maharashtra has accepted the recommendations of the Enron negotiation committee, headed by Madhav Godbole, to minimise the power rate and dispose of additional power generated by the Dabhol Power Company to other states.

Talking to newsmen the state Chief Minister Vilasrao Deshmukh said that the cabinet has taken a note of the committee's recommendations and all future negotiations would be based on these recommendations. All these recommendations would be made public soon, he added.

One of the recommendations of the committee was that neighbouring states like Karnataka, Madhya Pradesh, Delhi, Rajasthan and Haryana would take interest in buying the power from DPC, if the power rate was between Rs 2.25 and Rs 2.40 per unit.

The committee further recommended that:

  • In order to continue with these rates the current shareholders should abandon the 75 per cent of capital,

  • The central government should float public bonds of Rs 250 billion and the amount should be given to the state government without interest,

  • Besides foreign shareholders, new alternative shareholders should be involved in the project,

  • LNG terminal facility should be delinked from the project, and

  • Loans and power tariff rates should be restructured.

The committee also suggested steps to reduce the power tariff:

  • Fuel supply and shipping agreements with the suppliers should be renegotiated,

  • Central government should waive customs duty on machinery and pipelines, and

  • If DPC is not entitled for Income Tax concessions for the first 10 years, then they should be considered for waiver.

Deshmukh said that since Enron had decided to dissociate itself from the DPC, the committee felt that it was not necessary to continue the negotiations. However, the state government could negotiate with DPC on the committee's recommendations, he added.

Replying to queries about the judicial probe that was initiated by the state government last week, Deshmukh said that it has nothing to do with the Centre's efforts at resolving the Enron imbroglio.

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