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Maharashtra Cabinet to meet to decide DPC power tariff

Anil Sasi & Sidhartha in New Delhi

Even as the Maharashtra Cabinet is slated to meet on Wednesday to discuss the proposed tariffs at which the state will evacuate power from Dabhol Power Company, the lenders to the project, led by the Industrial Development Bank of India, are exploring options to rope in an operator other than National Thermal Power Corporation to restart the plant.

NTPC is likely to restrict itself to an advisory role in initiating commercial operations in Phase-1, and completing Phase-II of the project.

"The lenders are exploring all options, including persuading NTPC to restart the plant or rope in a third party to do the same," a power ministry official told Business Standard.

Senior NTPC officials, however, said the utility was agreeable to providing only technical consultancy services for the operation and maintenance of Phase-1 of the project, and had ruled out any commercial or organisational responsibility in the same.

"NTPC will at best provide an advisory role, and the lenders will have to take on the responsibility of commercial operations and management of the plant," an official said.

On the other hand, a senior executive with one of the lenders to DPC said though NTPC was the first choice for restarting the project, other prospective operators would also be approached.

Institutional sources said initially there was a proposal to rope in one of the seven bidders to pick up a stake in DPC to restart the plant.

The option was, however, ruled out because the lenders feared the proposal would be opposed by the other bidders.

Since August 19, when the Centre and the lenders agreed on a price of Rs 2.76 per unit of power purchased from DPC, the Maharashtra government has held internal meetings to firm up a view before approaching the state Cabinet.

The Centre and the lenders have proposed that the state evacuate 75 per cent of the power generated from the 744 mw Phase-I of the project.

In the past few weeks, the lenders have also moved ahead with a proposal to go for asset sales for the 2184 mw power plant.

ICICI Bank executive director S Mukherjee confirmed that several meetings had been held with international lenders like Japan Bank for International Cooperation to convince them on the asset sale model.

Mukherjee also said Rothschild of the UK had not yet been given the mandate to prepare a blueprint for the asset sale model. Sources said the consultant would be given the mandate once the international lenders agreed to the proposal.

US-based Overseas Private Investment Corporation, a lender to the project, has opposed the move because it has insured the project, and such a move would result in a loss of $400 million for it.

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