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MSEB may buy DPC power at Rs 2.80 per unit

A government committee in Maharashtra has approved the purchase of power at a higher price from the bankrupt Enron Corp's Indian unit, raising hopes that the idle plant will be restarted soon.

"The committee has cleared a proposal allowing the MSEB to buy power from the Dabhol Power Company at Rs 2.80 per unit," a senior state government official told Reuters on Saturday.

The Maharashtra State Electricity Board is the sole customer of Dabhol Power, which Enron set up on India's west coast. The power plant, in which Enron owns a 65 per cent stake, was shut down in May 2001 because the board stopped buying power.

The committee, which met late on Friday, accepted the tariff proposed by Industrial Development Bank of India, the lead lender to the project, said the official, who declined to be named.

The plant, once showcased as an Indian success story in attracting foreign investment, is now controlled by the lenders. About 30 financial institutions led by Industrial Development Bank of India lent $1.9 billion to the project.

In July, Maharashtra, one of India's most industrialised states and home to the financial capital, Mumbai, allowed the board to pay Rs 2.25 a unit for Dabhol's power after it faced a shortfall of more than 1,000 MW.

But the offer was turned down by Indian lenders who said it was too low.

Then the state government last month rejected a proposal from the bank that the board should pay Rs 2.86 per unit, saying it was too high.

The official said the latest proposal would now go to the State's Cabinet for clearance, and later be submitted to the Maharashtra Electricity Regulatory Commission, the state's power regulator.

The 740 MW first stage of the plant began operating in 1999. The 1,444 MW second phase was nearly complete when construction was halted after the board fell $240 million behind in payments.

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