Maharashtra, Centre to renegotiate Enron deal

By Our Special Correspondent

NEW DELHI, APRIL 23. Faced with the prospect of the Enron corporation pulling out of the Dabhol power project, the Centre and the Maharashtra Government today decided to renegotiate the power purchase agreement (PPA) with the Dabhol Power Company (DPC). The Centre also agreed to take out the surplus power, a long standing demand of the State.

These decisions came at an emergency meeting between the Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, and the Finance Minister, Mr. Yashwant Sinha, here. The Union Minister for Power, Mr. Suresh Prabhu, and the former Chief Minister and Nationalist Congress Party chief, Mr. Sharad Pawar, were also present.

The meeting, ahead of the DPC board meeting in London on April 25, decided to constitute a committee to re-negotiate the PPA. The committee will have a Central Government representative and will have two issues on its agenda - the cost of power and the use of power.

Later, Mr. Sinha told reporters that the price at which power would be bought from the DPC would be re-negotiated which basically means re-negotiating the PPA while the use of power would include the extent of the State's requirement, how much surplus power would have to be wheeled out of the State and who would buy it. Maharashtra has been requesting the Centre to buy the surplus power from the DPC and put it in the national grid so that the high cost the power can be evened out in the combined pool.

He chose to disregard the possibility of Enron pulling out of the project saying, ``we will cross the bridge when we come to it. Let Enron tell the negotiating committee that it wants to pull out.'' However, he added, ``we hope to engage the DPC in negotiations and hope it will respond positively and not take any precipitative steps in the meanwhile.'' The delegation's interaction with Mr. Sinha was preceded by a meeting with the Power Minister earlier in the day. These two meetings took stock of the reports that Enron was contemplating pulling out of the 2,184 MW power project, the second phase of which is nearing completion. In London today, Enron officials met the company's lenders who were becoming sceptical of the DPC's future.

The setting up of the negotiating committee is expected to take about a week, Mr. Deshmukh said. Asked about the price at which it would like to buy power, he said ideally the price should be between 2.80 and 2.90 paise a unit. ``But that is a technical issue.''

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