State meet on DPC today

Maharashtra chief secretary Ajit Nimbalkar has convened an inter-departmental meeting on Wednesday to take stock of the revival plans for the Dabhol Power Company (DPC). The meeting is scheduled prior to the meeting between Indian and foreign financial institutions that will take place in London.

According to a senior government official, "Ours is a general updation meeting. We are clear that only after the foreign lenders and the IDBI-led Indian financial institutions are able to arrive at a decision on the hit each of them is willing to take would we come into the picture. Only when the foreign institutional lenders are eliminated from the picture by Indian lenders acquiring their stake at a discounted price, the dialogue between us and them can be initiated."

From theinstitutions' perspective, the tariff of Rs 2 40 per unit, thus far acceptable to Maharashtra, needs to be hiked to ensure a faster realisation of the principal sum outstanding towards the financial institutions.

The rate at which MSEB commits to purchase power from the first phase of the restarted DPC project would decide the bidding price for a private power major to acquire the project. "Any bidder who intends to acquire the restarted DPC project would first calculate the investment needed to start a greenfield project like DPC. He would also factor in various risks associated with the DPC project such as the age of the plant, deterioration that has already set in, costs involved in completing the remaining portion of the revived plant," according to the official.

He added that once these risks have been factored in as a discounted project price, the bidders would get into the fray.

"But all this is dependent on the sacrifice that the foreign lenders are willing to make so their stake is acquired by the Indian lenders. Then the financial institutions would have to agree to the tariff that is acceptable to the state government, a portion of which will go towards repaying oustandings," he said.