THE government has ruled out any "quick fix" solution to the Dabhol power project imbroglio. It has, however, said a policy package has in-principle been cleared by the Centre including granting it a mega power project status.
According to sources in the prime minister's office, the Indian financial institutions' (IFIs) proposal on re-engineering the project has ensured that the cost of power would be brought down to between Rs 2.50 and Rs 2.75 per unit. The Centre would also direct the states to lift power from the plant, they said.
The PMO sources also categorically ruled out National Thermal Power Corporation (NTPC) or the IFIs picking up Enron's 65 per cent stake in the $ 1 billion equity of Dabhol Power Company. "The government is very clear on this count. The project has to be owned and run by the private sector," they said.
The sources also said the Indian legal system was such that the IFIs and banks would not lose their money. No claims by the foreign creditors would be entertained because the tangible assets of DPC belong to the IFIs and hence to the government.
"What is worrying the government though is after declaring itself bankrupt under Chapter 11, Enron will freeze the claims of creditors resulting in a loss of Rs 3 crore per day to Indian lenders," the sources said.
The proposal submitted by the IFIs has called for a 50 per cent discount on the DPC's cost of equity. The new owner, however, would be given sops including customs duty exemptions on equipment imported earlier. "The Centre will also ask MSEB to lift a significant quantity of power with the balance being taken by other states," sources said.
Officials in the finance ministry said the IFIs were given a six-week timeframe when mid-November to come back with a concrete proposal after negotiating with prospective buyers. Tata Power and BSES have evinced interest in taking over the project.
