Events
in 1993
14.
On 3rd February 1993 the SIA (the Secretariat of Industrial Approvals,
Ministry of Industries) gave industrial approval to Enron, inter alia, on the
condition that the “Annual foreign exchange outflow on all counts would not
exceed U$ 950 million”. This was against the GOM’s own estimate that the
foreign exchange outflow of the project was U$ 1450 million annually, as well as
per the CEA in whose estimate the foreign estimate started at U$ 1333 million,
annually.
15.
In April 1993 Dabhol Power Company (hereinafter referred to as ‘DPC’)
prepared a project report and submitted same to the CEA even before notifying
the project as required under the law. The details included in the report were
considered to be inadequate by the CEA.
16.
On 30th of April, the World Bank appraised the project and wrote to the
GOI, with a copy sent to Chairman, MSEB. The project when examined by the World
Bank was considered unviable and that it would place a heavy financial burden on
the MSEB Further, that the project was inappropriate in the context of
the Need and pattern of demand for electricity in Maharashtra. It also suggested
that “substantial adjustments” in tariff would be needed in the tariff in
order to accommodate the high cost LNG power. The note stated, inter alia, that
“Our analysis based on the parameters provided to us indicates that the LNG-based project as presently formulated is not economically viable, and thus could not be financed by the Bank” (Emphasis supplied)
“(a) The proposed 2,015 MW project is too large for base load operation in the Maharashtra State Electricity Board (MSEB) system. Project design is inflexible and would result in uneconomic plant dispatch (lower variable cost coal power would be replaced by much higher cost LNG power) in order to utilise the full amount of LNG to be contracted. This adversely affects the economic viability of the project and would place a heavy financial burden on MSEB”; (Emphasis supplied)
“(b) The project is not part of the least-cost sequence for Maharashtra power development. Local coal and gas are the preferred choices for base load power generation”.
17.
On 28 June 1993, Joseph Sutton Vice President of Enron wrote to Chairman,
MSEB in response to the World bank note and increasing press criticism that
“I
feel that the World Bank opinion can be
changed. We will engage a PR firm during the next trip and hopefully manage
the media from here on”(Emphasis supplied)
18.
On 21/5/93, the GOM’s response to the World Bank’s critique was:
“The
note does not support the Project. It, however, points out very clearly that
this project would be a very good project if it was not coming up in India”
and that “The World Bank presumes that the tariff of the LNG based power project
from Enron will be very high”...”We are, however, negotiating strongly with Enron Power Corporation and trying to push
down the tariff”
Not only was no reduction in the tariff, but in fact,
subsequently there was an increase in
the “negotiated tariff” after “negotiating strongly”!!!.
19.
MSEB in an internal note around the same time, forecast a steep decline in efficiency of its own operations and system to
justify Enron’s Project.
20.
These comments and an detailed analysis justifying the project was sent
to the World Bank. On 26 July 1993, the World bank replied to the GOI and MSEB
in response to their comments on the World Bank note. The bank reiterated its
earlier stand and severely criticised the MSEB ‘s attempts to justify the
project on grounds that its own system would decline in efficiency..
“...
However, we cannot accept the more
pessimistic scenario recently provided by MSEB according to which the existing
system is projected to decline in efficiency. If this were to be indeed the current best projection, determined
actions should be taken with priority to reverse this projected deterioration
rather than accepting it as a given fact in the analysis of new investments.”
“...we are finding it difficult to accord supplied justification to the Dhabol project based on the most recently discovered slippages in MSEB’s ongoing and planned least cost progress.”
After extensive further review of the above parameters and detailed review of the analytical frame work and costing assumptions, we reconfirm our earlier conclusion that the Dabhol project as presently formulated is not economically justified and thus could not be financed by the Bank.”
(Emphasis
supplied)
21.
In August 1993 the CEA conducted a study into the reasonable capital cost
of Combined Cycle Gas Turbine plants, like
Enron’s (for evaluating bids
for the DESU Bawana project), and found the reasonable cost after considering
all relevant factors like currency depreciation, Interest during construction,
Inflation etc., to be “Rs. 18130 per kW (December 1996) and Rs. 19160 per kW
(December 1997)”. i.e. Rs. 1.81 crores
per MW (December 1996 completed costs) and
Rs. 1.91 crores per MW (December 1997 completed costs). This is against Enron’s cost (both then and currently) of more than
Rs. 4 Crores/MW.
22.
In August 1993 in a meeting chaired by Chief Minister, Maharashtra, in
reply to the proposition that issues like
importing fuel, total foreign exchange outgo and (presumably) tariff etc.
“..were minor issues to be clarified” and that “the FIPB would take a
decision on them at the time of final review..”, the Union Minister for
Power, the Union Minister for Power replied that
“..the project should from the point of view of the existing guidelines with particular reference to two tier tariff”. He also felt that “project need to be technoeconomically appraised and cleared by CEA before MSEB signs any formal agreement with the Company” (emphasis supplied).
These “minor issues” were in fact examined by the FIPB and not by the CEA, as will be seen subsequently.
23.
On 26 August 1993 Ms.
Rebecca Mark, of Enron, expressing satisfaction over the progress of the
project, wrote to Shri Sharad Pawar, Chief Minister, Maharashtra stating that
“The
remaining concern seems to reside with Mr. Beg, Member Planning for Thermal
projects. He continues to hold up project approval based on the question of
demand for power in Maharashtra. No
one from the Ministry of Power in Delhi has given direction to Mr. Beg to move
forward on this issue.”
It
is clear that the Enron was asking Shri Pawar to intercede and influence a
statutory body in the discharge of its duties and/or to get the Ministry of
Power to do so against the informed judgment of the expert authority.
24.
In September 1993 the Cabinet Note requesting that Cabinet allow MSEB to
sign PPA. was finalised. The Note, inter alia, states that Government guidelines
require capital costs to be approved by the CEA. Further Tariff figures are
discrepant at various different points viz. at very different levels of customs
duty, tariff remains same!!!. This clearly points out both the total
non-application of mind and a desire to push the project through at all costs.
25.
The note had been discussed between MSEB, Department of Energy and
Department of Finance, Government
of Maharashtra since July 1993. Various concerns were voiced by the Principal
Secretary, Finance. These ought to
have been part of the Cabinet Note. However, a separate “secret”
note purporting to be the “additional
views of the Finance dept.”,. “which remained to be incorporated in the
Cabinet Note” (Emphasis supplied)
was drawn up. These “additional views’” are as follows:
“...nor
has the project cost projected has been defined as a ceiling project cost.
It is quite possible that in the end, we might end up with cost and time
overruns. Secondly, in terms of the
agreements that are going to be executed, there does not appear to be any
incentive on behalf of the ENRON to
curtail the project cost.”; “It would be difficult for us to know exactly
what the power is going to cost”; “We cannot but feel that the commitment on
behalf the MSEB is open in absence of the details...”; “Besides,
one cannot help feeling that Enron is not taking any risk whatsoever as a
generator of power but wants guaranteed rewards, which is not a very
satisfactory arrangement.” (Emphasis supplied) It
went on to say that the Cost of LNG was extremely high and was not known,
without which cost of power could not be known.
Further
that the project would lead to a “Weakening the credit structure of the MSEB”.
(Emphasis in the original ) “The
Project envisages the sale of expensive power to HT industrial users via the
MSEB with the profits of such sales being earmarked for payment to ENRON on a
preferential basis. Incidentally, this amounts roughly to Rs. 250 crore per
month. In fact, any special
arrangements made for payment of cost
to ENRON weakens the residual operations of MSEB, which needs to be serviced
by non-HT non-industrial users. This
would definitely weaken MSEB and will preclude other MSEB projects from being
financed”
“The full set of contractual agreements must be received and finalised, not only the Power Purchase Agreement”.
26.
On 10th September 1993, the Secretary (Energy), GOM set the agenda for
decision of the GOI in a letter to
the Special Secretary., Power, GOI.. The letter included, inter alia, the
following agenda:
“guarantee
against change of legislation/ subordinate legislation in respect of allowing
foreign private sector investment/ operation of the plant”;
“Suitable
amendments to the Electricity Acts to prevent MSEB from restraining the
operations of Enron Power Plant; as per the statutory powers conferred upon
it.”;
that
the “Structure of the tariff as
prescribed under the structure of these acts to be in consonance with the
Enron’s tariff structure proposed under the PPA;
that
“The DPC will have no obligations to
provide information to any authority or MSEB other than those prescribed in the
PPA”
and that “the relevant arbitration provisions under the act will not apply to this PPA.” ( All emphasis supplied ).
As will be seen
later, all elements of the above agenda were carried out for the project.
27.
On 20 September 1993 the CEA
wrote to GOM that “The studies carried out by CEA indicate that the project is not the least cost option”.
28.
On 22 September 1993, the notification was published, as required under
S. 29 of the Electricity Supply Act, 1948 (herein after referred to as the ESA).
The Notification was deficient in material respects. It deliberately misled and
misrepresented facts. In particular, in that it stated fuel would be natural Gas
(not LIQUEFIED natural gas), thereby suppressing the fact that fuel would be
imported at a very high cost and would involve very heavy capital costs for the
port, regassification facility etc. This is one of the main reasons why the
entire project is so expensive. It also did not specify that it would be using
Distillate no 2 but mentions fuel oil (which is substantially cheaper). Further
the notification did not mention other salient features like the cost at which
power was to be supplied, that the plant was a base load plant, etc. The
advertisement invited enquiries for additional information, but all requests for
relevant details were refused.
29.
In December 1993, the MSEB had purported to carry out an exercise
comparing the PPA tariff with normative tariff, purportedly derived through the
notified method. The MSEB ’s effort was a blatantly dishonest effort based on extraneous, untenable and illegal assumptions and it
was clear that the MSEB was fraudulently attempting to show the PPA tariffs as
lower than the normative tariff.
30.
On 2.11.1993, in a meeting of the FIPB
(Foreign Investment Promotion Board) it was noted that
“one of the key issues was the ... reasonableness of the tariff
formula” that there had been some criticism of the high cost of power from
this project. Further, the meeting noted that the M/power explained that “the
Central Electricity Authority would go into the question of reasonability of
tariff and the principles of tariff formula
and that
“the primary concern remained the question of tariff.” Further that the
FIPB was to consider the following issues, inter alia, that “the
guaranteed purchase and assumptions about 90% PLF may imply that other stations
with cheaper power may have to back down while Dabhol would not”.
(Emphasis supplied).
31.
The “key issue” and the
“primary concern” about the cost of Power was hastily and perfunctorily
disposed of in the following manner. On the following day, 3.11.1993, the
Finance Secretary, GOI, took a meeting on Dabhol Power Project to discuss “the
tariff for power proposed by M/s Enron”. The minutes record:
“Finance
Secretary sought a clarification on the Internal Rate Return (IRR) to equity
assumed in the calculations. The Financial Adviser MSEB stated that the normal
IRR to investors would be 25.22% and assuming an inflation rate of around 3-4%,
the real IRR would be 20.6% at 80% availability. Chairman,
MSEB stated that in the negotiations they had attempted to bring down this rate
but eventually had accepted this figure.
The
question was raised as to whether this was an unreasonable rate of return. The
point was made that a high rate of return could be obtained by keeping down
costs and through efficient operations without any adverse effect on the power
cost. It was, therefore necessary to
consider also the validity of the cost estimates. The Financial Adviser, MSEB stated that they were not competent to
comment on capital costs but generally felt that these were not out of line..
“Financial
Adviser MSEB stated that their assessment was that domestic investors would
require a somewhat lower IRR and of this were to be accepted on optimum blended
IRR would be between 17-18.3 % in real terms. He clarified
that such a reduced IRR could facilitate a negotiation on reduced escalation
for capacity charge on the tariff
amounting to 0.57 cents/kwh.”
Finance
Secretary enquired regarding the tariff in the Hub River project of Pakistan.
Financial Adviser MSEB stated that in the Hub River Project, there was front
loading of tariff which declined gradually over the years, the annualised tariff
would be 5.9 cents per unit. By way of comparison after excluding import duties
and corporate taxes and removing the inflation element,
the annualised tariff for Enron would be
around 5.71 cents per unit while that for Hub Valley would be 5.4 cents per unit
at 75% PLF including 10% import duties. This is arising because of the lower IRR
of the Hub river project.”
32.
It is critical to place some of these numbers in context
·
The
reduction of “0.57
cents/kwh.” in a situation of “a
reduced IRR” amounts to U$ 90 million a year (Rs. 300 crores a year). No such
“reduction” took place
·
That
“the annualised front loaded tariff of Hub Valley (in
Pakistan) would be 5.9
cents/unit”. This against annualised 7.5 cents/unit not 5.71 cents as
dishonestly represented. The 7.5
cents of the DPC was back loaded. Consequently,
the Hub Valley tariff went down
over the years while the Enron’s tariff increased.
·
No
one sought to enquire why the IRR (which is lower than the average rate of
return) for the Dabhol Project was so high.
·
The
IRR mentioned in the minutes works out (very approximately) to over a 32% return
on equity. The Law, mandated a 16% return on equity. Every
1% Return on Equity represents a return of U$ 8.5 million (Rs. 28 crores) in
a project this size. The overall difference amounts to well over U$ 100 million
(Rs. 320 crores then)
33.
On 5.11.93, 1993 (recorded in the minutes dated/drawn on 10.11.1993) of
the FIPB meeting, based on the earlier discussion, it was recorded that:
“Finance
Secretary observed that that the question of cost of power had been looked into
and it had been found that it was more or less in line with other projects being
put up in Maharashtra...” (Emphasis
supplied)
It seems incredible that the above casual observation has sufficed to a
clear $2.5 billion power project involving a foreign exchange outgo of Rs. 5000
crores a year and in any event is a distortion of fact.
Further
that:
“IV
CEA CLEARANCE”
(Emphasis in the Original)
“Secretary
(Power) indicated that clearance should be available in the week beginning 8th
November, 1993” (Emphasis
supplied)
Interestingly, this would be before the CEA had an occasion to consider
the project or for that matter before the minimum statutory period under Section
29 of the Act would have expired.
34.
On 8.11.1993, a note was drawn up by the CEA. Some of its observations
include:
“Based
on 90% dispatch and 76.4% minimum take or buy liability for LNG, the minimum
charges payable by MSEB works out to 1334.18
Million Dollars in the year 1998 ..” (Emphasis supplied)
“The
annual total outflow of foreign exchange on all counts is indicated as around US
$ 950 million in the SIA approval dated 3.2.93. This issue needs to be taken
care of by MSEB.”
“the
return on equity, would work out to about 26%
in the 5th year increasing to 52%
during the 15th year if the tariff of DPC was adopted for calculations”
A comparison of the DPC tariff with the tariff of as calculated under the
Law was also made by simply taking prices as “indicated by DPC”
Even after allowing an ad-hoc incentive for the GOI tariff, the GOI
tariff was lower by 14 paisa. The annual
difference is of the order of Rs. 220 crores (U$ 70 million a year). Without
the ad-hoc incentive the difference works out to an annual difference of the
order of Rs. 500 crores, i.e. over the life of the contract, in dollar terms, to
nearly U$
3000 million (Rs. 10,0000 crores) !!!
35.
The CEA also carried out a study of the backing down of existing
generating stations As per the CEA’s analysis, substantial amount of MSEB’s
own generating capacity would have to be backed down in order to accommodate the
90% guarantee promised to Enron. It
is to be noted that as per the CEA, 408
MW of MSEB’s generating capacity, in the first year, costing 50 paisa -80
paisa a unit would be backed down to buy
695 MW of Enron’s power @ Rs. 3.47 a unit (per MSEB).
36.
DPC repeatedly refused to give the CEA information it asked for.
On
10/11/93, in response to CEA’s questions on the project costs, the DPC replied
that
“It is important to note, however, that capital costs are irrelevant to CEA”
Further in response to the CEA asking for specific components involving a expenditure of nearly U$ 2.6 Billion, (Rs. 9000 crores then), the DPC’s response was that
“Your request for more detailed project costs of equipment/system/works other than those provided in the capital cost summary cannot be supported and is not deemed necessary.” (Emphasis supplied) .
In reply to the CEA’s queries on “The reasons for the high cost of balance of plant and housing may be furnished”, DPC’s response was
“Same response as question #2 above”. i.e. “Your request ......cannot be supported and is not deemed necessary.”
37.
On 11.11.1993, the Secretary (Power, GOI), wrote to Chairman, CEA,
extracting Finance Secretary’s observation at FIPB meeting of 5.11.1993. The
letter stated that
“Finance
Secretary observed that the question of cost of power had been looked into and
it had been found that it was more or less in line with other projects being put
up in Maharashtra”.
38.
The issues before the CEA in considering the clearance of the project
included the following
“Issues for consideration for CEA clearance”
· “Non tying up of essential clearances/inputs by Enron”.
· “Non-justification of Phase II from power absorption angle”
· “Costliest option of power generation”.
· “High risk elements involved in LNG supply contract”.
· “Consequence of exemption of major deviation from Govt. of India Notification dated 30.3.1992”.
39.
On 12/11/93, the CEA met to consider the project’s techno-economic
clearance. Extracts from the minutes of the meeting include the following
“The backing down of the existing thermal generation capacity in Maharashtra due to this new capacity addition would imply heavy additional economic costs imposed on the power system of MSEB and these costs needed to be quantified and net economic rate of return from Dabhol project computed.....Keeping in view the costliest option of distillate fuel/LNG, the difference between the cost of LNG based power and the least cost option for Dabhol should be quantified.....The objective should be to minimise the cost of supply of electricity to the consumers in Maharashtra in the context of prevailing low electricity tariff structure in various states including Western Region.”
“CE (TPA) stated that the tariff for sale of power from the project was not as per GOI notification dated 30th March, 1992. He further stated that in response to request for details of cost estimates, M/s. DPC informed in a letter dated 10.11.93 that the capital cost of the project was irrelevant to CEA because the tariff was guaranteed and changes in capital cost were not passed on to the customer in the tariff.”
“Chairman
observed that the Dabhol tariff was a negotiated one and a communication was
received from the Ministry of Power informing that the cost of power had been
looked into by the Ministry of Finance and found to be more or less in line with
other projects being put up in Maharashtra. As such, tariff aspects and
deviations with reference to GOI notification and cost estimates could not be
examined in the CEA.”
“CE (Commercial) stated that the tariff proposed was a negotiated one and not as per GOI notification or related to the capital cost and payments involved foreign exchange outgo. The return on equity would work out to about 26% in the 5th year increasing to 52% during the 15th year if the tariff of M/s. DPC was adopted for calculations. Exemptions for deviations from GOI tariff notification including return on equity and other aspects would need to be looked into by the Ministry of Power and other concerned agencies of GOI.”
“Member (P) observed that as the World Bank had not agreed to finance the project and there would be a gap of US $ 600 million in the financing plan indicated by M/s. DPC.”
“Chairman
stated that in view of the replies received from M/s. DPC in regard to cost
estimates, clarification by the Ministry of Power on financial package and the
examination of tariff aspects by Ministry of Finance, examination by CEA would,
in effect, get limited to the technical aspects and need for the project
which was already discussed. Chief
Engineer (C) expressed the view that given this background, the completed cost
would not be considered by CEA at a later stage.”
“After discussions, it was decided that the Ministry of Power might be informed that in view of the fact that the tariff for power from the project was negotiated one and not in conformity with GOI notification, and not related to the capital cost and cost of power from the project had been looked into by the Ministry of Finance, only the technical aspects of the scheme were examined in CEA and found to be generally in order. Formal communication of clearance to technical aspects of the scheme could be given after compliance of Section 29 of the Electricity (Supply) Act , 1948 by M/s. DPC subject to conditions set out therein.” (Emphasis supplied)
40.
Thus from the documentary record, it is evident that the CEA
consideration of the cost aspects of the Dabhol project resulted in an adverse
conclusion drawn on all counts. viz. tariff, rate of return, forex outflow and
heavy additional economic costs imposed upon the MSEB. Faced with extraneous
pressure to clear the project, the CEA abdicated its statutory responsibility to
consider costs in their various aspects on the basis of the above referenced
letter dated 11/11/93 from the Secretary, Power, GOI. Thus the CEA acted in
breach of its statutory duty in examining only the technical aspects of the
scheme, and deciding to accord, only technical clearance. Further that “ that
given this background, the completed cost would not
be considered by CEA (even) at a later stage.”
41.
On 22.11.1993, the 2 month period under S. 29 expired. Various requests
for details Including details regarding cost of electricity, capital costs etc.,
were refused.
42.
On 23.11.93,
A.
The GOM wrote to the CEA, enclosing a copy of a letter stating that “
M/s Enron have stated that that they have not received any objections
pursuant to the notification about the proposed Dabhol power project”.
B.
The CEA on learning that 34 representation were received, faxed a letter
to the GOM, asking “whether
Section 29 of the Act was complied with.”
C.
The MSEB wrote to the CEA that “power purchase agreement, cost details
etc. cannot be given to the representationists until project is cleared“
D.
The Ministry of Power gave an undertaking to the
DPC that “MOP will expedite consideration of all clearances which fall
within their competence and ensure that your
application for such clearances are approved” (Emphasis supplied)
43.
On 24.11.93, the GOM (realising that CEA was aware of representations),
states that 37 representations (not 34) were received and that Section 29 was
complied with.
44.
On 26.11.1993, the CEA gave clearance subject to certain conditions. In
the letter the CEA specifies that;
“aspects
relating to import of fuel, foreign exchange outgo and deviation from Government
of India’s notification including return on equity was looked into by FIPB and
found acceptable by them.”
It must be emphasised that while the clearance given by the CEA was only
a technical clearance, it was deliberately and repeatedly misrepresented as the
‘techno-economic clearance. All parties including the GOI, the MSEB, DPC and
the CEA have claimed this to be the clearance. on various occasions
including to the Cabinet of India, Cabinet of Maharashtra, the Courts, the
Parliament and the Press. All the parties now claim that the clearance was
granted on 14th July 1994.
45.
On 2.12.1993, the Secretary (Energy) GOM, issued a note enclosing CEA’s
26.11.1993 letter, holding that
“This
letter conveys full and final techno-economic clearance”
“the project has been fully scrutinised by the Government of India who
has now issued their final clearance.”
46.
On 6.12.1993, MSEB’s Solicitors clarify that
“The
communication dated 26th November, 1993 which has been addressed to Dabhol Power
Corporation mentions that the technical aspects of the scheme had been accorded
clearance of the CEA subject to certain conditions set out in the letter..”
The
question that is required to be considered in the light of the above
communications is whether
the scheme prepared by DPC for establishment of Combined cycle LNG based Thermal
Power Plant of 2015 MW at Dabhol has the required approvals of the CEA as
contemplated under the Electricity Supply Act, 1948.
By
its communication dated 26th November, 1993 CEA has only cleared the technical
aspects subject to conditions which have been reproduced above. It requires to
be noted that though in its “in principle” clearance letter CEA had observed
that one of the issues to be resolved before the techno-economic clearance would
be granted to the Project was the tariff issues in the light of the GOI
Notification dated 30th March, 1992. There is no reference in the 26th November,
1993 communication to this aspect except that in paragraph 2 of the letter of
CEA it is observed that -
“
The aspects relating to import of fuel, foreign currency exchange outgo and
deviation from Government of India’s tariff notification including return on
equity have been examined by FIPB and the project had been found acceptable by
them.”
It
is not clear from the above as to whether CEA itself has examined the issues
relating to tariff in the context of the Govt. of India notification dated 30th
March, 1992 and found the deviation therefrom acceptable to it.
Approval
of tariff by CEA assumes importance in the context of the overall
techno-economic clearance of the Project which CEA is required to grant.
As
far as the tariff for the sale of electricity by generating company is
concerned, the provisions are to be found under section 43A (2) of the Supply
Act. The said sub-section provides that the tariff for the sale of electricity
by a Generating Company to the Board shall be determined in accordance with the
norms regarding operation and the Plant Load Factor as may be laid down by the
Authority and in accordance with the rates of Appreciation and reasonable return
and such other factors as may be determined, from time to time, by the Central
Government, by notification in the Official Gazette.
The
Central Government, in exercise of the powers conferred on it by the aforesaid
provision by its notification dated 30th March, 1992 determined the factors in
accordance with which the tariff for sale of electricity by generating companies
to the Board and to other persons shall be determined.
It
would be clear that the tariff for the sale of electricity which is agreed upon
between DPC and the Board has to strictly conform to the norms laid down in the
Government of India notifications. If the tariff does not conform to the
criteria then in our opinion it would be necessary for the CEA or the Government
of India to specifically approve the tariff. As aforesaid the CEA has not
approved the tariff but only noted that the deviation from the tariff
notification has been examined and found acceptable by FIPB. This
cannot amount to a clearance by the CEA of the PPA tariff formula.
These
matters, in our view, are not incapable of resolution especially since the FIPB
has, according to the CEA, found the economic aspects of the project acceptable.
This however, needs to be perused at the appropriate level in the Government of
India. the Board, may in the meanwhile sign the PPA once the Government of
Maharashtra approves it pursuant to the Chairman’s request in that regard to
the Secretary (Energy), subject to pursuing the matter of a formal Government of
India notification relating to the tariff.
47.
On 8.12.1993, the Power Purchase Agreement (PPA) was signed. This allowed
for the purchase by the MSEB of 695
MW of electrical capacity and/or energy. The 2nd phase was completely optional
and non binding on MSEB .
Further, on the same day, 8.12.93, the Solicitors of MSEB and DPC issued letters to DPC and MSEB confirming that “... tariff structure would be formally notified...” under sec 43(A) 2.. of the ESA”.