Indian power firms not keen on buying DPC

Dev Chatterjee

Mumbai, May 22: Leading Indian power companies have ruled out buying Enron Corp’s stake in Dabhol Power Company if the project comes up for sale. The reason, say power company officials, is the high power tariff. ‘‘None of the state government or consumer will buy power at the prevailing power tariff,’’ say officials of leading power companies.

‘‘If the project is up for sale, there is no question of us buying Enron’s stake in Dabhol Power Corporation. We think the power tariff of over Rs 7 is too high and it would be difficult for us to find any buyers,’’ said a top Tata Power official. ‘‘The PPA has to be re-negotiated and tariff brought down,’’ he added.

Tata Power had taken over the Mangalore power project after US energy giant, Cogentrix had withdrawn from the project. According to sources, the company will now invest its time and funds into 1000 mw coal-based Mangalore power project instead of taking over new power projects like DPC.

‘‘There are reports that Karnataka government wants to have re-look at the Mangalore power project PPA, we are busy with that,’’ said Tata Power official. Tata Power is one of India’s largest power generation and distribution companies and is considered a likely suitor for the DPC.

Reliance Industries, which was setting up a 450 mw power project in Patalganga near Mumbai, has also expressed its reservations about taking over the project. In its post-annual results news conference, Anil Ambani managing director of RIL had said that the company is not keen on buying Enron’s stake in DPC. RIL also owns 29.68 per cent equity in BSES which has its own distribution and power generation capacity for Mumbai suburbs.

Power sector analysts say only the cash-rich Union government utilities have the cash to takeover Enron power project but it would be difficult for them to sell power to other States unless some solution is hammered out between Enron, and Maharashtra government over the tariff. Already Karnataka and Madhya Pradesh, though facing major power cuts, have ruled out buying power from MSEB at the stiff rate.

Similarly, Maharashtra is a power deficit project but it is unable to lift power from Enron project as the state electricity board is unable to pay Enron bills due to its bankrupt balance sheet.

MSEB has said the power produced by $ 2.7 billion Dabhol power project is expensive and has refused to buy the output from the second phase. The contract between the two signed in the mid-1990s had called for MSEB to buy the entire capacity of 2,184 MW. The first phase of 740 MW began operations in May 1999 but MSEB is unable to pay even the bills for first phase.