M A I N   N E W S

Enron’s DPC to scrap pact

London, April 26
In a major setback to India’s power sector, Enron’s Dhabol Power Company board empowered its management to sever power supply agreement with Maharashtra State Electricity Board, a move that could inflict a financial liability of Rs 2840 crore on the Centre.

A decision to authorise DPC President Neil McGregor to issue a termination notice to the MSEB for sale of power was taken by the board at its meeting here yesterday by a vote of six to one after Maharashtra Government representatives were prevented from voting on ground of ‘interested party’.

Dubbed as ‘unfortunate’ by Maharashtra Chief Minister Vilasrao Deshmukh, the decision was the culmination of the bitter fight between the US energy giant enron and the state government over the price of power from the $ 3 billion project, the first one to get the Centre’s counter-guarantee.

The sole dissenting vote to authorise the management to issue “notice of termination on the contract to sell 740 MW of power from the Dabhol project (first phase),” in Maharashtra came from the Industrial Development Bank of India (IDBI).

While the Centre sought to play down the issue with Power Minister Suresh Prabhu saying in New Delhi that there would not be any adverse impact of any decision by any company, Mr Deshmukh said in Mumbai, “We have already requested the energy multinational not to take any harsh decision.”

Meanwhile, the MSEB today paid Rs 134 crore ‘protest payment’ for the March bill of Rs 146.64 crore to the DPC in Mumbai.

Earlier in the day, Mr Prabhu said in the Lok Sabha that the scrapping of the agreement with Enron would have a limited impact on the Centre, but the Power Ministry officials had gone on record yesterday that the termination could cost the Union Government up to Rs 1,800 crore as one year electricity bill apart from $ 300 million as termination charges.

While the DPC spokesperson declined comment, saying, “It is our corporate policy not to comment on internal board meeting proceedings”, MSEB Chairman Vinay Bansal, who attended the meeting, said “the Indian side told them that it would be unfortunate if Enron broke the contract.”

The decision came barely months before the DPC’s scheduled commissioning of 1444 MW phase II (January 2002). The state government had announced earlier this week its decision to constitute a negotiating committee, having a Central representative, for reworking the Power Purchase Agreement.

Prior to the board meeting, the DPC had slapped one conciliation notice on the Centre and three arbitration notices on the state government over non-payment of dues amounting to Rs 213 crore for December and January. PTI

Sinha comes to HP’s rescue
Rakesh Lohumi
Tribune News Service

Shimla, April 26
With the Centre agreeing to clear the state’s overdraft, the financial crisis which forced the Reserve Bank of India to issue orders to stop payment to government cheques yesterday is likely to be over by tomorrow.

According to highly placed sources, the Union Ministry of Finance will deposit an amount in excess of Rs 180 crore in the state government’s account to clear the overdraft tomorrow morning.

The ministry has already received instructions from Mr Yashwant Sinha, Finance Minister, to this effect.

Mr P. K. Dhumal, Chief Minister, used his clout at the Centre to bail out the state from the tight financial spot which could have delayed payment of salaries of employees. He remained in constant touch with

Mr Sinha after the RBI stopped clearance of government cheques.

The banks refused to clear the cheques for the second day today.

Mr Dhumal, was not unduly worried about the crisis he said the non-clearance of cheques by banks should be an eye-opener for all concerned.

The BJP would use it as an opportunity to expose the disastrous fiscal policies of the previous Congress regime which had plunged the state into a debt trap.

It would soon launch a state-wide campaign to present the true picture of the state finances before the masses and expose those responsible for it.

The crisis was a result of “wrong” fiscal policies pursued by the Virbhadra Singh government which committed grave irregularities and raised indiscriminate loans at exorbitant rates of interest to bridge the revenue deficit.

He said it all started in 1989 when Mr Virbhadra Singh concealed the deficit of Rs 200 crore before the Ninth Financial Commission as a result, the state got almost Rs 1000 crore less during 1990-95.

Thereafter, during 1994-98 his government raised indiscriminate loans and opened a large number of institutions without any budgetary provision.

It indulged in what could only be termed as criminal financial irregularities by raising loan against a loan.

An amount of Rs 756 crore was deposited at the end of March and withdrawn in the first week of April.

Similarly, loans raised through boards and corporations in violation of the Constitution were also utilised for running the government. The Comptroller and Auditor-General of India had indicted the state government for these irregularities.

Now cutting down on non-Plan expenditure was the only way out but this could not be achieved immediately.

Curbs on sugar export go

New Delhi, April 26
The Cabinet Committee of Economic Affairs today removed all restrictions on sugar exports and allowed future trading in white sugar.

The future trading in sugar was prohibited till now under Section 17 of the Forward Contract (Regulation) Act, 1952.

The decision is expected to stabilise fluctuations in prices, safeguard interests of farmers, stockists and exporters.

The committee also approved the revised estimate of the Moga-Hisar-Bhiwani transmission line at a completed cost of Rs 150.9 crore.

The committee also approved the revised cost estimates of the Naptha Jhakri power project at a cost estimate of Rs 1561.63 crore.

The original estimate was approved by the committee in April 1988 at an estimated cost of Rs 889.9 crore. UNI