Mumbai, May 16
The Central Government has decided to purchase the Dabhol Power Project (DPP) shortly and the plant will start generating electricity within three months of the takeover, Union Agriculture Minister Sharad Pawar told reporters in Kolhapur town, 225 kms from here, yesterday.
Confirming reports emanating from the Maharashtra State Electricity Board, Mr Pawar said power from the plant would be supplied to Maharastra at the rate of Rs 2.20 per unit.
Mr Pawar said the final touches for the takeover the Dabhol power plant was being taken by the group of ministers headed by Defence Minister Pranab Mukherjee.
The Maharashtra Government had earlier indicated to the Central Government and negotiators working to transfer the control of the plant to Indian investors that the Maharashtra State Electricity Board would not be able to guarantee off-take of power from the plant unless it was affordably priced, according to sources.
After Mr Pawar’s statement yesterday, sources here feel that Indian lenders to the project may be on the verge of hammering down the price of the plant asked by international lenders like General Electric and Bechtel.
Reports from New Delhi said, domestic lenders led by IDBI and the State Bank of India were willing to buy the foreign companies’ stake at around $300-350 million. However, negotiations were bogged down on the project’s foreign debt component of around $600 million. The international lenders might be asked to absorb the foreign debt component and write off the losses, it was felt. The two Indian institutions are likely to issue bonds for funding the takeover of the project.
The plant uses expensive naptha as fuel and before its shutdown, Dabhol Power Corporation had priced power at between Rs 4 and Rs 7 per unit. The power would have been priced even higher at present high international oil prices. The Maharashtra Government is already pressing for modifying the plant so that it is able to use the cheaper natural gas available in the country in place of imported
naptha.
