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Wednesday, Sep 04, 2002

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Maharashtra rejects Dabhol lenders' rate for power

Our Bureau

MUMBAI, Sept. 3

EFFORTS by lenders to Dabhol Power Company (DPC) to re-start the 653-MW phase-I of the Dabhol power project have reached a dead end with the Maharashtra Government rejecting their offer to sell power at Rs 2.86 per unit.

Saying that the offer was "unacceptable'', the State Government has instead suggested that the IDBI-led lenders' consortium reduce tariff rates to "an acceptable level''.

When contacted, the IDBI Executive Director, Mr A.K. Doda, said, "I do not know yet what the Government has said. We'll have to first study the Government's position. I cannot comment on the issue at the moment.''

The Maharashtra Chief Minister, Mr Vilasrao Deshmukh, told newspersons after the co-ordination committee meeting late last night that the Government had rejected the proposal to pass through fuel, interest and other costs to power consumers.

Leaders of the ruling Democratic Front have also suggested that Indian lenders led by IDBI repay loans to foreign lenders. The State Government has suggested that the Centre waive the minimum alternate tax for the DPC project in Maharashtra and IDBI reduce interest rates on loans to the project from 13.5 per cent to 10 per cent. The Government has also asked that prices of feedstock — naphtha — "be linked to Indian coal instead of international parity''.

Mr Deshmukh said the FIs would be informed of the decision and that the State Government would like to discuss "further reduction'' in tariff with the lenders.

According to senior oil industry analysts, it would be difficult to adhere to the State Government suggestion seeking a link in the prices of DPC feedstock to Indian coal.

Since the plant could not use coal as an alternative fuel, there did not seem to be a case for linking naphtha prices to coal, a senior analyst said.

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