The Hindu Business Line : Dabhol re-powered

IF THERE ARE no further hitches, the 740 MW Dabhol power plant on Maharashtra's Konkan coast should once again begin generating by the end of 2005, under new owners. The Centre seems to have hammered out a settlement with General Electric and Bechtel, which together own 85 per cent of the project's equity, the domestic financial institutions, and the Government-owned power and energy utilities such as the National Thermal Power Corporation and Gas Authority of India Ltd to re-start this jinxed plant that has been shut since May 2001.

Yet, even now it is difficult to believe that all the glitches have indeed been sorted out and the plant, originally promoted by Enron which itself ran into a host of problems in its operations in the US, is all set to fire again. For, there are still issues of international arbitration and attachment of shares of the Maharashtra Power Development Corporation Ltd initiated separately by the two American companies that have to be sorted out. But at least on paper there is a solution that will see the world-class plant, that has been an idle national asset, once again feed electricity to the power-starved Maharashtra grid. The agreement envisages setting up a Special Purpose Vehicle in which stakes will be held by NTPC, GAIL and the Maharashtra State Electricity Board. It had been the Board's reluctance to pay a high price — then more than Rs 7 a unit — that led to the plant's closure. This SPV will own, manage and operate the plant, whose second phase will also be completed taking its total capacity to 2,184 MW. Maharashtra has agreed to buy all the electricity generated by the plant.

The Dabhol project and the problems that it created should also serve as a lesson for the nation on how not to woo and sign up a power project. In the early 1990s, when the then Finance Minister and present Prime Minister, Dr Manmohan Singh, initiated reforms under P. V. Narasimha Rao, the Enron-promoted Dabhol project was touted as the beginning of a flood of private investment in the power sector. High-profile visits by Enron executives to the State, first to hold discussions with the then Congress(I) Government and its successor Shiv Sena-BJP regime will still be fresh in the memory for those tracking this project. Charges and counters of corruption and favouritism flew back and forth, even as the project suffered till it was finally shut down. Now, after a good four years of lying idle, the plant is to be re-started under new owners. The settlement may not be satisfactory to all concerned, but the positive note is that the various parties were willing to sit down and talk it out. If the Enron project marked the decline of the Maharashtra State Electricity Board as the country's premier power utility, the project's revival should be the pivot for the beleaguered Board to turn around the State's power position.

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