The Hindu Business Line : NTPC seeks to include Dabhol project under tripartite pact

THE Rs 26,000-crore National Thermal Power Corporation (NTPC) has sought the inclusion of the erstwhile Dabhol power project under the purview of the tripartite agreement to mitigate the risk of a payment default by Maharashtra, which is to buy 95 per cent of the generation from the 2,184-MW project.

The agreement, which was signed by the Centre, the RBI and the State governments in 2003, to prevent payment defaults by States to central public sector utilities, will require Maharashtra to enter into a binding commitment for ensuring the timely payment of NTPC's billings from the station.

The issue of inclusion of the project under the clauses of the tripartite agreement is expected to attain centre-stage with NTPC scheduled to kick off talks with the Maharashtra State Electricity Board (MSEB) for finalising the power purchase agreement for the project over the next few days.

NTPC's demand comes in the backdrop of the final tariffs from the station projected to be nearly 20 per cent higher than the Rs 2.30 per unit tariff envisaged earlier. Also, since MSEB will be the single largest buyer of Dabhol's power generation, the default risk faced by NTPC is perceived to be much higher.

"Maharashtra has earlier too defaulted on payments to the utility. The fiscal health of the Maharashtra Government is also not at its best at this point. In the light of this, it would in NTPC's best interest if the project is covered by the tripartite agreement," an NTPC official said.

Recovering dues: NTPC's recoveries from State electricity boards (SEBs), which were tottering at around 75 per cent of overall billings prior to the implementation of the tripartite agreement in March 2003, has now shot up to nearly 100 per cent, with SEBs making timely payments.

The agreement directs SEBs to make payments against the bills of central utilities such as NTPC within 60 days of billing or 45 days of the receipt of bills, whichever is later. It has also been made mandatory for SEBs to open and maintain irrevocable letters of credit equal to 105 per cent of their average monthly billing for the preceding 12 months.

Non-compliance invokes penal measures, including a graded reduction in the supply of power from central power stations. Where defaults exceed 90 days from the date of billing, the Centre can recover these dues through adjustment against releases due to the State.

NTPC is one of the stakeholders in Ratnagiri Gas and Power Pvt Ltd, which has taken over the assets of the erstwhile Dabhol Power Company. The power major will manage the station and its operations entirely once it goes on stream mid next year.

The NTPC stock closed at Rs 106.80 per share on the BSE on Monday, Rs 4.45 higher than the previous closing price. The 52-week high for the stock was Rs 109.30, while the 52-week low stood at Rs 72.

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