Celeste for amicable settlement on Enron, CM stands by review

Says Celeste: "We have discussed the problems at length and I feel that all the parties concerned including the Dabhol Power Company and the central government should sit together to find a way out. This is quite important since it affects the general investment perception of the state."

However, sources said that no commitment was made by the state government with issues still pending. Says PS Paunikar, technical director, MSEB: "There was no talk about a renegotiation for the project but only general talks about the issues that are at stake including the precarious financial position of the state electricity board.

When asked on the ongoing state tax tussle, state energy minister Dr Padamsinh Patil told The Indian Express that the issue will be positively resolved soon and that the state is willing to compromise." However, the CM had strongly objected to granting sales tax exemption to DPC for the fuel it purchases from Indian Oil Corporation.

During the meeting which lasted 45 minutes, Deshmukh explained to Celeste the financial burden cast on the Maharashtra State Electricity Board (MSEB) on account of purchase of power from the Dabhol Power Company (DPC), the subsidiary of Enron set up in coastal Konkan.

Deshmukh told Celeste that the state government would be approaching Centre to lighten its heavy financial burden after the review committee came out with "concrete proposals".

Celeste said the issue was an important one and hoped it would be sorted out soon. "Every crisis is an opportunity", he was quoted as saying.

Top MSEB officials present at the meeting explained the financial burden suffered by the board owing to power purchase agreement reached with DPC for the first phase of the project. The board’s current dues to DPC are to the tune of Rs 240 crore for November and December 2000.

Earlier last night Celeste, in his address to businessmen at the US Consulate, referred to the project and hoped that a working solution would be found despite misrespresentations and misunderstandings regarding the cost of dabhol’s power.

Stating that power sector reforms were urgently needed, Celeste said neither the MSEB nor any other state electricity board can succeed if they are not permitted to recover the full cost of power they distribute.

Celeste also promised all possible help on "an informal level" to sort out the issue which has cast a heavy Financial burden on Maharashtra State Electricity Board (MSEB), prompting a demand from many quarters to scrap the controversial agreement.