Dabhol to invoke counter-guarantee as MSEB defaults on dues

MUMBAI, JAN 31: With the Maharashtra State Electricity Board (MSEB) having failed to clear its dues within the stipulated period, the Dabh...

MUMBAI, JAN 31: With the Maharashtra State Electricity Board (MSEB) having failed to clear its dues within the stipulated period, the Dabhol Power Company (DPC), a subsidiary of the Enron Power Corporation, has decided to invoke the State Government’s counter-guarantee to recover them.

“As per the agreement, it was binding on the MSEB to clear the dues within the stipulated period. Since the MSEB has failed to clear them for November by January 25, the DPC has served a notice to invoke the counter-guarantee. Under such circumstances, it is legally binding on the government to make the payment within seven days,” Energy Secretary Vinay Mohan Lal said.

Lal said since there is still time for the deadline set by the DPC, it will be too premature to comment on the course of action the DPC will initiate to recover the arrears.

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A senior official said if the government fails to clear the dues by February 1, then the DPC will invoke the Centre’s counter-guarantee to recover them. Of course, that is unlikely, because if the State Government fails to make the payment, the Centre will deduct the financial assistance being released to Maharashtra to do so, the official added.

As per official records, the electricity bill for the month of November stood at Rs 160 crore, out of which, the board has already paid Rs 90 crore from its internal resources. The DPC has now decided to invoke the counter-guarantee for recovery of Rs 70 crore, a senior official said.

“The DPC has option to invoke either the letter of credit (Rs 130 crore) or the counter-guarantee to recover the arrears. Apparently, the DPC has decided to invoke the counter-guarantee for the purpose,” the official said.

This is for the first time that the DPC has invoked legal provisions to recover its outstanding arrears. So far, the DPC has been pressurising the board as well as the Congress-led Democratic Front Government to clear them. “Since it has been decided to set up a review committee, we feel that the decision to invoke the counter-guarantee is an attempt to pressurise the government to drop the proposal,” the official said.

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