Govt to renegotiate Enron phase II and tariff structure

During this period, the cost of power, which was originally estimated to be about Rs 2.03 per unit has shot up to Rs 7.80 last month. But though Tata Electric Company (TEC) has about 220 MVA of power surplus which is available to MSEB at almost less than half the price, MSEB cannot buy that as the PPA says MSEB has to take all the power produced by Enron.

For the first phase, MSEB is paying capacity charges of Rs 94.59 crore per month. It will have to pay Rs 96.41 crore after the generation of 722 MW in the second phase which is due to begin in August 2001 and an additional Rs 119 crore per month after the generation of a further 722 MW by October 2001. Besides, Rs 53 crore will have to be paid as capacity charge for setting up of LNG terminal at DPC, Patil pointed out.

Till date, the government has incurred a loss of Rs 828 crore in its exercise of buying power from DPC and selling to its consumers at a lesser rate, he said.

The energy minister came down heavily on BJP leader Gopinath Munde who was energy minister during the Sena-BJP regime and was instrumental in the revival of the project. The unjust conditions did not exist in the original PPA but were inserted during the renegotiations between the power company and the Sena-BJP government. The Congress government had issued permission for only first phase of the project, but Munde cleared both the phases without even thinking of the implications, Patil charged.

“You wanted to drown Enron in the Arabian Sea but you ended up with drowning Maharashtra in the sea,” Patil quipped while referring to Munde’s campaign against Enron in 1995.

The energy minister also painted a gloomy picture of the power sector in the state and said the government urgently needed Rs 13,780 crore for improving it. For that it will float bonds of Rs 12,000 crore, he announced.

Although the state could generate 10,841 MW power, there was shortfall of about 1500 MW during the peak hours. On the other hand, the state was unable to get 1500 MW power due to several reasons including less supply from NTPC, and restrictions of Maharashtra Eelectricity Regulatory Commission on buying more than 300 MW power from Enron.

The MSEB was suffering a loss of 40 paise per unit while supplying power to its 1.18 crore domestic consumers and farmers.

Bowing to pressure from MLAs from all parties, who forced an adjournment of the Assembly, Patil announced rollback in the tariff for farmers and the powerloom sector. Despite the new rates announced by the MERC, the farmers will be charged only Rs 600 per horsepower per month while the powerlooms will be required to pay at the old rate of Rs 185, he announced. The difference will be paid by the state government itself for which the state exchequer will have to bear an additional burden of Rs 700 crore every month.

The debate today witnessed noisy scenes and worst of all, verbal dual between Patil and Munde which stooped to very low levels. Speaker Arun Gujrathi had to expunge certain remarks of the duo from the records of the Assembly.

Enron*March 1992 – State government sings Memorandum of Understanding with Enron Power Corporation (March 1992).

*December 1993 – Power Purchase Agreement (PPA) signed.

*May 1994 – Conditions precedent waived.

*July 1995 – A three member committee headed by Gopinath Munde set up to review the Enron power project.

*August 5, 1995 – On the basis of the recommendations of the Munde Committee, the project is scrapped.

*October 1995 – Enron claims damages. Initiates proceedings before arbitrators in London.

*November 1995 – On the basis of the recommendations made by Kirit Parikh Committee, Sena-BJP government decides to renegotiate with Enron.

*February 1996 : Amended power purchase agreement signed.

*December 1997 – Construction begins at project site after High Court clears the project.

*March 1998 – Special Leave Petitions filed in the Supreme Court challenging the project.

*August 2000 – P B Samant and Pradumnya Kaul file writ petition in the Supreme Court and seek intervention. All the cases are pending before the appex court.