With this, the sweetheart deal between the Shiv Sena-BJP and Enron Power Corp of the US is unravelling rapidly. The timing could not have been worse for the ruling parties their fudging and obfuscation on the Enron deal stands exposed just as they are on the verge of facing the Lok Sabha and assembly elections. Let's take a look at the claims by the state government and the truth revealed by Dabhol Power Company's (DPC) first two bills.

DPC's first bill for a whopping Rs 230 crore, covering pre- and post- commissioning charges until May 31, 1999 itself needs explanation; but that according to Mr. Munde will happen when he first gets an explanation from the DPC. In fact there is nothing to explain. Sources in the power business say that thestate government had naively failed to read the small print, which loaded several costs on to the Maharashtra State Electricity Board (MSEB).

The cost of power: During the last assembly session Mr.Munde had categorically told legislators that there will be no additional burden on consumers due to the purchase of power at Rs 3 per unit. However, Enron's June bill of Rs 117 crores for 236 million units works out to a unit tariff of Rs 4.95.

Unless MSEB, which is already burdened with bad debts and arrears of around Rs 2,500 crores passes the cost on to consumers, its own losses will run into several thousand crores of rupees within a couple of years. Industrial users are already overburdened by high tariffs and they have prepared for Enron by setting up captive consumption units. Some may even prefer to relocate .

Pass through costs and escalation: In the last few weeks, both Mr.Munde and chief minister Narayan Rane have taken to explaining that DPC's power tariff has shot up because of the rupee-dollarparity and cost of fuel. Will they also explain why the project was renegotiated at a fictitious Rs 26 to a dollar even when the rupee had already depreciated to Rs 33.4? The demand supply situation: This is another question that the government has fudged continuously. When Mr.Munde and his party cancelled the Enron contract, they charged that the demand supply situation did not warrant the setting up of a large independent power project. They questioned the need for other projects including Dabhol phase II (2184 MW totally), Bhadravati and the Reliance. After the re-negotiation, the government insisted that the state faced an acute power shortage and pushed ahead with all three mega projects.It vehemently refuted charges that MSEB would have to stop buying cheaper power from Tata Electric Companies (TEC) because of the Enron deal.Within two days of DPC going on stream on May 13, MSEB stopped buying power from TEC because it is committed to pay full capacity charges (Rs 80 crores) to DPC irrespective ofwhether it picked up the power.

This was one of the issues raised by all the 26 cases filed against the project and dismissed. What makes the situation uglier is that TEC had been supplying power to the MSEB at a mere Rs 1.80 per unit. The public sector NTPC supplied it at an even cheaper Rs 1.30 per unit.

The BJP-Sena claims about an negative demand-supply situation had begun to wear thin several months ago but it blames this on the industrial downturn. The State then struck deals with Andhra Pradesh, Karnataka and Tamil Nadu to supply power to them at a rate of Rs 2.70/unit during the day and a subsidised Rs 2.30/unit in the night. This is half the price at which MSEB will be buying power from DPC and much cheaper than the rate it charges its own industries. But even at these rates, the three states have stopped buying power after the monsoon set in.

Will demand pick up? Not in the near future. The state has granted permission to 65 captive power units and 32 non-conventional power generation units,with a total capacity of 1776 MW. Of these 522 MW have already been commissioned. These figures do not even take into account the surplus generated if and when the Reliance and Bhadravati projects are commissioned.

Except for public protests and agitation of the sort threatened by the MSEB workers union, Maharashtra's consumers will have no choice but to pay up extortionate power tariffs which are bound to be charged by the MSEB. The only hope now is the Central Electricity Regulatory Commission's threat that it could reopen Enron's power purchase agreement if Maharashtra goes in for a multi-state power export deal.

Though Enron may insist that it has an ironclad contract, public outrage and protests are known to have forced many international companies back to the negotiating table. This time around, the high cost of Enron's power is no longer in the realm of speculation, but a reality that begs explanation.

Author's email:suchetadalal@yahoo.com