Tata Power approaches Centre for takeover of Dabhol

ANUPAMA AIRY & SANJAY JOG

NEW DELHI/MUMBAI, SEPTEMBER 18: Tata Power has formally approached the power ministry for takeover of controversy-ridden 2184 mw Dabhol power project of Enron but laid down certain conditions including guaranteed offtake of 80 per cent power from Phase-II. This move assumes significance as Tata Power is the first company to write officially to the government among those which had evinced interest in this project. Other companies in the race included AES Transpower, Hindujas and BSES.

Managing director of Tata Power Adi Engineer confirmed that the company has submitted the letter to the power ministry ‘subject to certain conditions’. Sources close to the company said,”Tata Power has told the government that Dabhol project was on Tata’s radar screen. The company would take an interest provided its makes a sense from the shareholders’ point of view. The company’s aim is to provide good service to consumers of Maharashtra”

Officials disclosed that in yet another letter to the finance secretary, even the Industrial Development Bank of India (IDBI) has listed Tata Power and BSES as two serious contenders for the Dabhol project.
However, on being contacted, BSES chairman and managing director, R V Shahi categorically denied that his company has shown any interest in the project. Shahi, however, confirmed that he had held discussions with IDBI over this project.

“We are not ken on this project and I have already made it clear at the company’s AGM on August 30 that BSES was not at all keen on Dabhol as it is not a viable project.” Shahi added.

According to official sources Tata Power, in its letter, has not clearly spelled out the ‘reliefs and concessions’ which it is seeking from the centre. “All they have stressed upon is the guaranteed offtake of 80 per cent power from the 1444 mw Phase-II project, officials said.
Meanwhile, the Centre is already examining the ‘roadmap’ prepared by committee of Indian financial institutions on resolving the Dabhol power imbroglio.

“The concessions sought by Tata Power should be in line with those made by the FIs”, sources said. Official sources disclosed that following report of the FIs, power ministry has already asked Central Electricity Authority (CEA) to study in detail the impact of the two-part tariff model and other concessions suggested by the FIs for making the project viable.

“CEA has been given a weeks time to submit its report”, sources said. Meanwhile, official sources said that even though FIs had stressed on the need to associate National Thermal Power Corporation (NTPC) and Gas Authority of India (GAIL) with the restructured Dabhol project, the centre is clear that it will not force any of these public sector companies to take over the Dabhol project.

As another option, FIs had also recommended that the government should ask NTPC to take over this project, operate it for 2-3 years and thereafter disinvest to the private sector at a premium.