ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Power: Costly Mess

Costly Mess In June 2004, it will be three years since the Maharashtra State Electricity Board (MSEB) terminated its power purchase agreement with Dabhol Power Corporation (DPC) and defaulted in its payments, citing high tariffs. Since then the Dabhol mess has proved to be intractable, and increasingly complex, with stakeholders filing a string of lawsuits against the MSEB, the government of Maharashtra and the central government, in India and abroad. Some of the flashpoints centre around the jurisdiction of MERC in relation to the power purchase agreement of DPC; the validity of the various guarantees and counter-guarantees that Maharashtra, the union government and domestic lenders have issued to foreign lenders of the project, in the event of payment default; and the order in which claims of a now bankrupt company should be dealt with. However, the overriding public interest lies in resuming operation of the plant, at an affordable and sustainable cost to meet the power shortfall of the state, and equally important, to arrest the erosion of a large asset that has already proved to be too costly to its citizens.

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