Enron saga continues

Mumbai: The Bombay High Court on 19 September accepted the application for intervention filed by the 11 foreign lenders of the Enron-promoted Dabhol Power Company (DPC) challenging the Maharashtra Electricity Regulatory Commission''s (MERC) order on the pending bills of the Maharashtra State Electricity Board (MSEB) to DPC. Based on a petition filed by the MSEB in May 2001, the MERC had ordered that since the DPC-MSEB pending bills are under dispute, the independent power producer cannot invoke the escrow account guaranteed by the MSEB and the Maharashtra government. The MSEB has to pay around Rs 348 crore to DPC against the electricity tariffs for April, May and June 2001.

The offshore lenders of the DPC project, early this month, had filed an application for intervention before the high court against the MERC order. The FIIs have to encash approximately Rs. 2,088-crore guarantee given to the project. The US Exim Bank alone had given a guarantee of 1,401.50 crore forwarded to the IDBI consortium of Indian FIs to the project. The FIIs, in their application for intervention submitted before the court, said the institutions may require to draw upon the guarantee given to them by the Indian public sector FIs. If DPC finds itself in a position where it lacks the financial resources with which it could service or repay the loan advanced it by us, the bank informed the court.

The US Exim Bank has informed the court that of the $298.2 million advanced to DPC, approximately $221.7 million of principal remains outstanding.

In the second case related to DPC-MSEB dispute that came up before the court for hearing, the high court asked MERC member Jayant Deo to appear before the court on 27 September. DPC had alleged that Deo is a biased member against the company and had published and circulated a series of articles against the DPC project before assuming the charges as a member of the MERC and his position as a MERC member is unlawful.