Mumbai: The Maharashtra government has put off its plans to restart phase-I of the Dabhol power project as the coordination committee of the Democratic Front government has rejected the proposal mooted by the Industrial Development Bank of India (IDBI) in this regard recently.
 A source close to the development said in the coordination committee meeting held last week, the members of the Peasants and Workers Party (PWP) had vehemently opposed IDBI's proposal to restart the project.
They have cited that if the government restarts phase-I, all the existing cases against Dabhol Power Company (DPC) and its parent Enron Corporation have to be withdrawn from the respective courts, which, at a later stage, would help Enron to put stronger claims on the power project.
Currently, over 20 DPC-related cases are pending in the Bombay High Court, the Supreme Court and the Maharashtra State Electricity Regulatory Commission. Financial institutions (FIs) led by IDBI had asked DPC and the Maharashtra government to restart the operations of phase-I immediately to expedite the process of revival of the project.
The PWP has also pointed out that the restart of phase-I would also adversely affect the arbitration proceedings against Enron in London because a renewed power purchase pact from DPC would weaken the state government's claims. Further, since DPC is under the control of the high court receiver, a court advise will also be needed for the reopening of the plant, they added. The source said considering these facts, the state government has put off its plans on DPC phase-I restart and decided to come out with a white paper on the legal status of the project. The white paper would discuss the possible legal implications if the plant starts again. The FIs had also suggested that the power generated from DPC phase-I can be sold at a lower rate now and the arrears, if any, could be settled once the final deal for the project was struck. Currently, the domestic FIs are understood to be seeking a package to revive the mega project aimed at substantially lowering the power tariff from about Rs 6 to about Rs 2.50 per unit.
The FIs, who have an exposure of over Rs 6,000 crore in the project, have also approached the central government and other promoters (the Maharashtra government, DPC and lenders) for concessions and incentives as an effort to sell it to a prospective buyer.
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