Enron may face another penalty

MUMBAI, MAY 20. Undeterred by issuance of the preliminary termination notice (PTN) by the Enron-promoted Dabhol Power Company, the Maharashtra State Electricity Board has decided to slap another Rs. 400-crore penalty on the U.S. energy major.

``PTN or no PTN, in the first week of June, the MSEB will slap one more Rs. 400-crore penalty on the DPC for misdeclaration and default on the availability of power, a review for which will be taken next month,'' sources in the MSEB said today.

The proposed penalty follows the DPC's inability to produce power on February 12 and March 13 as per MSEB's demand in the stipulated time of three hours as per the power purchase agreement (PPA), they said. ``In fact, we would pay the Rs. 139- crore April bill on May 23 and this will be the last payment from our side, rest of the due amount should be adjusted in the penalty,'' the sources added.

The MSEB follows a four-month cycle, the first instance of failure on January 28 fell in the first cycle, while the other two instances fell in February-May, a bill for which would be prepared and despatched to the DPC in June.

Earlier, the MSEB had slapped a Rs. 401-crore penalty on the DPC for ``not generating'' required power for January 28 demand.

The matter has been disputed since, as the DPC has refused to ascertain the validity of the MSEB's claim, the sources said adding the matter was now under arbitration, process for which would begin soon.

The sources said that contrary to the DPC's allegations, the despatch instructions were in line with the PPA provisions and there were no procedures previously agreed or followed about declaration of availability and delivery of the instructions during the start-up of the ``cold plant''.

``The instructions are revised for only those hours for which there were no instructions earlier,'' they said adding that in the past the DPC was able to achieve the instructed capacity at the specified hour.

``We also fail to understand why the DPC is not accepting that its machines and technology is sub- standard and that the Dabhol power project will never be able to reach 95 per cent capacity,'' the sources said.