Maharashtra plays funny with Dabhol Power

Vol 5, PW 2 (14 Mar 01) Midstream & Downstream

Maharashtras local electricity board could teach a thing or two to other bankrupt Indian state electricity boards.

For instance: how do you turn the tables on your creditors, so that dues owed by you turn into money owed to you Read on. On February 28th, MSEB wrote to the Dabhol Power Company demanding penalty payments worth Rs400cr ($88m) for "wilful misdeclaration".

Its argument: on January 28th, DPC failed to deliver power following massive disruption at the Chandrapur power station. So far so good.

Only catch is that MSEB owes DPC Rs229cr ($50m) for power supplied in December and January. "Deduct Rs229cr from the penalty due to us and pay us the balance," wrote MSEB.

Dabhol Power was not amused. The company responded with a hard-hitting press release: "Apparently MSEB is looking for technicalities and raising frivolous claims in an attempt to avoid payment of amounts legitimately owed to DPC," reads the statement.

"We are confident this issue will be resolved in DPC's favour." It adds: "If we are unable to resolve these issues amicably, they would be resolved through arbitration. This latest move would appear to bring us closer to arbitration rather than a cooperative resolution of these matters and brings into question whether MSEB wants to find a solution or to escalate the stakes."Wade Cline, Enrons India chief, drafted the statement.