MSEB to pay Rs 20,000-crore compensation if Enron wins

Sanjay Jog

Mumbai, May 7: THE Maharashtra State Electricity Board (MSEB) will have to shell out a whopping Rs 20,000 crore towards revenue compensation allowance to Enron if the latter wins its case at the arbitration proceedings in London.

In another scenario, if the MSEB wins its case of recovery of rebate of Rs 401 crore from Enron at the arbitration, its outgo would be restricted towards the debt portion at Rs 9,000 crore.

The arbitration proceedings are likely to commence by early June after the appointment of the third arbitrator. The Centre has appointed senior counsel Harish Salve as its arbitrator, while Chinese lawyer Quinton Loh would represent state government and former justice of Bombay High Court ML Pendse would represent the MSEB at the arbitration proceedings.

The DPC has also appointed Andrew John Rogers QC (formerly chief judge of the commercial division of the Supreme Court of New South Wales).

Top sources from state government and the MSEB told The Financial Express that the Centre, which has yet to nominate its member on the Madhav Godbole renegotiation committee, would have to bear a liability of about Rs 2,400 crore.

These liabilities would mainly be in favour of the counter guarantee provided for the Dabhol phase-I.
These preliminary estimates have been prepared by the state government and MSEB, especially in the wake of the ongoing crisis over whether or not Dabhol Power Company (DPC) issues a preliminary termination notice.

The state government and MSEB, which have been weighing various possibilities of slapping a preliminary termination notice to Enron for non-payment of rebate of Rs 401 crore following misdeclaration and default on the availability of power on January 28, are optimistic that the MSEB has bright prospects to win its case at arbitration as the rebate has been claimed as per the clauses of the PPA.