FIs for allotting distribution zone to DPC buyer

idbi-led financial institutions are putting together a proposal to be presented to the state government and maharashtra state electricity board, under which the buyer of enron's dabhol power company would be allotted a distribution zone. the new owner would also be allowed to sell electricity directly to consumers, if the proposal is accepted. this proposal formed the basis of discussions during the recent three-day singapore meet between ifis, dpc and the two utilities in the fray for buying enron out of dpc, tata power and bses. if the proposal doesn't find favour with mseb and the government, it will be a setback for domestic lenders, who would be forced to piece together another workable model. fi sources said offering a profitable distribution zone and allowing third-party sale of electricity was a pre-condition set by both the contenders. primarily electricity distribution utilities, both tata power and bses will also evaluate one of the lucrative distribution zones of navi mumbai, thane or pune as part of the package deal. et had on october 6 reported that the domestic lenders had mooted a similar proposal, with the help of the central electricity authority. maharashtra state electricity board had then rejected the proposal to part with any part of its distribution network to any private power utility. since then, things have moved fast and mostly in favour of the domestic lenders with the union government and the power ministry supporting the proposal. this is a payment security mechanism, thrown up by indian lenders. if mseb buys the power from phase i (744 mega-watt), there needs to be a buyer for the rest of 1440 mw produced by the second phase. this could be a combination of two — handing-over of a mseb-owned distribution circle and selling power directly to a few industries, said a bses official. another option of ntpc buying power from the plant was also discussed at the singapore meet. mseb chairman vinay bansal told et that no such proposal has ever come to the board from domestic lenders. tata power has been demanding an extension of their distribution areas. but we can't afford to oblige because that would imbalance our receivables, said bansal. as the fi officials pointed out, the proposal involves all involved parties making sacrifices to salvage the project. while the sacrifice would be in the form of lower interest rates for lenders and selling its stake for an amount below its initial investment by enron, mseb would have to sacrifice a distribution zone. mseb, however, says that once a lucrative zone is chopped off from its distribution area, it will lead to mseb's cashflows declining drastically. these economics are preventing us from giving away any distribution areas, said a mseb official. over the last two years, maharashtra state electricity board had tried to unbundle its functions and privatise distribution circles by appointing il&fs and the administrative staff college of india of hyderabad. both il&fs's proposal to form a joint venture to privatise navi mumbai, and asci's maharashtra electricity reform bill are currently on the backburner.

FIs for allotting distribution zone to DPC buyer

IDBI-LED financial institutions are putting together a proposal to be presented to the state government and Maharashtra State Electricity Board, under which the buyer of Enron’s Dabhol Power Company would be allotted a distribution zone.

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