ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Unconvincing Exercise

ON January 8 the Maharashtra chief minister, Murali Manohar Joshi, finally announced his cabinet's decision to revive the US multinational Enron's suspended Dabhol power project on new terms and conditions. The terms included a level ised' tariff of Rs 1.86 per kwh, which is 3 paise per unit lower than that worked out by the expert committee set up to renegotiate the project. Thus there were obviously two stages through which these new terms have been worked out: the first involved negotiations between Hnron executives and the expert committee; and then followed more negotiations between the slate government and Enron to further 'improve' the terms, possibly because of differences over the revival of the project among sections of the ruling Shiv Sena-BJP alliance. The details of the first stage of the negotiations are available and therefore can be assessed At that stage, taking a base exchange value of Rs 32 to the dollar, Enron 'agreed' to a levelised' tariff of Rs 1.89 per kwh for power generated from a combination of Phases I and II of the project involving a total capacity of 2184 MW, compared with the original Rs 2.40 per kwh for power generated from Phase I of the project with a capacity of 695 MW. However, over the three- year period when Phase II is still under construction, the tariff will be Rs 1.90 per kwh during the first year rising to Rs 1.98 per kwh, to return on the completion of Phase II to the rale worked out as part of the renegotiated deal for a 20-year period.

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