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

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Dabhol, Godbole Report and the Future

In the present state of the power sector in India, Dabhol power at its present tariffs is likely to be unacceptable to the extent of its capacity. The speediest way out of this imbroglio may well be to treat DPC as a stranded project and negotiate the lowest cost to move the foreign investors out of the project. This may mean that governments might have to take a knock because of stranded costs, to the extent that the price payable might be more than what an Indian investor might be willing to pay. Tariffs can then be based on those lower capital costs and without the dollar denominations

The history of India’s flirtation withEnron leading to the birth of theDabhol Power Company (DPC),the commencement of Phase 1 of theproject, and the construction of Phase 2,have been succinctly documented, mostrecently by Kirit Parikh (EPW, April 282001: Thinking through the Enron Issue) A review committee under the chairmanshipof Madhav Godbole, with membersas E A S Sarma, R K Pachauri, DeepakParekh, Kirit Parikh and Vinay Mohan Lalwas appointed on February 9, 2001 It submitted the first part of its report onApril 10, 2001. On April 30, a negotiatingcommittee to renegotiate the terms withEnron and DPC, with the same members(with the addition of some others), wasannounced.

The first part of the report identifiesthe factors leading to the Dabhol tariffsbeing what they are and identifies variouspossible measures to bring them down It has not at this stage negotiated withDPC, though it has heard them. Nor hasit considered the reforms required in thepower sector in Maharashtra

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