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Revival of Dabhol Power Project



Revival of Dabhol Power Project

e should be grateful to Madhav Godbole and E A S Sarma for having dared to criticise the government, including its politicians and senior bureaucrats, for the ineptitude in the Enron settlement saga (‘Aftershocks of Dabhol Power Project’, August 26, 2006). They have essentially made three points, while illuminating how the government did a poor job in the negotiation for revival of Dabhol Power Company (DPC), which is now rechristened as Ratnagiri Power Project: (1) how the judicial enquiry, which could have annulled the contract – in case it were to have proved that the public interest was vitiated – was killed, by deliberate inaction in getting the Supreme Court stay on the commission vacated. (2) how the government was in deep slumber, not picking up the 65 per cent of Enron’s stake, which came for a mere $ 20 million, during the bankruptcy proceedings. (3) how the government agreed to forgo the Maharashtra government’s 15 per cent equity, in addition to Rs 401 crore claim on DPC for mis-declaration of capacity, which eventually led to Maharashtra State Electricity Board (MSEB) cancelling the contract, where the authors believe MSEB was on a strong wicket.

Madhav Godbole and E A S Sarma, the two authors, and the chairman and member respectively of the government enquiry committee, deserve our full approbation. However, if Enron power was high cost electricity, we have to blame ourselves more than Enron. I don’t think Enron cheated us; they merely looked after their interest. The World Bank had already determined that the project was not economically viable, because importing gas when domestic coal was available in plenty was not a good idea and that the Maharashtra grid would not be able to absorb the base load power of 1,800 MW from Enron. The former chairman of Central Electricity Authority, S N Roy had repeatedly asserted that the increase in demand is more in the intermediate and peak loads, while the supply offered by the independent power producers was increasing base load, thus creating a mismatch. Enron was interested in gas because it had already invested in “hard luck” cases of oil and gas fields in Qatar and wanted a major user. But at that time it was also simultaneously in the business of risk hedging for its customers; it could easily have given a fixed price contract, even for fuel, if only the MSEB side wanted it. But the fact is, we did not ask for it. Subsequently, the (erstwhile) Maharashtra electricity regulator compounded the mistake by cutting down the drawals from DPC, even when its variable cost was still less than the purchase price from some plants of NTPC. This arose from neglecting to consider the power purchase agreement, where the fixed cost was already committed, and hence became what economists call sunk costs. Bizarrely, the officers of MSEB then crowed that they are not obliged to take even a single kwh of electricity from DPC, without realising that they would be the greater losers, if they did not take it. By this process, the regulator made the price of DPC power even more costly.

Be that as it may, the authors have courageously named a politician who is presently a cabinet minister, and have also lamented that the right to information is not working! If it does not work for a former chief secretary of a state and a former finance secretary of the centre, what about ordinary mortals?



Mohammed Afzal’s Hanging

eople’s Union for Democratic Rights (PUDR) strongly condemns the reported decision taken to hang

(Continued on p 4220)




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(Continued from p 4094)

Mohammed Afzal on October 20, 2006. Not only does PUDR condemn the death penalty in principle, but in this case, we have followed the Parliament attack case closely from the time it was committed to trial under Prevention of Terrorism Act (POTA) and had observed the denial of fair trial in this particular case. PUDR’s report, A Trial of Errors, noted, “It is perhaps inherent in a trial under POTA that the accused is disabled to a point where rules of evidence become pliable and conjecture can take over and death sentences become easy to award”. Unfortunately, our apprehensions have come true. Besides lack of fair trial, it is well known that Mohammed Afzal did not have access to proper legal aid during the course of trial. Therefore, the punishment of death penalty to Mohammed Afzal is unfair and must be commuted.


Secretary, People’s Union for Democratic Rights, New Delhi

Public Interest Litigation

propos the commentary entitled ‘Rights of the Poor: An Overview of Supreme Court’ by Rakesh Shukla (September 2, 2006). The cases cited show how public interest litigation (PIL) has failed to provide justice to those who need it most, more particularly in the last two decades.

In April 2005, a report entitled ‘The Public Interest Litigation Hoax: Truth before the Nation’, authored by the undersigned, was published by PIL Watch Group. It highlighted the plight of people adversely affected by PIL judgments. The affected people/victims were mostly denied hearing during the court proceedings, flouting the principles of natural justice.


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    Economic and Political Weekly September 30, 2006

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