The beleaguered Dabhol power plant in the Indian state of Maharashtra is once more ready to start generating power, but yet again a failure to make suitable letter of credit (L/C) arrangements may prevent the power plant from generating electricity.

Wranglings over L/C guarantees by both the federal government and the Maharashtra state featured prominently in the 2001 failure of the Dabhol Power Company when it was operated by the now collapsed US energy company, Enron.

The authorities remain convinced, however, that L/Cs should remain a key feature in Indian power financings. (DC World News 9 February 2004)

Ready to go

The Dabhol power plant is all set to generate electricity with gas as feedstock from the second week of August, provided its promoters sort out payment issues.

A first shipment of gas has been piped to Dabhol, but its owners, Ratnagiri Gas and Power, could not take delivery because the company could not provide an L/C to pay for the fuel.

Guarantees

Ratnagiri says it could not provide the L/C because it had not obtained a guarantee from its sole customer, the Maharashtra State Electricity Board, for purchase of power.

For its part, the Maharashtra State Electricity Board says it has been awaiting government approval to provide the guarantee, but it expects L/Cs to guarantee power payments will be opened soon.

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