MSEB also proposes to recover around Rs 20 lakh spent on incidental charges comprising fees of consultants and legal counsels. However, MSEB would refund a bank guarantee amount of Rs 5 crore to Enron India as there was no agreement which was formalised and the project had not started its implementation.

MSEB sources told The Financial Express that it would have to consider these options at the earliest as Enron India has conveyed its decision to withdraw from this project. According to sources, of the Rs 20 lakh, Enron India had paid a draft of Rs 10 lakh while the balance had been an irrevocable letter of credit opened by consortium member Global Telesystem. "We will have to see whether the time limit of the letter of credit has lapsed or it can be encashed," sources added.

MSEB sources said that Enron India has conveyed its decision of withdrawal from this project on Thursday evening. It must be mentioned here that MSEB, at the end of calender year 1999, had received tenders from Enron India CDS Holdings with Global Telesystems, Tata Electric Companies (TEC), BSES Telecom with National Grid International, BPL Broadband Networks with PowerGrid Corporation of India and Finolex.

"The dispute was largely related to the concession agreement as Enron India was reluctant to pay Rs 100 crore towards right of way when the government, in its recent policy has made this free if it was along the road," these sources added.

Enron India was adamant on its stand that MSEB should set up a special trust to monitor the withdrawal of Rs 100 crore by it. However, MSEB had refused to set up such a trust.

Furthermore, Enron India had laid down the condition that MSEB would have to incur an expenditure on strengthening its transmission lines. Similarly, it had suggested that it should be allowed to lay an advanced and state-of-the-art cable instead of optic fibre. "However, we insisted upon laying an optic fibre network as mentioned in the tender document," these sources added.

According to MSEB sources, Enron India had pointed out that MSEB had no legal sanctity to enter into a joint venture for laying optic fibre along its transmission lines although the state government has cleared this project. However, MSEB sources said that it has yet to receive the legal opinion which it had sought from the state law and judiciary department in the past in this regard. "We will have to check whether or not MSEB is legally allowed to enter into a joint venture for such a project," sources added.

MSEB has decided to put on hold this project for the time being as it awaits the state law and judiciary department's opinion. In a communication to the Bombay Stock Exchange (BSE), Global Telesystems has clarified that the company's main interest in the optic fibre cable project was that of an EPC contractor. However, in view of the delays in finalising various agreements between MSEB and Enron representing the joint venture company, Global has not made this project as part of its projections.

The company further clarified that its stand on this issue will have no adverse effect on the revenues and profitability of the company. "The optic fibre cable project was initially to be executed by the joint venture company between Enron, MSEB and Global. However, the said joint venture has not been formed till date.