23 January, 2021

Everything We Own

Everything We Own
  • Whether it buys any power from Dabhol or not, MSEB has to pay for Dabhol's generating capacity and fuel.
  • If MSEB fails to pay, the Government of Maharashtra (GoM) promises to irrevocably and unconditionally pay DPC its dues.
  • If GoM defaults, the Republic of India counter-guarantees the payments due to DPC.
  • In this case, the Government of India (GoI) asks the RBI to deduct this from the constitutionally sanctioned share of revenues due to Maharashtra.
  • The Indian Constitution limits the power of the State to give guarantees to limits fixed by legislature, and limits total exposure to the amount of the Consolidated Fund.
  • There is no constitutional provision to guarantee revenues to a third party, much less revenues due to a third party that has contracted with a state corporation.
  • However, the GoM has indemnified DPC against any "invalidity, illegality or unenforceability of the guarantee". So, even if it is unconstitutional, the GoM has to pay.
  • The GoM has staked all its assets, present and future, as surety for the payments. The...


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