Dabhol charging Rs7.80 ($0.16c) per kw/h

Vol 4, PW 23 (20 Dec 00) Midstream & Downstream

Enron is back in the news, for all the wrong reasons.

This time controversy centres on the high tariff that the Enron-backed Dabhol Power Company is charging the Maharashtra State Electricity Board - a staggering Rs7.80 per kw/h, against Rs1.86 kw/h agreed when the Shiv Sena-Bharatiya Janata Party alliance re-negotiated the Power Purchase Agreement in December 1995. Enron supporters argue the sharp hike is because the Dabhol tariff is linked to the dollar-rupee exchange rate and global crude prices over which the company has no control.

Few are willing to listen, and a smell of crisis fills the air, particularly in the cabinet of Congress chief minister Vilasrao Deshmukh. Threats of resignation and taunts by a left wing coalition partner have forced State energy minister Padamsinh Patil to come out against the Dabhol PPA.

"Does the minister read the daily newspapers or does he only read comic books" demanded one angry cabinet member. Goaded by a rising tide of anti-Enron sentiment, Patil was forced to tell the local state legislature that he plans to "review" the tariff charged by the Dabhol Power Company.

In so doing, he must be feeling uncomfortable. In 1993, Patil was energy minister when the government of Congress chief minister Sharad Pawar signed the original PPA with Enron.