Enron's Kenneth Lay threatens India again

Vol 5, PW 16 (26 Sep 01) Midstream & Downstream

India's power ministry is angry at the latest round of "sabre-rattling" by Enron chief Kenneth Lay.

On Monday 24th September the Times of India front-paged an ultimatum from Lay to Indian prime minister AtalBehari Vajpayee. The newspaper said Lay wrote to Vajpayee on 14th September warning him of the consequences if the Indian government or its agencies refuse to buy out the Dabhol Power Company for the actual cost of $1.2bn.

"Since we have not received any response we are left with no option but to vigorously pursue our legal claims," said Lay. Enron's cumulative claims, said Lay, would top $5bn in arbitration.

Lay rejects a proposal that theIndustrial Development Bank of India could buy out DPC's equity at a discounted price of $400m. "I believe receiving anything less than our full investment to be an act of expropriation by the government of India," he adds.

Under US law, such moves would automatically lead to American sanctions, he said. India's power ministry is reacting angrily to Lay's comments.

"If Enron wants to defame the Indian government using the media we will not talk to them," a power ministry source tells Petrowatch. "We will not pay them the price they are asking." He adds: "We accept that Dabhol was a bad business deal and we are willing to talk realistic solutions.

But we will not stand for such talk."