Enron faces wrath of new government in Maharashtra

Vol 3, PW 20 (27 Oct 99) Midstream & Downstream

The new Congress-led administration in Maharashtra has singled out the Enron-backed Dabhol power project for Special Attention.

Put another way: theres trouble ahead for Enron! In a thinly veiled threat made to reporters after his swearing in ceremony as chief minister, Vilasrao Deshmukh made a comment in Hindi which translated verbatim into English means: "We wont let them (Enron) get off lightly". Asked to elaborate, the reticent Chief Minister refused but few will have misunderstood his intention.

Deshmukh took charge on Monday (18th October) at the head of a coalition, which includes supporters of former Maharashtra chief minister Sharad Pawar, responsible for the original Dabhol contract. In opposition, Pawar and Deshmukh pledged to renegotiate the Power Purchase Agreement (PPA) for Phase I and suspend Phase II until agreement is reached.

"We maintain the stand we took in opposition", said Deshmukh. What stand In a statement dated 2nd September, signed by Suresh Kalmadi, of the Maharashtra Pradesh Congress Committee, Congress set out the following demands:- The PPA of Enron be made public An independent commission look into the merits of the PPA and its impact on the finances of Maharashtra and on industrial units.

Follow the example of Indonesia and renegotiate all transactions with power companies. Maharashtra should renegotiate all transactions with Dabhol Power Co.

Replacement with Enron of the tariff structure of Phase I. Enron should be forced to deliver power at Rs 3.00 per unit as committed by (former) deputy chief minister of Maharashtra (Munde).

MSEB should be allowed to acquire cheaper power from TEC and NTPC. Enron should first make its Phase I tariff clear taking into account the present exchange rate (which the government of Maharashtra avoided) and then talk on the terms of Phase II tariff.

Enron should give details of $3m spent to educate Indian politicians and officials of the previous administration. Phase II should be kept on hold till all the above issues are resolved.

The statement ends: "Maharashtra is a power surplus state as well as the state with the highest cost of power. This defies the fundamental laws of economics".

Theres clearly trouble ahead for Enron!

LNG Summit