ENRON SETS ITS EYES ON BOMBAY POWER COMPANY

Vol 3, PW 15 (18 Aug 99) Midstream & Downstream
     

The market in Mumbai is abuzz with rumours that Enron - in partnership with Reliance - is looking to take a major stake in the privately-owned Bombay Suburban Electricity Supply Company (BSES).

A source tells Petrowatch that plans are underway to set up a "shell" investment company in Mauritius and then strike at BSES. Currently, Reliance holds 11.8% in BSES and is the largest single private investor.

About 35% is held by domestic financial institutions and the rest is held by the public. It is believed Enron sees BSES as a "good buy", as it has distribution rights in suburban Bombay and its returns are assured.

"Enron is gearing up to be the largest private power producer in Maharashtra", writes a correspondent, "A distribution company would fit nicely into its strategy". BSES currently has a 495-MW power station and has sought permission to set up a second 500-MW power station.

The state cabinet has cleared the project, and Enron reckons it could use its LNG for the new power station. Apparently, the plan is to make an offer to financial institutions that they find irresistible.

Enron sees no opposition from the local government. More so since the Maharashtra State Electricity Board (MSEB) holds 30% equity stake in Phase I of the Dabhol power station.

Besides, Enron is charmed by Reliance's legendary skills at getting things done in the corridors of power and is confident it can acquire BSES.