Search the Internet          Tips  Sites: Finance, Investment

Enron ready to complete Dabhol project before exit

Enron Corp is willing to complete the second phase of the troubled Dabhol power project if the Indian government wants, a DPC spokesman said on Wednesday.

Construction of the nearly complete second phase was abandoned after Enron got embroiled in a payments battle with the Maharashtra State Electricity Board, its sole buyer.

Enron has announced its intention to sell its 65-per cent stake in the Dabhol Power Co following the dispute over payment for power from the 740-MW first phase of the project.

The 1,444 MW second phase of the project is 97-per cent complete.

"I can confirm our proposal for buyout submitted to the government of India included our offer towards services at cost for project completion should they so require us to facilitate this," Enron India's spokesman, Jimmy Mogal, said.

Earlier on Wednesday, the head of a leading trade body, Confederation of Indian Industry, said a 'win-win' solution to the row could be achieved within weeks.

CII got involved in talks after Enron Corp's chairman, Kenneth Lay, asked for its help to resolve the dispute, CII Director-General Tarun Das said on the sidelines of a business conference.

Win-win solution

"It could be resolved within weeks. It will be a win-win situation for all. Enron will leave India but it will complete the project. There will be a 2,000-MW plant owned by Indians," Das said.

Enron's problems over the $2.9-billion Dabhol venture, India's biggest direct foreign investment, has raised doubts about India being a favourable destination for investors.

"We are facilitating a dialogue. We want foreign investment to come to India and we want good Indo-US relations," Das said.

Enron India's spokesman declined to comment on the prospects of a quick solution to the row.

Enron Corp owns 65 per cent of Dabhol while US conglomerate General Electric and construction firm Bechtel each own 10 per cent. The local utility, Maharashtra State Electricity Board, owns the remaining 15 per cent.

The utility's refusal to buy output from the second phase and delays in paying for power purchased from the project's first phase sparked the dispute earlier this year.

In May, the Dabhol Power Co issued a preliminary notice to terminate the agreement to buy power from the utility.

The utility retaliated by issuing a similar termination notice and imposed a stiff penalty saying the firm had violated its contractual obligations.

YOU MAY ALSO WANT TO READ:
The Enron Saga

Tell us what you think of this report