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Enron not interested in completing Dabhol project

The US energy major Enron-promoted Dabhol Power Company has said it is 'not interested' in completing the $3-billion power project in Maharashtra, following non-payment of dues by the Maharashtra State Electricity Board and central government's refusal to honour the Rs 1.02 billion counter-guarantee.

In DPC's board meeting held in London on April 25, Enron India managing director K Wade Cline and DPC president Neil McGregor made it clear that they were 'not very keen for completion of the project as the management felt that both the state government and the Centre were undermining the gravity of the situation', a senior state government official who attended the meeting said.

Cline told the DPC directors that since the state government had 'not shown' any serious interest in dissolving the imbroglio, DPC and its international lenders were 'not in favour of continuing the project'.

When contacted DPC spokesperson refused to comment.

The fate of DPC's 2,184 MW project, which is 92 per cent complete, hangs in balance, since the Indian financial institutions led by IDBI have stopped funding the debt portion of the project, with around 70 per cent of the $1.8-billion worth total disbursement already pumped in.

"Naturally, we have stopped disbursement as we think that it is indeed a loss-making proposition, as of now. If MSEB begins paying, we would go ahead with our funding as well," an IDBI official said.

According to the IDBI official, this very stand adopted by Indian lenders has upset the DPC management and Enron top bosses in Houston as well.

At the meeting, Cline had informed that DPC's foreign lenders had put up a condition before the company, that they would cough up the required $250 million, 'only if Indian FIs fulfill their debt component', the official added.

Other than the issuance of termination notice to MSEB, another issue that rocked the heated meeting was Godbole review committee's strong stand on separating the $800-million liquefied natural gas terminal from Dabhol project.

"On what basis has Godbole committee asked for renegotiation of the LNG facility? Do they have any international expertise in purchase of this particular fuel?" Cline had questioned the MSEB representatives in London.

He asked whether the high-powered panel had 'ever consulted any expert before commenting on 'take or pay' clause of the LNG contract which is mandatory feature worldwide'.

In its recommendations made public two weeks ago, the Godbole panel had recommended renegotiation of the five-million-tonne LNG terminal facility and DPC's shipping agreements with Oman LNG and ADGAS.

"The ministry for petroleum and natural gas should examine the feasibility of integrating the Dabhol facility within the broad plans of LNG imports into India and also the necessary pipeline investments in this regard," the panel recommended.

While the 740 MW Phase-I is already operational, the 1,444 MW Phase-II is scheduled for commissioning in January 2002.

YOU MAY ALSO WANT TO SEE:
MSEB to slap termination notice, if things go beyond control
World Bank rules out role in Enron-MSEB tussle
Maharashtra CM hopeful of renegotiation with Enron
Enron moves towards ending Dabhol deal: Reuters
History of Enron's Dabhol power plant: Reuters
'I think there will not be many takers for Enron's stake in DPC'
DPC serves arbitration notice on Maharashtra govt
Set up probe panel to look into Enron PPA: Godbole panel
DPC invokes counter-guarantee again
Sucheta Dalal on the Enron problem reaching a flash point
The Money Interview/Enron Action group

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