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India says no proposal to buy Enron's Dabhol stake

The Indian government is not considering any proposal to buy US energy giant Enron Corp's 65 per cent stake in the troubled Dabhol Power Co, Minister of State for Power Jayawanti Mehta told Parliament on Thursday.

"No, sir," she said in a written reply to a question from deputies who asked whether New Delhi was considering buying Enron's holding in Dabhol.

Enron said earlier on Thursday it wanted to sell its stake in Dabhol for at least $1.0 billion.

Dabhol, in India's western state of Maharashtra, is locked in a bitter dispute with its sole customer, a domestic state-owned power utility, over high tariffs and payment defaults.

"In the interest of quickly resolving this dispute, Enron has expressed a willingness to forgo expected profits and negotiate terms that would allow Indian authorities to acquire foreign stakeholders' interest in Dabhol," a company statement said.

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

Dabhol's first phase of 740 MW was completed last year, and its second phase of 1,444 MW is nearly complete.

The $2.9-billion plant is India's biggest foreign direct investment and some analysts say the government's attempts to resolve the dispute are a test case of its ability to attract more foreign investment.

The company shut down the first phase of the plant in May and halted construction of the second phase after a payment default by MSEB, which said Dabhol's power was too expensive. A financial daily on Thursday quoted Enron India managing director K Wade Cline as saying that the buyer would also have to pay for the estimated $230 million needed to complete the project.

Cline said that Enron was willing to provide "technical and vendor support assistance" to the buyer, according to the report.

But if the government accepts the offer for sale, Enron would be willing to complete the project before handing it over, the paper quoted Cline as saying.

A company spokesman said last month the foreign owners wanted to sell their stake in the project to the federal government or to its lenders.

The Business Standard newspaper on Wednesday quoted Cline as saying that Enron was willing to accept part payment in cash, and the rest in staggered instalments over an unspecified period.

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