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Enron's exit moves to begin from Nov 19

The countdown for US energy major Enron's exit from India will begin from November 19, 2001, after which the Dabhol Power Company will serve a termination notice to the Maharashtra State Electricity Board even if a buyer is not found for the $3-billion power project.

"We are not in the business of litigation, but of selling energy worldwide. November 19 is our exit path and no way are we going to take a merchant risk in the power purchase agreement," Enron India chief K Wade Cline said.

"I surely have a distressed asset, but not a distressed PPA," he emphasised.

DPC'S May 19 pre-termination notice to MSEB expires on November 19, after which the US energy major would approach its lenders for a go-ahead on issuance of the final termination notice.

Cline said that after terminating the PPA, DPC would take the arbitration route for its $48-million dues from the Maharashtra State Electricity Board.

DPC has been incurring extra expenses to the tune of $500,000 per month as interest charges, he said. "My options are very clear -- either the Centre finds a buyer for the project or we renegotiate or terminate the PPA," he said.

The multinational was also willing to help the Centre scout for a buyer.

"Contrary to media reports, DPC's rate of return in dollar terms is a mere six-and-a-half per cent. We are not a debt collections company. We too have to show our face to the shareholders who expect a healthy return on their overseas investments," Cline said.

When asked whether DPC had agreed to waive off the rupee-dollar parity in order to reduce tariffs, Cline said, "If you want to get rid of foreign equity from this country and do not want a dollar linkage, please do all investment in Indian currency only."

He said the rupee-dollar parity would disappear if an Indian company buys out the project.

"The project then also could be run on a 30 per cent plant load factor. Believe me no foreign guys are going to do that," the managing director said.

However, Cline said, apart from wanting to sell its $3-billion asset for $1 billion "at cost and no profit" basis, DPC was ready to complete the project before calling it a day from Dabhol.

"Though we are looking at exit routes, DPC is ready to get the original contractors and ensure completion of the project as the original designs and drawings of the plant are not with the company, but with them," he added.

Over the fate of DPC's liquefied natural gas carrier 'Laxmi', the managing director said that the Mitsui-OSK Line consortium was looking at various options like deferring its delivery or even diverting it to other markets.

"Laxmi is undergoing sea trials. However, its lenders have also stopped disbursal of the funds for the carrier," Cline added.

Several factors, including the announcement of a judicial probe by Maharashtra, strengthened the mulinational's decision to quit the project.

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