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Private firms expect Enron India's woes to end

India's private power producers expect an early end to the dispute between Enron Corp and a local utility after Prime Minster Atal Behari Vajpayee said he was optimistic about the US firm's $2.9-billion project.

"Now the central government is taking interest. That too at the highest level. That is very nice," Harry Dhaul, director-general of the Independent Power Producers' Association of India, said.

On Wednesday Vajpayee said he was confident that Dabhol Power Co, 65-per cent owned by Enron, and the Maharashtra State Electricity Board, the plant's only buyer, would sort out their problems.

MSEB, which complains that Dabhol produces costly power, defaulted on payments of $48 million to DPC last year.

The squabble provoked Enron to serve a preliminary termination notice to MSEB and the utility declared late in May that it had stopped buying power from the controversial plant.

Dabhol's first phase of 740 MW is already operational and the next phase was scheduled to add 1,444 MW later this year. MSEB has already said it would not buy power from the project's next phase.

Private power producers, who have been demanding central government intervention in the dispute said Vajpayee's comments augured well for the plant and will help refurbish India's image that took a beating after the dispute involving its largest direct foreign investor.

"I think the prime minister has done absolutely the right thing. It is going to send the right signal that we are back on track and the international investors concern will be duly met."

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