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Enron dispute a damper for foreign investments: Blackwell

P Jayaram, in New Delhi

The dispute over US energy major Enron Corporation's Dabhol power project in Maharashtra would be a damper for future US and foreign investments in India, US Ambassador Robert Blackwill said Wednesday.

"The problem Enron has had in India will continue to cast a very dark shadow on foreign investments in India," Blackwill said in response to a question at a press conference at the Foreign Correspondents' Club in New Delhi.

"It remains a problem. We hope that a mutually acceptable resolution between the parties can be reached," he added.

Set up at an estimated cost of $2.9 billion, the second phase of the power project got held up after the Maharashtra State Electricity Board, which holds 30 per cent stake in Dabhol phase-I (740 mw), stopped payment on grounds of high power tariff. This soon snowballed into a legal battle between MSEB and Enron.

MSEB has already suspended power purchase and rescinded the power purchase pact with the Dabhol Power Company. The other partners in the project are General Electric and Bechtel.

After months of waiting, the Indian financial institutions moved in this month to protect their funding in the project. The two-day talks at Singapore on November 10-11 to find a solution coincided with energy provider Dynegy Inc taking over Enron in a $9.5 billion deal.

Enron, which initially said it would sell the Dabhol project for $1.2 billion, has now offered to settle for nearly $800 million.

At the Singapore meet, Bombay-based BSES Ltd and Tata Power Corporation made known their interest in acquiring the stake of the three multinationals - Enron, Bechtel and GE - in the Dabhol project.

Indo-Asian News Service

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