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Vajpayee says New Delhi will help solve Enron row

Prime Minister Atal Bihari Vajpayee said on Friday the government will help resolve US energy firm Enron Corp's problems in India.

Vajpayee also reaffirmed New Delhi's commitment to push ahead with power sector reforms at a meeting of an advisory body in New Delhi.

"The central government, in cooperation with the government of Maharashtra, financial institutions and other partners, will facilitate an early and amicable resolution of the vexatious problem surrounding the Dabhol power project," he said.

Enron has announced its intention to sell its 65-per cent stake in the Dabhol Power Co following a dispute over payment for power from the 740-MW first phase of the project, which was built last year at Dabhol, south of Bombay.

The 1,444 MW second phase of the project was 97-per cent complete when construction was abandoned due to the dispute with a local utility, its sole buyer.

Enron holds a 65-per cent stake in Dabhol, while US conglomerate, General Electric and construction firm Bechtel each own 10 per cent. The local utility, Maharashtra State Electricity Board, owns the remaining 15 per cent.

On Wednesday, Enron said it was willing to complete the second phase of the project if the Indian government wanted.

The Confederation of Indian Industry said on Wednesday that a "win-win" solution to the row could be achieved within weeks.

However, the company has sent an arbitration notice to the government on September 4 as formal conciliation talks between the two sides failed last month.

The Business Standard daily reported on Friday that the government had offered to buy Dabhol equity at a 20 per cent discount, but Enron officials said they had not received any such offer.

Enron moots Centre's direct role

DPC on its part said that the Centre must play a direct role in resolving the multinational's problems.

"DPC, its offshore sponsors and lenders have maintained for several months that the centre must play a direct role in resolving the Dabhol challenges," the company spokesman said.

Reacting to the PM's assurance, the spokesman said the step was 'appropriate', given that it was "the Centre that invited Enron, GE and Bechtel to set up DPC with substantial credit support from itself."

"We are pleased to see that the PM has taken a personal interest in a direct resolution," the spokesman added.

He said DPC has delivered to the Centre and Indian FIs a proposal that was acceptable to offshore sponsors and added, "we await a reply to that proposal."

With additional inputs from PTI

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