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Enron gets impatient as Dabhol row lingers

US energy firm Enron Corp sees no early solution to its bitter dispute with a local utility despite an assurance from Prime Minister Atal Bihari Vajpayee that New Delhi will step in to resolve the row.

The company wrote to Vajpayee more than a month ago with an offer to sell its 65-per cent stake in Dabhol Power Co, but the Union government has not responded, Enron India spokesman Jimmy Moghal said on Monday.

"It's been more than a month since we have communicated to government authorities and have yet to receive any response."

He said that Enron chairman Kenneth Lay had written another letter to New Delhi expressing 'disappointment' at the lack of progress.

The company wrote to Vajpayee saying a long legal dispute would "raise serious questions about India's image as a safe and reliable destination for foreign investment", Moghal said.

Earlier this month, Vajpayee said the federal government would facilitate a quick solution to Enron's dispute with the Maharashtra State Electricity Board, which was the sole buyer of Dabhol's power.

But Enron is not optimistic.

"Contrary to recent impressions created...regarding a quick resolution of the Dabhol project, little progress has so far been made with, in fact, no proximity to reaching a fair and reasonable solution," it said in the statement.

A newspaper said Kenneth Lay wrote in his letter to Vajpayee that foreign investors would doubt the sanctity of contracts signed in India.

"Any other foreign investor or lender is going to ask himself why his contract is any more likely to be honoured than ours has been," the paper quoted Lay as saying.

Moghal declined to comment on the newspaper report.

Enron says India may face $5 billion in liabilities for violating contractual obligations.

In May, Enron issued a preliminary notice to MSEB to terminate the contract. That move put in place a six-month deadline for the two to work out differences or the contract would be terminated.

The six-month period expires on November 19 after which Enron would decide on issuing a final termination notice.

"Consideration will be taken after November 19 whether or not we will move towards final termination, which would then lead to arbitration," Moghal said.

The first phase of the $2.9-billion project, with a generating capacity of 740 MW has been idle since May when MSEB stopped buying power. The second phase, which will add 1,444 MW of capacity, is 97-per cent complete.

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