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October 10, 2001
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New Delhi likely to buy out Enron stake: reports

Shiv Kumar in Bombay

The central government's reported move to buy out US energy major Enron's stake in the beleaguered Dabhol Power Corporation has raised hopes that this would help Maharashtra shore up its finances.

"There are some indications that the central government may buy out Enron. Reports from Delhi indicate that we are nearing a solution," a well-placed state government official said, speaking on condition of anonymity.

Should this happen, it would remove Maharashtra's liability to pay for Enron's stake.

The Maharashtra government has for long been pressing the National Thermal Power Corporation to buy out Enron's stake, a demand that the Central government refused to concede.

"The central government did not want to set a precedent for other private power producers in the country," the Maharashtra government official admitted.

Reports in a section of the media indicate that the Union government is mulling the establishment of a special purpose vehicle to buy Enron's stake as an alternative to NTPC buying out Enron.

Enron is also attempting to sell its stake to other private sector players.

Negotiations are on between the Tatas, India's largest private power utility and the Bombay Suburban Electric Supply company, which provides power to Bombay, but no agreement has been reached so far.

While Enron is insisting on $1 billion for its 65 per cent stake in the project, Indian companies have valued the stake far lower, say sources. The other shareholders in the project are General Electric and Bechtel Corporation with ten per cent each and the Maharashtra State Electricity Board, which holds 15 per cent.

The $3 billion project is in limbo with the MSEB, the sole buyer of power, unable to pay for it. The plant, which generated 740 MW of power in the first phase, has had its capacity enhanced to 1,444 MW at present. Its original schedule was to attain full capacity of 2,184 MW this October after the completion of its second phase. The plant has now been shut down after MSEB stopped purchasing its power.

Indo-Asian News Service

The Enron Saga
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