Enron, India utility dispute intensifies<\/p>\n
BOMBAY (Reuters): A dispute between U.S. energy giant Enron
\nCorp and an Indian utility has worsened ahead of a meeting on
\nTuesday to discuss the fate of the controversial US$2.9 billion
\nproject.<\/p>\n
Analysts expect little progress at the meeting between Enron's
\nDabhol Power Company and a committee set up by the western Indian
\nstate of Maharashtra to renegotiate the power project's tariff.<\/p>\n
The U.S. firm, which served a termination notice on May 19 of
\nits agreement to sell electricity to the state-run local utility,
\nhas opposed the lower rates and has already said it considers the
\nTuesday meeting as a courtesy call.<\/p>\n
The Maharashtra State Electricity Board (MSEB) also served a
\ntermination notice last Thursday saying Dabhol's plant could not
\nmeet capacity targets within a specified period.<\/p>\n
Last week, Dabhol returned a cheque for $39 million to the
\nMSEB and a Dabhol spokesman declined to comment on the issue.<\/p>\n
But newspapers reported over the weekend that Enron had
\nreturned the cheque because it was annoyed with MSEB's contention
\nthe plant cannot ramp up to full capacity within three hours from
\na cold start as stipulated in the agreement.<\/p>\n
Dabhol has contested this claim saying its plant is not built
\nfor such a purpose.<\/p>\n
MSEB is the sole buyer of electricity from Dabhol under an
\nagreement.<\/p>\n
The two sides have been sparring for more than six months over
\nthe giant power project, being built in two phases. The first
\nphase of 740 MW is already up and running while the second of
\n1,444 MW is slated for commissioning next month.<\/p>\n
MSEB, which has defaulted on past payments of $48 million, has
\nrefused to buy power from the second phase stating it is too
\ncostly and rates should be lower.<\/p>\n
The row is seen as a test case of India's ability to attract
\nforeign investment in the power sector, which needs 100,000 MW
\nover the next 10 years to meet growing demand.<\/p>\n
But its ability to solve the issue also depends on cooperation
\namong various political parties, which have been using the
\ncontroversy to attack each other.<\/p>\n
On Sunday, Vilasrao Deshmukh, chief minister of Maharashtra,
\ncriticized the federal government for not helping the state
\nresolve the issue quickly, the Press Trust of India (PTI) said.<\/p>\n
"Despite several letters, the federal government has not
\nresponded to the state's pleas to intervene in the matter," PTI
\nquoted Deshmukh as telling reporters after a party meet in
\nBombay.<\/p>\n
Maharashtra is ruled by a coalition headed by the opposition
\nCongress party.<\/p>",
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