Enron plans to sell majority stake in Indian power venture

Enron plans to sell majority stake in Indian power venture

BOMBAY, India (AFP): U.S.-based energy company Enron Power Corp is putting in place plans to sell its majority stake in the troubled Dabhol Power Co. in western India, reports said Friday.

"Enron is believed to be in the process of appointing a merchant banker to sell its majority stake in the Dabhol Power Co (DPC)," The Economic Times said, quoting unnamed sources.

Leading investment banks are currently making presentations to Enron to win the mandate, which is expected to be awarded in a few days.

"Enron will always consider a legitimate proposal to sell an asset if it makes strategic sense, but we are not currently selling our stake in DPC," an Enron spokesman told AFP.

Enron holds about 65 percent of DPC, the Maharashtra State Electricity Board (MSEB) has 15 percent and two other US companies hold 10 percent each.

Enron is putting up a three-billion-dollar, 2,184 megawatts power station in the port town of Dabhol, some 200 kilometers south of here.

The project was signed in 1993 and construction began a year later. It was scrapped in 1995 by Maharashtra state's Hindu nationalist government which had just been voted to power.

Opponents of the project had by then built up a campaign, accusing Enron of bribing local politicians and officials to win the contract.

The Hindu nationalists re-negotiated the power purchase agreement and phase one, generating 714 megawatts of power, began operating in 1999.

In 2000, MSEB began defaulting on payments forcing Enron to invoke government counter-guarantees in January 2001.

The Hindu nationalists were replaced by a Congress-party led government which said the cost of Enron's power was "unaffordable".

The government set up a panel to review the project. The panel, early this month, said the power project agreement should be renegotiated.