Enron wants Indian govt to buy its Dabhol stake

Enron wants Indian govt to buy its Dabhol stake

BOMBAY (Reuters): U.S. energy group Enron Corp said on
Saturday it wants to sell its stake in the Dabhol Power Company
either to the Indian federal government or to the project's
lenders.

"As the largest investor in the DPC, Enron believes that
selling its interest either to the government of India or to the
project's lenders is the best approach to resolve the protracted
dispute," a spokesman for its Indian unit told Reuters.

This follows comments made by Enron chairman Kenneth Lay in
Friday's issue of Financial Times that Enron is looking to exit
from its Indian venture.

The Dabhol Power Company (DPC), 65 percent owned by the Enron
Corp, is currently locked in a bitter dispute with a local
utility over a payments default.

"We want out," said Enron's Chairman Kenneth Lay in an
interview with the Financial Times.

DPC which is India's biggest direct foreign investment, had
signed a contract to supply power to a state-owned utility, the
Maharashtra State Electricity Board (MSEB), from its gas-based
plant on the state's west coast.

But MSEB stopped buying power in May calling it expensive and
defaulted on payments jeopardising the project's future.

"We have made it pretty clear to the government leadership we
are now at a point where we would like to be taken out and we
think most of our partners do," Lay said in the Financial Times
interview.

Besides Enron, the other shareholders in DPC are U.S. group
General Electric and Bechtel which own 10 percent each and MSEB
with 15 percent.

Earlier this month Lay had a meeting with India's Finance
Minister Yashwant Sinha to try and resolve the issue but talks
ended without any solution.

"We have fought this once before, put it back together, fixed
the contracts, but we don't want to do that again and have the
same problems in a few years," Lay was quoted by the paper as
saying.

DPC's power plant is being built in two phases. The first
phase of 740 MW is up and running and the second phase of 1,444
MW is 97 percent complete.

Some analysts say India's attempts to resolve the Enron
dispute is a test case of its ability to attract more foreign
investment.

Last week U.S. assistant secretary of state on South Asian
affairs, Christina Rocca, said the problems surrounding India's
investment climate could be summed up in a five-letter word,
"Enron".

"I have to emphasise that it will be difficult for
international investors to view India favourably until it (Enron
issue) is resolved and in a reasonable manner," she told a
meeting in New Delhi.