India may let power project deal pass

India may let power project deal pass

By Clarence Fernandez

BOMBAY (Reuter): Differences between the rightwing Hindu parties ruling India's richest state may enable the country's largest power project to squeak through despite threats to scrap it, political analysts and newspaper editorials said last Friday.

The two parties rode local opposition to the $920 million project at Dabhol on Maharashtra's west coast to win power in March on promises to review the contract between the state-run electricity board and the Enron Corporation, the U.S. company building the plant.

Newspaper editorials last Friday said the Maharashtra state government was seeking a way out of the Enron tangle with its decision to place the review report before the legislature, scheduled to reconvene on July 5, instead of deciding immediately.

A legislative endorsement of the venture, The Times of India said, would provide a face-saving device for the coalition of the national opposition Bharatiya Janata Party (BJP) and the regional Shiv Sena.

This was a likely outcome, the newspaper said, since not all the Shiv Sena-BJP legislators are against the project, and only those from the coastal region were vocal in their opposition.

"The alliance can claim that even though it was keen on fulfilling its election promise, it was helpless in the face of the legislature's endorsement of the venture. The rejection of the report will not necessarily mean a defeat of the government," it said.

The opposition Congress Party could vote with the Shiv Sena to allow the project to go ahead, perhaps with modifications, analysts said.

Maharashtra Chief Minister Manohar Joshi, visiting the United States to reassure investors of his government's commitment to economic reforms program, said on Thursday it would take only a week to make a decision on the report of the review committee.

The review of Enron's contract, which critics say sets too high a price for the power the plant will generate, was originally due in May.

Analysts say the one-month delay granted to the review committee indicates a tussle between the BJP and the Shiv Sena.

"Obviously the BJP wants the Enron project scrapped because it is looking at the national elections," an analyst with a Bombay investment firm said. General elections are due by next May.

"But the Sena, the real party in power and taking all the decisions, has realized it has drastic ramifications," he added.

Recent U.S. and British appeals that scrapping the Enron project would jeopardize foreign investment were angrily condemned by Indian opposition parties as interference.

The project is seen as a test case for the success of the economic reforms launched by the nationally ruling Congress government of Prime Minister P.V. Narasimha Rao.

While the BJP has spearheaded opposition to the project, the Shiv Sena is seen to be veering to the view that the project might be acceptable with certain modifications.

An editorial last week in the Shiv Sena newspaper, Saamna (Confrontation), said scrapping Enron would not be a solution to the problem.

But, the article said, to permit it to go ahead would be a betrayal of the people of the west coast, who protest that the project will endanger their farming and fishing livelihood.

"A third alternative must be found," the editorial said, but offered no solutions.

The Times said political expediency had prompted Joshi's move to call a vote in the state assembly.

"Clearly the BJP-Shiv Sena government has boxed itself into a corner by adopting heroic postures in opposition which it finds it cannot reasonably sustain in government," the newspaper said.