January 29, 2002	Tuesday	Ziqa’ad 14, 1422

NEW DELHI: Through Enron Corp’s troubles in India over its stalled $3 billion power project, the power giant’s suave executives never tired of warning the government that how it handled the project would be a litmus test for this country’s decade-old economic liberalization.

According to Jayati Ghosh, who teaches economics at the Jawaharlal Nehru University, Enron was more than just another transnational corporation (TNC).

“It was in fact the symbol of and even a model for economic activity in India and across the world.”

In 1996, Enron collected $200 million in political risk insurance for its power project at Dabhol in Maharashtra, from the Overseas Private Investment Corporation (OPIC), which funds US companies investing abroad.

But Enron fared very well against the successive changes of governments at the state and centre, as well as in dealing with India’s formidable bureaucracy.

Given the revelations of Enron’s political connections at home in the United States, in the wake of its collapse this month, critics say there is now little doubt that Enron won friends and influenced people in the time-honoured way of these parts — bribery.

Whether or not Enron actually greased palms to penetrate India’s state-run energy sector and survive successive changes of government in industrialized Maharashtra is now for a one-man commission headed by S.P. Kurudkar to determine and pronounce on. The panel began its work last week.

The economics of it was simple. The Maharashtra electricity board was forced, under the terms of the power agreement, to shut down its own plants to buy power from Dabhol — at seven times the price for distribution to consumers.

In reaction to the expected high price of power, industries began fleeing Maharashtra for other states.

Enron, basically an energy trader, demanded that its plant be run on imported naphtha or liquefied natural gas (LNG), which it said could be imported from its fields in the Middle East when India had vast amounts of cheap coal.

According to Mohan Guruswamy, a former adviser to Finance Minister Yashwant Sinha, the price that is paid for the 85 per cent foreign stake will reflect the actual cost of building Dabhol, which is likely to be half of what Enron claimed it did. —Dawn/InterPress Service.