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Dabhol Power Station, India : Corruption Case


The Dabhol power station was privatised in the state of Maharashatra in India in 1996. The contract was awarded to Enron on a take or pay basis for 20 years without competitive tender, amidst allegations of bribery and on terms that favoured the investor rather than the people of Maharashtra.

The contract agreement stated that Enron would sell electricity to the state electricity board at a fixed price (US $ 0.0872 a unit) and a fixed quantity (17280 million units of electricity). In other words, the state electricity utility agreed to pay Enron about USD $1.4 million a year for the following 20 years.

This was the largest contract in India�s history, providing India with its most expensive power station.

In 2001 Dabhol was shut down. The Maharashtra state nullified its power purchase agreement with DPC, contending that the cost of power was inflated.

Then in June 2002, legal experts argued that the Maharashtra government could restart the 740MW Phase-I of the Dabhol Power Company (DPC) under an interim arrangement without inviting legal action.

Meanwhile, it was reported that domestic and foreign lenders were planning to implement an asset sale of the Dabhol power plant. This is contrary to the earlier plan of selling shares of the company.

A senior institutional official said: "We are considering the option of asset sale rather than equity sale." He said the asset sale will result in affordability of power to both Maharashtra State Electricity Board and the government of Maharashtra. Although a final decision has yet to be taken, such an arrangement will mean that institutions can receive an uninterrupted repayment of loan from the new buyer, from the project's cash flows, and reduce the debt/equity ratio of the project.

Sources said the lenders have decided to initiate the sale process after restarting the plant. It will soon ask General Electric and Bechtel Corporation of the US to commence plant operations.

Both the companies hold 10 per cent stake in the project which has been shut down in June 2001 after MSEB decided against buying power from the plant.


The following lists all references contained in our database that are relevant to this briefing
mbendi [11/6/1999] 'Nigeria to privatise power' [Source ID = 8]

Finanical Times [9/26/1995] 'Survey of Power in Asia' [Source ID = 32]

AUSTRALIAN FINANCIAL REVIEW [10/2/1995] 'BID TO SAVE POWER PROJECT' [Source ID = 715]

Power Asia FT Bus Rep: Energy (Q1:93) [3/18/1996] 'Tough going for Enron as Dabhol talks grind on:' [Source ID = 1103]

FINANCIAL EXPRESS [2/19/1999] '' [Source ID = 3651]

Reuters [9/7/1999] 'India election fans Enron controversy' by Anantharaman Muralikumar [Source ID = 4029]

Reuter [9/7/1999] 'India Congress seeks Enronproject changes' [Source ID = 4030]

Reuter [9/7/1999] 'Enron confident about India power project' : http://www.enron.com [Source ID = 4031]

Reuter Textline (Q2:58) [2/20/1996] 'India's RAO, Investors Score Victory In Phone Case' by Nelson Graves: http://www.enron.com [Source ID = 5749]

SAUDI GAZETTE Reuter Textline (Q2:77) [2/8/1996] 'ENRON NOW WON'T BE THROWN 'INTO ARABIAN SEA' by N A MIRZA, Saudi Gazette Staff: http://www.enron.com [Source ID = 5750]

SERVICE - INDIA REUTER INDIA ECONOMIC NEWS Textline (Q2:87) [6/2/1996] 'ENRON HAS LAST LAUGH ON INDIA PROJECT:' by CLARENCE FERNANDEZ: http://www.enron.com [Source ID = 5751]

Reuter News Service - India. Textline (Q2:51) [1/24/1996] 'INDIAN STATE SAYS TO TIE UP ENRON PAPERWORK BY FEB' by CLARENCE FERNANDEZ: http://www.enron.com [Source ID = 5752]

Financial Times Bus Rep: Energy (Q1:218) Power Asia [1/22/1996] 'Dabhol project: A case of reinventing the deal:' by FT: http://www.enron.com [Source ID = 5753]

Financial Times: Business Report (Q1:58) [1/10/1996] 'Enron's lessons' by Financial Times: http://www.enron.com [Source ID = 5754]

The Times of India [9/8/2001] 'FINANCE, POWER, LAW SECRETARIES DISCUSS DABHOL' : http://www.enron.com [Source ID = 5942]

The Press Trust of India [11/22/2001] ' Enron may have to sell stake in Dabhol plant at half price' : http://www.enron.com [Source ID = 6208]

Financial Times [2/18/2002] 'TotalFinaElf pulls out of race for Dabhol plant' by Khozem Merchant in Bombay: http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT308EOEUXC&live=true&tagid=ZZZCWHK1B0C&Collid=ZZZYFLDCC0C [Source ID = 6406]

Financial Times [2/12/2002] 'Enron: over there and overpaying' by THOMAS CATAN, STEPHEN FIDLER, KHOZEM MERCHANT, GWEN ROBINSON and ROBERT WRIGHT: http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT308EOEUXC&live=true&tagid=ZZZCWHK1B0C&Collid=ZZZYFLDCC0C [Source ID = 6615]

The Times of India [6/19/2002] 'STATE CAN RESTART ENRON PLANT: EXPERTS' by Nitin Yeshwantrao: http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT308EOEUXC&live=true&tagid=ZZZCWHK1B0C&Collid=ZZZYFLDCC0C [Source ID = 6779]

The Economic Times [6/23/2002] 'LENDERS TO SELL ASSET OF DPC, NOT EQUITY' by Baiju Kalesh: http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT308EOEUXC&live=true&tagid=ZZZCWHK1B0C&Collid=ZZZYFLDCC0C [Source ID = 6780]

 [7/17/1997] 'India The "Enron Project" in Maharashtra: Protests Suppressed in the Name of Development' by Amnesty International: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 6863]

Dow Jones News Database (Q1:34) [9/25/1995] 'State Government In India To Rethink Enron Power Plant' by Miriam Jordan: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 7152]

REUTER NEWS SERVICE: USA Reuter Textline (Q2:32) [9/19/1995] 'ENRON WILLING TO ALTER FUELS IN INDIA PROJECT' : http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 7153]

Power Asia FT Bus Rep: Energy (Q1:174) [8/21/1995] 'Enron and AES: The problems of financial risk' : http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 7154]

Dow Jones [8/8/1995] 'Enron's Dabhol Power Denies India Corruption Charges' : http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 7155]

The Associated Press [1/14/2002] 'Enron's $2.9 billion electricity plant in India now a rusty ghost tow' by NEELESH MISRA: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 7579]

Agence France Presse [9/22/2003] 'Bechtel, GE seek to recover investments in Enron's Indian unit' : http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 8364]

The Economic Times of India [5/13/2003] 'DABHOL DOESN'T MAKE IT TO ENRON'S LATEST RECAST PLANS' by Ela Dutt: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 8365]

The Hindu [9/23/2003] 'ENRON, A COMMERCIAL AND NOT POLITICAL RISK' by Oommen A. Ninan: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 8367]

Inter Press Service [12/12/2002] 'ENRON'S FLAMES SINGE EXPORT CREDIT AGENCIES' by Danielle Knight: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 8880]

Financial Times [4/28/2004] 'Government faces Dollars 60m claim over India losses' by CHRISTOPHER ADAMS: http://www.amnesty.org/ailib/aipub/1997/SUM/32003197.htm [Source ID = 9073]

BBC [11/30/2004] 'Export Credits Guarantee Department (File on Four Transcript)' : http://news.bbc.co.uk/nol/shared/bsp/hi/pdfs/30_11_04_export_credit.pdf [Source ID = 12996]


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