Dabhol: Pricey power for India
At the outset, Enron promised a unit price of 6 cents per unit, but because the plant runs on imported LNG (liquied natural gas) and the agreements have been made in dollars, the price is now about 20 cents per unit, according to the IPS news agency. The Maharastra State authorities have huge payment problems, and were behind on their payments for both November and December of 2000. State authorities said that they were not able to meet the payment obligations in the 1993 agreement. Enron presented a guarantee signed by the national government in New Delhi, who therefore found themselves forced to pay the November bill of USD 19 million. The bill for December, at USD 40 million, remains unpaid. On 25 February, also, the bill for January comes due.
The power price is now above the price of oil, and has become a huge burden on the State, which has had to close its own, far cheaper, coal-fired plants. The deal with Enron obliges the State to pay Enron USD 250 million, no matter how much power is taken from the power plant. To cut costs, the State has limited its power use to 45 % of generation. Enron points out that the price would be lower if the State took out twice as much as today. Enron also claims that the problems would be reduced if the State improved its routines for collecting payments, according to the Financial Times.
According to the IPS, the governments of both the Philippines and Indonesia have experienced a similar situation, when private, multinational corporations have been let in through privatisation of the power industry. The Philippine utility, National Power Corp., owes more than nine billion dollars' worth of unpaid power bills.
Norwatch Newsletter 4/01