The Hindu : Tough choices ahead for DF Govt. on Enron

Online edition of India's National Newspaper
Tuesday, Jun 18, 2002

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Other States - Maharashtra

Tough choices ahead for DF Govt. on Enron

By Mahesh Vijapurkar

MUMBAI JUNE 17. Legal opinion tendered to the Maharashtra Government has favoured re-starting of the 740-mw Phase I of the Dabhol Power Company's (DPC) plant on an ad hoc basis pending the resolution of other issues. But there are indications that the ruling coalition will tread very carefully on the issue due to the recent political crisis in the State.

Maharashtra needs more electricity, though with the onset of monsoon, the demand from the farm sector would be lower than in the summer months. During summer, the Maharashtra State Electricity Board (MSEB) was in a fix as it was unable to distribute power properly because of collapsed transmission towers in Marathwada. The State is not power-surplus, but it had never faced such a crisis before. It may be recalled that about a year ago, the MSEB had walked out of the power purchase agreement with the Enron-promoted DPC for various reasons, including its inability to pay the bills. The matter then went to the regulator and, later, the courts.

The Democratic Front Government will have quite some political manoeuvring to carry out before it allows the DPC facility to be used. For its erstwhile allies — the CPI (M) and the Peasants and Workers Party (PWP) — anything to do with Enron is anathema. The Congress and the Nationalist Congress Party (NCP), who are the major partners in the DF combine, want to woo the two parties back into their fold.

Even if it is able to reconcile the other issues bothering the CPI(M) and the PWP, the parties are sure to turn their backs if Enron is seen as being favoured, even if on an ad hoc basis. These parties continue to be worried that the inquiry commission set up to probe the deal has not made any headway yet.

The suggestion that the first phase of the controversial project be revived came from the financial institutions since no State except Maharashtra is ready to buy the power. Since the MSEB is the buyer, the Government's mandate is crucial.

The DF Government — which won the trust vote last week with 143 MLAs voting for it and 133 against — would have been in trouble if the CPI(M), with two MLAs, and PWP, with five, had voted against the motion. The CPI(M) voted for the Government and the PWP abstained to keep the Shiv Sena-BJP coalition out. The Government knows it cannot take them for granted any more.

In such a context, political considerations gain primacy even though legal opinion has supported ad hoc generation of power and its absorption by the MSEB at affordable prices.

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