Dabhol Project Work To Begin Soon: Enron Chief
"Our projects in India have received much more publicity than either we or the government would have liked," Lay said. "We believe that the Dabhol project should not have been cancelled nor should we have had to go through some of the experiences," he said.
"We are committed to Maharashtra state and to India. We will be doing business in India for a long, long time," Lay said. Although Enron would have preferred to have avoided the experiences of the last 13 months, "we believe we have a good project. We believe we are good partners for India," he added. Lay, who was one of the speakers at an Indian investment conference, made the strongest pitch for investment in the country, much to the surprise of some of the participants.
He said he had often been asked if Enron would have still invested in the Dabhol project if it had known what it would have had to go through. "My answer," he added, "is an emphatic yes."
Lay spoke at length on the success of India's economic reforms. "The prime minister, Deve Gowda, has reorganised the Foreign Investment Promotion Board and instructed them to expedite disposal of cases The backlog of 400 cases have now been processed," he said.
"Adequate electricity is mandatory to promote economic growth. The demand for electricity in India is many times the rate the world over. At peak periods the shortfall on a nationwide basis is 20 per cent. It is much greater in certain states," Lay noted.
He quoted from a study by the Cambridge Energy Research Associates which said that at present there was a demand for 80,000mw of power against 53,000mw of actual capacity available.
"The cost of construction to meet this demand is very large," he said. "It has been estimated that India needs $140 billion as investment in power generation to catch up with economic growth."
Lay praised the rule of law in India. "Our contracts and agreements were always held to be legally enforceable. The legal system has worked more quickly and more decisively than it would have had in the US judiciary," Lay said.
"The Indian judiciary is very independent of the government.
We had arbitration rights in the contract," Lay said.
"Soon after the cancellation, arbitration proceedings were begun. The ability to have legal remedies was helpful in bringing the contract together. We prefer to get paid for building the project rather than for not building it," he said in a reference to the penalty clause.
Enron had chosen to have arbitration in London, he said, because it had well established arbitration laws.
In reply to a question, Lay said, "so far all private investment in India has been in generation. As the country moves towards privatisation and distribution, there will be the requirement for a regulatory body."
The conference, attended by 200 participants who included Indian American professionals and businessmen and senior executives of American companies, was jointly organised by the Confederation of Indian Industry, Greater Houston Partnership and the Consulate General of India, Houston.