Enron Scouting For Power, Gas Projects
We have and we are actively looking at LNG and some power opportunities in India. We are still very positive about our long-term prospects in India, he said in a brief interview. But obviously we will not start another major power project until this one (Dabhol) goes back on stream.
Lay said the Dabhol project would be significantly costlier because of the delays. Putting the cost of mounting interests charges at a few million dollars a month, he said the overall electricity cost could have been further reduced if the project had been expanded, and both phases combined, in the initial stages.
Theres no doubt our cost has gone up, he said.
But the Enron chairman emphasised repeatedly that his company was bullish on India. We would prefer not to go through the past 15 months. But would be do it again? Yes, definitely, he said.
The Houston-based giant power company estimates that India, along with China and Indonesia, will be among the biggest energy markets in the world. Enrons estimates indicate that India will need to double capacity to between 60,000 and 80,000 MW.
The protracted legal tangle in India has, however, left its mark on the companys attitude towards emerging markets. Earlier, speaking at a seminar on encouraging private sector participation in East Asia, Lay said the top priority for host governments should be ensuring sanctity of the contract.
Projects of the nature cannot be held hostage to rumors or press accounts, he said, referring to the stalled project in Dabhol. Later he told Business Standard, The good news is that India is a country of law, where our legal rights have been protected.
Speaking ruefully of the companys legal battles in India, he said Enron was currently waiting for its twenty-fourth court judgement. We won the first 23 legal challenges, he said.
Lay said he was encouraged by the public support for the Dabhol project. One reason the government of Maharashtra turned around is because the people wanted it to go ahead. The people thought it would be some solution to the power black-outs, he said.
He pointed out that the Dabhol power project had won approval across the political spectrum, including from the Bharatiya Janata Party and the Left parties. This makes us a little less concerned about political change in the future, he said.
Political risk, however, is not the companys sole concern while doing business in the developing world. Along with the sanctity of contracts. Lay also urged host government to ensure creditworthiness of the power purchasers (state electricity boards in most cases), to reform electricity markets, to assume the foreign exchange risk, and to eliminate bureaucratic barriers.
The resources will flow to the countries which are doing the best job in making these reforms, he said.