Enron: DPC awaiting Centre's response

By Mahesh Vijapurkar

MUMBAI, AUG. 11. While Tata Power had been the first to indicate its inclination to buy the Enron's stake in the Dabhol Power Company if the numbers are right and all legal hassles are sorted out, Government sources say the Tatas are ``only sniffing at the project.'' Several others, including Reliance and BSES, are also ``waiting and watching''.

Enron, however, insists that its offer to sell its stake - as well as that of General Electric and Bechtel - would remain ``at cost'' in that it is ``willing to go out with just what was brought in from 1992.''

It has, in fact, mentioned the approximate figure to the Prime Minister, Mr. A. B . Vajpayee, in a recent letter, but Enron India's Managing Director, Mr. W. Wade Cline, declines to reveal it because it is sensitive, both politically and commercially.

Often, it has been made out to Enron that it may have to sell at much less than its ``at-cost'' offer, because the company is sick, but Mr. Cline says, ``we have a valid,'' iron-clad power purchase agreement (PPA) in place.

If so, it is not clear how that alone can lure investors, for, those wanting to pick up 15 per cent of the stake at 30 per cent premium last year backed out as problems with the Maharashtra State Electricity Board (MSEB) surfaced.

Enron had then wanted to lower its holding from 65 to 50 per cent.

The ``at cost figure'', Mr. Cline told The Hindu ``would be an auditable figure.''

The media guesstimate of the worth of the ``at cost'' offer at $1 billion is dismissed by Enron officials as ``a mere back-of-the- envelop calculation and nothing more.''

Neither would they, including Mr. Cline, say if that figure was ``way off the mark, less or more.'' Anything less than the ``at- cost'' offer would cut into the 6.5 per cent rate of return in dollar terms and would not be ``viable.''

The offer to the Centre includes the Enron's willingness, ``at no loss basis,'' to stay on for some time and get the contractors who have had deals terminated back to work or ``at least the drawings back from them'' and even help run the plant.

If so desired, the offer includes helping develop creative energy sale deal with buyers once the major stockholders get out.

This, according to Mr. Cline, is to ensure that a working, fully developed project goes to the new owner.

While it awaits the Centre's response after ``it decided not only to exit from the project but the entire energy business in India,'' Enron is not ``going to scout around the marketplace'' for a buyer for its equity.

Neither has any entity ``approached or talked to us,'' Mr. Cline said. If anyone comes with a viable offer, the company would explore a deal.

``We are only seeing reports in the media about interest in the DPC and nothing more.''

The Enron Corporation chief, Mr. Kenneth Lay, had told Indian lenders on his recent visit that ``we do not intend to put another cent in this sector anymore.''

The decision was because of two ``negatives that emerged'' soon after Mr. Lay's visit which he thought were very good - one was the decision to set up a judicial probe in the PPA and the other the unrealistic price offered by about six States for the power purchase.

Why does not the DPC just pursue the conciliation and arbitration route, having moved on to the path to terminate the project, and hope to receive a higher settlement as possible in the PPA which, the MSEB says, is rescinded? That is because, as Mr. Cline argues, ``it would take time, of say about two years'' and would ``be quite messy.''

Neither ``are we in the business of collection of bills.'' Apparently, Enron is worried about a post- arbitration risks as well.

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