One of the worlds largest natural gas-fired power generation project. Located at Ratnagiri in Maharashtra. Agreement with Maharashtra State Electricity Board(MSEB). Two phases: 2,015MW 1,320MW
Attractiveness of market, Western Style legal code, strength of democracy.
Selection of LNG as fuel instead of natural gas and coal.
Qatari government partnership.
Choose of Gulf source to supply gas.
Development of modern port facility and regassification facility.
Feb 1992 Advertisement for power plant near Delhi Enron investigates, initiates discussions with World Bank & Union Power Secy May 1992 Power Secy encourages foreign participation in power sector Enron willing to be a pioneer, asks for concessions in return June 1992 Site shifted from Delhi to Maharashtra, 2-phase project Phase 1 (695MW) to use fuel sourced locally Phase 2 (1320MW) would include regasification, converting Phase 1 to LNG and raising additional capital
Chronology of Enrons Efforts in India June-Oct 1992 Enron & MSEB sign MOU. Cap on power price to be at Rs.2.40/kWh Drafting of legal documents that defined risk sharing relationships of owners, builders, operators and purchaser. Enron presents the proposal to FIPB with Rajgopals support Dec 1992 FIPB approves project but World bank report tags the project as an expensive alternative to existing ones. Mark protests, sites inexperience of World Bank with natural gas plants and stresses on environmental benefits Veiled warning from Mark , questions seriousness of economic reforms in India. Heavy lobbying by Enron. Officials pay courtesy & lobbying visits to World Bank, Power Secy, MSEB Chairman, Chief Secretary of Govt. of Maharashtra
February 1993 Project gains pace on arrival of Sharad Pawar as State CM. GOMs five central concerns GOM guarantees, capital cost comparisons, rates of return, escalation factor, and exchange rate variation GOM objects to projected 26.52% return to equity holders, Enron threatens to withdraw MSEB keen to have equity stake in the project After negotiations, Enron lowers ROR to 25.22% and considers giving MSEB 10% permanent equity ownership. According to Enron, this would translate to 17.20% after considering US taxes. Others issues resolved gradually through negotiations May 1993 Power Purchase Agreement defines relationship between MSEB and DPC Dispute resolution through international arbitration if settlement not reached under Indian jurisprudence. Arbitration proceedings would be conducted in London according to UNCITRAL rules
December 1993 The DPC and the MSEB sign the Power Purchase Agreement on December 8, 1993. Enrons Experience in Various countries
1.United Kingdom
Place- Teesside
Capacity-1875 MW
EDCS Investment-$150 million
Year of Commercial Operation- 1993
Partnership with-ICI Chemicals
2.China
Place-Hainan Island
Capacity-150 MW
EDCS Investment-$135 million
Year of Commercial Operation Late 1995
3. Dominican Republic
Capacity-185 MW
EDCS Investment-$200 million
Year of Commercial Operation- Mid 1995
No. of years of Power Purchase Agreement- 20 Years
4. Turkey
Place-Marmara
Capacity-478 MW
EDCS Investment-$545 million
Year of Commercial Operation- Fourth quarter of 1997
Partnership with- State Power Utility
5a). Indonesia
Place- East Java
Capacity-500 MW
EDCS Investment-$520 million
Year of Commercial Operation-Mid 1997
5b). Indonesia
Place- East Kalimantan
Capacity-136 MW
EDCS Investment-$138 million
Year of Commercial Operation-Early 1998
Reasons for Failure Bhartuya Janata Party (BJP) defeats the Congress and comes to power in 1995. BJO makes a lot of nationalistic noise. Their leaders said that India should not be dicated by foregin power giants A report on DPC is made. Lack of Transparency in the agreement. Some clearances were ignored due to the fast-track nature of the project. Cost of the project was greater than comparable projects. (4.49 Cr per MW vs. 3.6Cr per MW. High Tariffs. Environmental concerns raised by World Bank not addressed. Project is cancelled in August 1995. Ethical Dimensions Allegations of bribes (courtesy visits to top officials)