CMS Energy, the Michigan global power company may withdraw from the Ennore project in Tamil Nadu, India according to reported comments from its CEO and Chairman, William T. McCormack in Washington yesterday. The remarks will come as a further blow to India’s attempts to secure foreign investment in its energy projects following Enron’s decision to give notice to withdraw from the Dabhol Power Project.

CMS Energy is the largest foreign energy developer in India. It is part of a the Dakshin Bharat Energy Consortium, chosen to finance, build and operate a 1886 MW natural gas-fuelled plant and a liquefied natural gas facility that will handle 2.5 million tons per year at a cost of $1.6 bn. The Tamil Nadu Industrial Development Company (TIDCO) project is intended to serve growing industrial centres throughout Southern India.

In September 2000, CMS announced the signing of a joint development agreement included in which was a commitment from the Indian government to establish an effective Payment Security Mechanism (PSM) for firm purchase of power from the Ennore plant.

Mr. McCormack, speaking in Washington yesterday, said “We have been very disappointed lately in India in the new project…the Ennore project – We have not been getting the cooperation and support we need.”

McCormick said after being “selected by the Government” to execute the project, the company had been “negotiating for several years with various Government entities”. “We were promised by the federal Government, by the Ministries and leaders that we would get federal credit support – in fact, equivalent to the counterguarantee – because the State Electricity Board could not provide the credits for it,” said McCormack “But the various authorities have not delivered on their promises in India, and I would say the project is in some jeopardy.”

The Dakshin Bharat Energy Consortium was formed in 1997 to bid for, develop, own and operate the Ennore LNG terminal and Power Project. It consists of CMS Energy Corporation of the USA (26.67 per cent ownership), the Aditya Birla Group of India (26.67 per cent ownership), Unocal Corporation of the USA (18.66 per cent ownership), Woodside Petroleum of Australia (15 per cent ownership) and Siemens Project Ventures of Germany (13 per cent ownership).