Enrons Dabhol debacle turns corner on a new life

Enron`s Dabhol debacle turns corner on a new life

A new deal, trimming (US)$300 million off the original (US)$2.8 billion total for the Dabhol project in India, is bringing Enron back on line there. Political upheaval there early in 1995 led to government cancellation of the deal. Construction was in progress, and the cancellation cost Enron an estimated (US)$250,000 a day.

Renegotiations began when Enron offered to shave capital costs and tariffs. “Is it all smoke and mirrors, or is there a savings?” asked Ron Somers, Mangalore Power Co. managing director. Mangalore is building a 1,000-MW coal-fired plant in the nearby State of Karnataka. Indian negotiators suggested alterations to reduce Dabhol plant costs from (US)$1.29 million per kW to around (US)$743,000 per kW. The Maharashtra state government officials are calling the deal a new “benchmark.” The deal was not yet finalized at press time.

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