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Enron asks Indian government to pay outstanding bill

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March 10, 2001 

BOMBAY, MAR 9 (AP) - U.S.-based power giant Enron Corp. invoked a federal guarantee for the second time within a month to recover dlrs 22 million from a defaulting western Indian state and a power utility, a company official said Friday.

"We are confident that the government of India will be able to arrange the payment. The Indian government has plainly and publicly acknowledged that it will ensure Enron gets paid," said Jimmy Mogal, a regional vice president of Bombay-based Dabhol, Enron's Indian subsidiary.

Enron invoked the guarantee clause for the first time last month for the recovery of dlrs 17 million owed by the Maharashtra State Electricity Board for November.

The outstanding amount was cleared by the board and the federal government did not have to step in.

"Unfortunately, this situation has arisen at the state level again," Mogal said.

Enron billed the state electricity board for dlrs 22 million for December.

The dlrs 2.4 billion Dabhol project in Guhagar, 335 kilometers (210 miles) south of Bombay, is India's biggest foreign investment.

It has run into disputes since Enron entered the Indian market in 1992.

The state government and various environmentalists say Enron's charges are "exorbitant."

They demand renegotiation of the power purchase agreement that covers the rate at which the company sells electricity to Maharashtra state.

Enron is charging 15 American cents per unit as compared to 4 cents when the deal was signed six years ago.

Enron blames the depreciation of the Indian rupee, and the high cost of naphtha used as fuel in the first phase of the 740-megawatts power plant, which began generating electricity in May 1999.

A state committee is discussing the viability of the second phase 1,444-megawatt plant scheduled to begin running on liquefied natural gas later this year.

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