WHO WILL FOOT THE BILL?

With only 50 per cent of MSEB’s electric supply being metered, where will the additional Rs 5000 crore revenue be realised to pay for Enron power is a question that needs to be clearly answered. All official reports in recent years have clearly stated that high tension industrial consumers cannot pay more than the current tariffs. Raising HT tariffs would lead to an exodus of industry from the state, or a shift to captive power plant supply. With agricultural consumers unable to pay even the highly subsidised tariffs of today, whether domestic and commercial consumers can sustain the Enron financial load is a question that must be considered before committing several thousand crore rupees of further investments.

MORE ENRON LESS ELECTRICITY

In 1993, the World Bank had twice reiterated that as a base load plant an LNG based plant of 2000 MW size was not viable. Thereafter the Rajadhyaksha Committee had raised similar doubts about the economic viability of the three IPP projects being planned for Maharashtra, including Dabhol. In 2001 the Godbole Committee stated unequivocally that “LNG is not a cost effective solution to meet base load power”. With hydrocarbon costs rising steadily it would be prime folly to proceed without a proper technoeconomic reappraisal of the viability and sustainability of a revived Enron project, which must be insisted upon before any further commitments are made.

If Enron power is indeed being made available to MSEB at Rs 2.30 per unit, then who is footing the Rs 1500 crore subsidy is another important question. If NTPC is bearing the subsidy, it must be noted that a financial burden of this size can bankrupt even a large healthy PSU like NTPC, to the detriment of the nation. Alternately, if the burden is distributed over the total electric supply from NTPC, so as to camouflage its origin, the resultant tariff increase nationwide is likely to be challenged in the CERC and lead to a major dispute between states.

If the high power committee which has been formed to revive the project is considering any of the above issues, there are no public indications of this. On the contrary, the public pronouncements of this committee show the same tendencies of disinformation and making of dubious claims, which have characterised the project over the past decade, with catastrophic consequences. Problems will not go away because they are not looked at. If Phase 1 collapsed because of payment default, the chances of something similar happening on a larger scale with Phase 2 are high and cannot be wished away. Should this situation arise in future, and payments committed to Enron pushed through, regardless, default on the other, less insulated, payments for power purchase would lead to the other supplies being shut off. With finite amounts being available for power purchase in the state, more Enron may actually mean less electricity for the state of Maharashtra.

EXPOSING THE ENRON MITRA MANDAL

The issues of electricity and load shedding, the fate of MSEB and Enron are set to dominate political scene in the coming months. The NCP has joined hands with the Shiv Sena and BJP in this ground alliance. Their nexus in electricity and Enron matters is a long standing one, so much so that the three parties are known in Maharashtra as the Enron Mitra Mandal. They joined hands to bring Enron, and equally unviable IPPs to Maharashtra. To this end they have ensured that the power ministry in the State has remained in their hands for more than a decade, which position they have used to systematically block growth of public sector generation, so as to create shortage conditions in which expensive private power can be hustled through. At the centre too, it was no accident that during the NDA government, Suresh Prabhu and Anant Gite of the Shiv Sena, and Jaywantibai Mehta of the BJP between them held the power ministry. The same nexus was seen in their successful attempts to stall the Kurdukar Commission which had started investigating the Enron debacle. An important political task of the democratic forces in Maharashtra, is to expose this unholy nexus before the masses, and build public awareness about their complete responsibility for the state’s current power shortage, which situation they now seek to exploit to revive their broader failed agenda.

OTHER IMPORTANT ISSUES

There are many important issues being thrown up by the power shortage in Maharashtra- the responsibility for this crisis, the fate of MSEB and public sector power, the sustainability of current power policy based on privatisation, and feasible alternatives available. It is not possible to discuss these issues within the scope of this article, and they will be taken up separately later. Even with regard to Enron there are a number of critical issues like jurisdiction of Indian and international law which have recently come to the forefront, huge claims made in arbitration against the country by GE-Bechtel, which we do not discuss at this point. There is no doubt that the Enron project is one of the world’s biggest and most expensive fiascos. Issues of misgovernance and undue influence at every stage have been squarely raised by a number of official reports. In the USA Enron Chairman Kenneth Lay was arrested and shown in handcuffs on BBC and CNN. Enron CEO Jeff Skillings and many other top officers have also been criminally indicted. In India, on the other hand, not a single person has been called to account till date.

RECONSTITUTE COMMITTEE

In the light of the events of May, it has become imperative to demand an immediate reconstitution of the high power committee which is considering Enron. When the committee was formed, the financer minister Shri P Chidambaram excused himself from the committee on the grounds that he had appeared for Enron as an advocate in legal proceedings. Given the objection to Kurdukar Commission by Shri Sharad Pawar, which is on the record, and his recent conduct vis-a-vis the Godbole Committee report, an official report accepted by his own government, it is wholly inappropriate that he be part of any Enron renegotiations. In fact it is wholly inappropriate and a conflict if interest that any person who was party to creating the Enron mess in the first place, including Shri Montek Singh Ahluwalia, should continue in such a committee. Such persons have been collectively indicted by the Godbole Committee, and there is material on record before the Kurdukar Commission to assign personal responsibility for various irregular acts. The events of May demand a reconstitution of the High Power Committee and also the re-appointment of Kurdukar Commission by the Central government to circumvent issues of centre-state jurisdiction which were used to stall the Commission. (June 4, 2005)