Energy giant appeals to India

The project is largest foreign investment in India

By Sanjeev Srivastava in Bombay

Kenneth Lay, the chairman of the US energy giant Enron, has asked the Indian Government to help resolve the deadlock over its $3bn power project in the western state of Maharashtra.

I think Delhi will have to play an important role in solving this problem,

Enron Chairman Kenneth Lay

The state authorities and Enron are locked in a dispute over the non-payment of dues to Enron's Indian subsidiary, Dabhol Power Co (DPC).

The Maharasahtra State Electricity Board (MSEB) owes nearly $64m in outstanding payments.

The Enron project is the single largest foreign investment in India and was once seen as the showpiece of India's committment to globalisation and economic reforms.

Global 'ramifications'

The Enron chairman, who met Indian Power Minister Suresh Prabhu in Delhi and Maharashtra Chief Minister Vilas Rao Deshmukh in Bombay, described his discussions as "productive and constructive".

The global power giant has run into local difficulties

"I think they (the government in Delhi) appreciate that this is a very significant project. It is the largest foreign investment in India and it is the largest independent power project in the world.

"There are a lot of international ramifications to the project," he told journalists in Bombay before rounding off his isit.

The Maharashtra chief minister is reported to have categorically told Mr Lay that the state government and MSEB were in no position to buy power from Enron until the central government chipped in with funds.

The chief minister is also reported to have told Enron officials that the state was not interested in buying power from phase two of the project at all.

Honouring agreement

The Enron chairman told journalists that he was hopeful the state authorities would honour their agreement with the DPC.

"I think Delhi will have to play an important role in solving this problem - but hopefully Maharashtra will continue to honour its contractual obligations as it was the state government and the MSEB which signed a contract with us five years ago," he said.

Meanwhile, an expert committee appointed to renegotiate the project with Enron also submitted its report to the Maharashtra state government on Wednesday.

The committee is understood to have expressed concern over the high tariff costs charged by Enron.

It also understood to have recommended the privatisation of at least the power generation and distribution arm of the MSEB so that the state utility functions more efficiently.