Dabhol Power Station

Dabhol Power Station is located near Anjanwel village in Ratnagiri district in Maharashtra, India, about 160 kilometres (99 mi) south of Mumbai. The power station was a built by the Dabhol Power Company (DPC), which was a joint venture of Enron International, General Electric, Bechtel and Maharashtra Power Development Corporation.[1] At the start of its construction in 1992, the Dabhol power station project was, at $3 billion, the biggest foreign investment in India. The plant was mired in controversies of corruption and malpractices involving Enron and people at the highest political levels of the Indian and the United States (Clinton and Bush Administration) governments.[2]

Dabhol Power Station
CountryIndia
LocationAnjanwel, Ratnagiri district, Maharashtra
Coordinates17°33′35″N 73°9′59″E
StatusOperational
Commission date2000
Owner(s)Ratnagiri Gas and Power
Operator(s)
Thermal power station
Primary fuelLNG
Power generation
Nameplate capacity
  • 1,967 MW

History

The Dabhol Power Station was the largest foreign investment project in India at the time. Until this time, Western companies and investors had avoided India. Planners at the Enron Corporation, a major partner in the project, advised against starting projects in India due its inefficient and government-controlled energy system.[3] Construction of the Dabhol Power Station was planned to be completed in two phases. The first phase was a 740 MW unit to use naphtha as the fuel. Construction started in 1992 and finally completed in May 1999.[4] The next phase was 1700 MW of units using liquefied natural gas (LNG) as fuel. At its height, the construction of the Dabhol power station employed 15,000 people.[5]

Controversies with Enron - building, pricing and operations

The power project ran into trouble due to the 1993 power purchase agreement between Enron International (EI) and the state's power utility, Maharashtra State Electricity Board (MSEB). The agreement negotiation lacked transparency, and details had not been made public.[6] For several years, the World Bank objected to the project. The controversy helped a Bhartiya Janata Party-Shiv Sena coalition win the 1995 Maharashtra Legislative Assembly election on a campaign pledge to "push Enron into the Arabian Sea." The state government halted the construction on August 3, 1995. By 1996, the MSEB and EI renegotiated the contract so that EI would cut power costs by 20 percent, but that the MSEB would be obligated to purchase more power.[7] In 2000, MSEB was paying DPC ₹4.67/kwh while the tariff that MSEB charged its customers was ₹1.89/kwh.[6]

Due to political controversies related to the high pricing of power from the station and allegations of corruption,[4] the construction and operation of the Dabhol power station was interrupted on several occasions even after it started operation in May 1999. In January 2001, the Maharashtra state government stopped paying the company due to the high cost of power charged by them. Subsequently, high-level US Government officials including Colin Powell, Dick Cheney, Christina B.Rocca and Alan Larson tried to convince the Indian authorities to pay Enron and allow them to continue its operations at Dabhol.[2] However, in November 2001, due to the Enron bankruptcy and disputes between Enron's creditors and the Government of Maharashtra (GoM). The power plant was finally rehabilitated and taken over by Ratnagiri Gas and Power (RGPPL), which successfully revived and operates the plant.[8]

By 2001, there were a number of political controversies brewing over the power purchase agreement. The price paid by MSEB for power from the Dabhol station was over twice that from other power stations in the state.[4] With escalating tensions between MSEB, GoM and DPC, operation of Phase I and construction of Phase II came to a halt in May 2001. With the Enron bankruptcy, Enron's stake in DPC was bought out by GE and Bechtel.

The plant was moth-balled for 5 years, while the various claimants, including MSEB, Government of Maharashtra, GE, Bechtel, Indian banks and the Government of India, settled their disputes over payments.

In May 2006, after protracted negotiations, state-owned NTPC Limited and GAIL agreed to take over the power station. RGPPL was floated as a joint-venture between these two companies to own and operate the Dabhol power station.[8] However, the revival proved difficult due to 3 catastrophic breakdowns in the equipment supplied by GE.[9]

After repairs to the equipment, the power station resumed operations at 100% of its installed capacity of 1967 MW in 2010, however it has had to often stop operation due to losses and a lack of buyers for its expensive electricity.[10]

As of 2016, the power plant continues to operate at a loss, selling energy to the MSEDCL and Indian railways at a highly inflated rate. In 2015, it had a debt of Rs. 10,500 crore. In a bid to revive the loss making plant, in September 2015, the Company owning the power plant RGPPL was split into two separate Power and LNG entities, one to manage the power plant and the other to manage the import of LNG.[10]

Closure of corruption case

On 11 April 2019 the Supreme Court in India closed the case of alleged corruption. Chief Justice Ranjan Gogoi and Justices Deepak Gupta and Sanjiv Khanna allowed the plea of the Maharashtra government to end the case, citing its 22 year duration [11]

See also

References
  1. "Case Study: Dabhol Power Company Limited". 12 October 2009. Retrieved 1 November 2011.
  2. Minority Staff Committee on Government Reform (22 February 2002). "FACT SHEET - Background on Enron's Dabhol Power Project" (PDF). U.S. House of Representatives. Archived from the original (PDF) on 25 October 2016. Retrieved 25 October 2016.
  3. McLean, Bethany. (2003). The smartest guys in the room : the amazing rise and scandalous fall of Enron. Elkind, Peter. New York: Portfolio. ISBN 1-59184-008-2. OCLC 52418094.
  4. "Enron's eight-year power struggle in India". Asia Times. 18 January 2001. Archived from the original on 23 November 2011. Retrieved 1 November 2011.
  5. Enron's Dabhol Power project is now a rusty ghost town
  6. Bajaj, Vikas (22 March 2010). "India's Woes Reflected in Bid to Restart Old Plant". The New York Times. Retrieved 1 November 2011.
  7. McLean, Bethany. (2003). The smartest guys in the room : the amazing rise and scandalous fall of Enron. Elkind, Peter. New York: Portfolio. ISBN 1-59184-008-2. OCLC 52418094.
  8. "Home". Ratnagiri Gas and Power Private Limited. Retrieved 1 November 2011.
  9. Bajaj, Vikas (22 March 2010). "India's Woes Reflected in Bid to Restart Old Plant". The New York Times.
  10. "Dabhol power project to be split into two companies to revive plant". The Mint. 30 September 2015. Retrieved 28 October 2016.
  11. Enron-Dabhol power project: Supreme Court closes case of alleged corruption The Economic Times 11 April 2019
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