Enron saga continues despite Atalji Bihari Vajpayee’s push

Old-timers recall the counter-guarantee given by the 13-day Vajpayee government in 1996 for the smooth run of the Enron project. The guarantee was provided despite Opposition from ideological bedfellow Swadeshi Jagran Manch (SJM) and Left parties. 

The Vajpayee government in its defence said the counter-guarantee had been provided for amendments to the power purchase agreement (PPA), subject to prior written approval by the Central government. Enron ensured that if the erstwhile Maharashtra State Electricity Board did not pay up, the money would be given by the state or Centre. The first phase of 744 mw went online in May 1999, almost two years behind schedule.

The power plant in 2001 ran into trouble due to Enron scandal leading to the bankruptcy. In 2005, it was taken over and revived the government’s Ratnagiri Gas and Power Pvt Ltd. The project capacity was reduced to 1,967 mw from 2,184 mw.  Even though the ownership of the project has changed, the project is still struggling to achieve its full capacity.

Maharashtra Electricity Regulatory Commission’s former member Jayant Deo said, “The counter-guarantee was given to ensure economic import of LNG to replace costly naphtha to run the project. Despite the project revival, LNG terminal is not yet ready.”

SJM’s national executive member Anil Gachke said the project viability since inception was a major issue. “The Vajpayee government should have examined the feasibility before providing counter-guarantee. The Enron project was designed with higher project cost and tariff. Even after RGPPL’s entry, the tariff is still high when power is available at competitive price in the market,” he said.

Power Struggle

The Vajpayee govt had given counter-guarantee to Enron project in 1996.
RGPPL now supplies 500 mw to Indian Railways from April 2017 in Maharashtra, Gujarat, MP, Jharkhand & UP.
This was done after MSEDC stopped drawing power from the project citing flaws in power purchase deal.