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Celeste meets Maharashtra CM on Enron issue

The outgoing US Ambassador to India Richard Celeste on Tuesday met Maharashtra Chief Minister Vilasrao Deshmukh and discussed the status of controversial Enron power project in the state.

During the meeting which lasted for 45 minutes, chief minister explained to Celeste the financial burden cast on the Maharashtra State Electricity Board on account of

purchase of power from the Dabhol Power Company, the subsidiary of Enron set up in coastal Konkan, official sources said.

Celeste described Maharashtra government's decision to set up a committee of experts to review the project as a 'positive' step and hoped that it would lead to a favourable outcome as the issue involved foreign investment in India.

Deshmukh told Celeste that the state government would be approaching the Centre to 'lighten its heavy financial burden' after the review committee came out with 'concrete proposals'.

Celeste said the issue was an important one and hoped it would be sorted out soon. "Every crisis is an opportunity," he was quoted as saying.

Deshmukh said the review committee was expected to be set up within 'a day or two'.

The MSEB officials present at the meeting explained the financial burden suffered by the board owing to power purchase agreement reached with DPC for the first phase of the project.

MSEB's current dues to DPC are to the tune of Rs 2.40 billion for November and December 2000.

Earlier last night Celeste, in his address to businessmen at the US consulate, referred to the project and hoped that a working solution would be found despite misrepresentations and misunderstandings regarding the cost of Dabhol's power.

The US Ambassador in his farewell visit said DPC's predicament has potential for far greater impact than on Dabhol itself.

He said: "It feeds the concern among American and other foreign investors that India remains a less than reliable destination for their investment dollars."

The world was watching and perceptions among American and other foreign investors would be affected by the challenge to Dabhol and how it would be resolved, he said.

"American business leaders are a cautious lot and their caution increases dramatically in response to indications from any country that legal contracts openly arrived at might be subject to re-negotiation, especially when a contract involves a several billion dollar investment such as that made by Dabhol, Celeste said.

Stating that power sector reforms were urgently needed, Celeste said: "Neither MSEB nor any other state electricity board can succeed if they are not permitted to recover the full cost of power they distribute."

"Rates must be rationalised, meters installed, bills paid. Everyone - and I would include Dabhol - needs to shoulder a fair share of the cost in achieving a stable and economically viable power distribution system," he added.

Celeste said India "needs Dabhol power as every business in India needs sufficient and dependable power to compete in the global marketplace".

He said it was vitally important for leaders in Delhi and Bombay to understand the responsibility they carry to ensure that potential investors felt at home in India.

The physical and bureaucratic impediments to greater trade that President Bill Clinton and Prime Minister Atal Bihari Vajpayee pledged to eliminate still seem to be there and must be addressed in for the potential of economic partnership to be fully realised, Celeste said.

He also referred to the joint working groups of both the countries on terrorism, export control dialogue, counter-narcotics, law enforcement & science policy and hoped that the co-operation would continue further.

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