The Dabhol Tangle

1992

Houston's Enron corp. and the west central Indian state of Maharashta agree to build a large gas-fired power plant in Dabhol, near Mumbai (Bombay). The project leads to the formation of the Dabhol Power co., a joint venture of Enron, General Electric, and Bechtel. Enron takes a 65 percent stake.

1993

The Central Electricity Authority in New Delhi approves in principle the construction of the Dabhol plant at an estimated US $3 billion, the largest private foreign investment in India's history. The World Bank reports the plant is too big for the state's needs and that electricity from it will be too expensive.

1994

The U.S. Export-Import Bank and the Overseas Private Investment Corp. approve $600 million in loans and guarantees for Dabhol.

1995

An electoral coalition opposing the Dabhol project wins the state election in Maharashtra and takes office. A committee appointed by India's federal government finds that the project's capital costs have been inflated and that electricity prices will be too high. Nevertheless, the new state government renegotiates the project, making it three times bigger and agreeing to terms that critics consider scandalously favorable to Enron, giving rise to suspicions that corruption played a role.

1999

the first phase of the plant (740 megawatts) starts operation. Human Rights Watch reports that local activists, opposing the project have been abused by security forces paid by the state electricity board.

2000

Influential citizens call on the Maharashtra government to terminate purchases of electricity from the plant on the grounds that it is too expensive.

2001

En declares bankruptcy. Dabhol electricity is found to cost 4 times as much as electricity from other sources in Maharashtra. The operation of Phase I of the plant is stopped; construction of Phase II (1444 MW), 90 percent complete, is halted.

2004

The newly elected Congress Party government in New Delhi reaffirms its commitment to the national policies of economic liberalization.

2005

Increasingly severe power shortages add urgency to the resuscitation of Dabhol.