ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Godbole Committee on Enron Project

The report of the Godbole Committee appointed by the government of Maharashtra on the controversial Dabhol Power Project highlights how reckless greed and scant regard for 'public interest' amongst various decision-makers in the government and private corporations could lead to fooling and fleecing of consumers and the general public. It clearly demonstrates that the project was undesirable right from 1992. The project would be disastrous even if MSEB were to function in an efficient manner, agricultural tariff were to be doubled, and power demand were to grow at an unprecedented rate. The committee also recommends radical restructuring of the project so as to drastically reduce the tariff as well as the burden on MSEB by half (i e, by Rs 3,000 crore/year). The chairman and another member have also highlighted the inevitability of constituting a judicial commission of inquiry in order to free MSEB/GoM from the irrational contract and to ensure that those responsible for the 'governance failure' be made accountable. This paper discusses the observations and findings of the committee and its importance.

 

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Background

The Dabhol Power Company, promoted by the US multinational Enron Corporation, is building one of the most controversial power projects in India. Right from the initial stage of signing the memorandum of understanding (MoU) in June 1992, the project has faced criticism on several grounds, including techno-economic, environmental, procedural, political, and national security grounds. The major techno-economic and procedural issues in the controversy include high capital cost, high tariff, inappropriate capacity and base load generation pattern, imported fuel, take-or-pay contract for LNG, irregularities in various statutory clearances and procedures. The project has also been a matter of intense litigation with over dozen public interest litigations (PILs) filed in the high court as well as the Supreme Court. One of these cases is still pending in the Supreme Court. The project was also the subject matter of political one-upmanship and even electoral battle among various political parties. The claim of spending US $ 20 million (Rs 100 crore, today) for ‘educating’ Indian officials, that was made by Linda Powers, the former Global vice-president of Enron, created quite a storm and fuelled allegations of corruption. Enron also claimed that the project provides much needed ‘development assistance’ and boasted of investment of $ 24.5 million (Rs 115 crore, in today’s cost) for providing a 50-bed hospital, a primary school, a vocational school, and drinking water pipelines for surrounding villages [Powers 1995].

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