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Say 'no' to MNC intimidation
Sack Enron, lock, stock and barrel...

EACH time an intimidating multinational throws a temper tantrum and threatens to stomp out of India, the media goes agog with reports quoting XYZ from the multinational, other multinationals and other Indian concerns (many of them with vested interests) that antagonising existing MNCs and foreign investors would mean scaring off other foreign investors.

Politicians and industrymen alike, waste no time in tut-tutting that India would be poorer for its disgruntled MNCs, that our country would become a pariah nation that no profit-oriented enterprise would want to touch, even with a bargepole, etc., etc.,... Absolute bullshit!

Manipulative MNC
On the contrary, India would stand to gain more - at least more in terms of admiration and respectability if not short-term and long-term benefits - if it gathers enough gall to kick out a manipulative, socio-economically insensitive multinational out, beyond its borders, lock, stock, barrel. Like Enron, for instance.

The cleansing and getting-rid-of-the-unwanted-MNC process, however, begins at the political level. If Sharad Pawar was stupid enough to invite Enron, Gopinath Munde displayed utter stupidity by repudiating it and then renegotiating the deal, with a little help from the great grandson of Sardar Vallabhai Patel, Mukesh Patel. Or maybe, they weren't plain stupid. We still have to probe what Enron's allocation of Rs. 60 crore-odd had to do with 'educating and training people's representatives and government officials'. For some reason we people in the media do not go after the complete truth. A pity.

When the Power Purchase Agreement (PPA) was being thrashed out between the state government and Enron's Dabhol Power Corporation (for setting up a 2015 MW plant at Guhagar) a hue and cry (rightly so) was raised over the fact that the price of power would be linked to the price of the dollar. The dollar, as we all know has shot only upwards, which means that the higher the dollar rate fluctuation, the higher the price of power.

This ridiculous proposition was well-exposed by the media and was debated, discussed and dissected ad nauseum. At the end of it Enron got what it wanted. The result now is there for all to see: The once profitable MSEB, now steeped in losses and the state government (already cash-strapped) having to bail out the electricity board out!

The deal was flawed and lopsided in every aspect. I have covered Enron's Dabhol project from inception, even visiting the site at Guhagar, spending two days speaking to officials and the project-affected villagers whose land was snatched from right under their nostrils. I was convinced that the power project would not be good for the state or the people. Apart from the dollar-based tariff, the other Enron imposition was that MSEB would have to buy 90 per cent of the power produced at Dabhol.

The cost would then work out to Rs. 2.40 per unit (at 1997 prices) said Enron. However, when MSEB first bought Enron power (around October 1999, I have been informed) it was pegged at Rs. 4.02 per unit which climbed to Rs. 4.10 until it touched Rs. 7.80 in November 2000. And still rising!

Somewhere down the line, MSEB woke up to the fact that buying 90 per cent of Enron power would mean 'backing down' 700 MW of MSEB production capacity. Mr. A.D. Golandaz, vice-president of the MSEB Workers' Federation consisting of 55,000 members tells me that Maharashtra state has installed power production capacity of 13,500 MW while the actual demand is only 11,000 MW.

But MSEB produces only 9,000 MW. Why? "MSEB is not doing proper load management and therefore the demand and supply shortage is apparent," he justifies. Enron on the other hand maintains that the price of power that MSEB is bearing would not have been so astronomically high had MSEB purchased 90 per cent of the power and not reneged on the contract by buying only 60 per cent of it.

"Why did the state government seal this deal when MSEB was ready to generate an additional 800 MW," asks Golandaz. In 1998, MSEB made a 'profitable surplus' of Rs. 250 crore while the year 1999-2000 shows a deficit of Rs.1,000 crore! Golandaz who is also the co-convenor of the Enron Virodhi Sangarsh Samiti attributes the loss directly to Enron.

The state government is fishing into its contingency fund set aside for natural calamities and is preparing to shell out Rs. 114 crore as 'part payment' to MSEB to enable the latter to pay up its dues of Rs. 262 crore to Enron. After once bringing Enron to its knees, the state government has now compelled a proud MSEB to prostrate with a begging bowl. What a crying shame!

No sooner had Enron threatened to invoke its letter of credit and speculate on international arbitration, than leading newspapers carried reports citing political observers as having said that Maharashtra's status as the most favoured destination for foreign investment would take a beating. Pooh! It is well known that all those who battled Enron and ousted them from their respective countries -- several developing nations -are today happier by their achievement.

The Congress government, then ruling the state, should have scrutinised Enron's track record before making a decision to grant the multinational a massive multimillion dollar power project. Cancelling and renegotiating the deal to settle political scores and perhaps make some money in the process is even more appalling. Scrapping the power project altogether was the better option that the Shiv Sena-BJP had.

But they did not exercise that. Today, the MSEB, the government and its people are paying for the mistakes of the erstwhile governments. But like the saying goes, it's never too late. It is indeed better to get rid of loss-imposing multinationals than to keep them going. The state should learn to cut its losses at the outset rather than wait till debts loom large and wide. Never mind if the government has to beg, borrow or steal, it is far more practical to scrap the Enron project and pay up penalty than suffer the ignonimity of being intimidated and bamboozled.

Lessons learnt
As for such multinationals, they should learn their lessons well. Enron, I think, may have already learnt it. Way back in 1995, on my visit to Dabhol in heat of May - during a phase when the company was riddled with allegations ranging from forcible land acquisition, corruption, exploitation of villagers to environmental fallouts and overpricing - I had asked Thomas White, chairman of Enron Operations Corp. where exactly Enron had erred.

I still remember his reply: "When foreign investors come here, they tend to take the opinions of only government officials. We did the same and by not consulting the public and discussing the project with the local public, we have erred. Now, we only want to fix it." Enron will have to fix it. Or else, leave.