Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

The Polit Bureau of the CPI(M) strongly denounces the decision of the Union Cabinet to permit the multinational corporation, Enron, to strengthen its hold on the Dabhol Power Corporation by allowing it to enhance its equity. As a result, the stake of the Maharashtra State Electricity Board (MSEB) will be reduced to 10 per cent against 30 per cent holding prevailing today. By this decision, the Union Cabinet has allowed the phase-II of the Dabhol Power Project to continue unhindered.

This decision comes at a time when there is a widespread demand for a review of the phase-II of this project. Already the price of power from phase-I has skyrocketed to Rs. 7.80 per unit. Given the counter-guarantee of the Central government and the power purchasing agreement which stipulates that irrespective of the demand, the MSEB will purchase power from Enron, the monthly bills of MSEB have swelled to Rs. 180-190 crores. After the implementation of phase-II, these monthly bills will grow to around Rs. 725 crore per month. This means over 80 per cent of the MSEB revenues will have to be paid to Enron. This is a surest recipe to cripple the MSEB.

In the meanwhile, the unit rate of Dabhol power will go way beyond Rs. 9, as against the MSEB’s own generation cost of Rs. 1.50 per unit. As a result of the payments to Enron, the MSEB had to enhance power rates in Maharashtra across the board four times in the last three years. This is imposing unprecedented burdens on the people. Reports suggest that the Union Cabinet has succumbed to US pressures in protecting Enron’s interests. In doing so, the Vajpayee government is imposing greater burdens on the people.

The Polit Bureau of the CPI(M) demands an immediate review of the power purchase agreement with Enron, scrapping the phase-II of the project and withdrawing the counter-guarantee by the Central government.