People's Democracy

SEVERAL important developments in the month of January 2001 have led to questions being asked in the bourgeois media about whether the endgame has started for the ill-famed Enron project.

Firstly, the MSEB expressed its complete inability to pay the Enron bills for November and December without the assistance of the State government (Subsequently the November bill was cleared-Ed). When the state government expressed its inability to pay the Rs 159 crore November bill, as well as the December bill of equal amount, Enron threatened to use the Letter of Credit facility and then invoke the state guarantee to collect its dues. (This threat was implemented just before Republic Day.) With the payments crisis maturing so soon, at only the Phase 1stage of supply of power, a big question mark was thrown over the future of Phase II, which is already in an advanced stage of construction.

It was in this backdrop that the American ambassador to India, Richard Celeste, rushed to Mumbai for a two-day visit before his retirement. Having one last look at the Elephanta caves was evidently not the purpose of his visit. His mission was to do some tough talking with the Maharashtra government. This is not the first time that an American ambassador has come to Mumbai on behalf of Enron. Some years back when the SS-BJP government had cancelled Phase 1 of the project, the then ambassador, Frank Wisner, had paid a similar visit. The SS-BJP government subsequently not only revived Phase 1, but also signed an agreement for Phase II of the project. Wisner, after retiring from India, went straight on to become an Enron director.

The extortionate Enron bill has not only bankrupted the MSEB, but also threatens to bankrupt the state government. The burden of this monthly ransom is being transferred on to the ordinary consumers, drought- affected farmers and recessions hit industry. The MSEB has now proposed a 50 per cent rise in rates of electricity supplied to farmers, domestic consumers and powerlooms. While the state government cannot find the funds to pay the Rs 32 crore to its employees in respect of dearness allowance, in the same month it scraped together Rs 114 crore from its near empty coffers to save the MSEB from defaulting on its October bill. The Enron monthly bills are resulting in all-around cuts in expenditure on health, drinking water, EGS and poverty-alleviation schemes. The common people are now feeling the Enron shock, and it is not surprising that public resentment is growing. This has compelled the chief minister to announce a review of the project.

The message delivered by Richard Celeste to Vilasrao Deshmukh was not new :

Celeste has reason to be confident that his threat will work. During the last twenty years the ruling parties, whether Congress or BJP, have been faithfully implementing the dangerous economic policies of liberalisation, privatisation and globalisation. Even though these policies originate in the World Bank and IMF, they know they have the Congress, BJP as well as many other capitalist parties, firmly in their thrall. These parties think that development can take place in India only with the entry of foreign capital, particularly American capital. So this end they are prepared to sell the country; hence the guarantees and counterguarantees to Enron, where nothing less than the assets of the country are pledged as security. A more shameless compromise of the nation’s sovereignty would be hard to find.

The Sharad Pawar government signed the first Phase agreement claiming that the electricity tariff would be Rs 2.40 per unit. After denouncing this agreement as tainted by fraud and corruption, and making it a political issue in their election campaign, the Shiv Sena-BJP combine signed Phase II, claiming that the tariff had been reduced to Rs 1.85 per unit. This was sheer chicanery ! The fraud continued.

In January 1999, the Dabhol Power Company submitted calculations of its tariff for the next 23 years to MSEB, showing that the average tariff over 23 years would be Rs 2.92 per unit. The MSEB in turn certified to the Maharashtra government that the tariff would be Rs 2.90 per unit over 23 years. The purpose of this fraudulent exercise was to get a tariff clearance from the central government, so that the project could obtain finance from the international financial institutions.

It has now come to light that the Central Electricity Authority had placed a precondition on Phase II : the MSEB must ensure that all the power would be absorbed before commencing Phase II. This condition cannot be met by the MSEB today, the MSEB has neither the demand, nor the paying capacity, to purchase the entire output, and that too at five to six times the cost of alternative sources. It is now clear that both the Pawar, and the Joshi-Munde governments had grossly exaggerated the demand for power while supporting the project.

The condition of absorbing Enron power becoming impossible to fulfil, the MSEB has now written to the state government asking what it should do in these circumstances ! But while the state does not need any power from the Enron Plant the government is reported to be going ahead with clearance for two private power projects by Reliance and Ispat, despite opposition from the MSEB!

And what of the present Democratic Front government ? This government is still trapped within the same framework. In its reply to the CITU Special Leave Petition in the Supreme Court, the government had stated the inability of the state to take any measures in the state against rising electricity tariff on account of unaffordable Enron power. The government threrfore had no option but to appoint an expert committee to go into the issues again, and to act on its recommendations. If this is true, then Mr Deshmukh must be commended for not buckling under American pressures.

There was more than a month’s dillydallying over the appointment of this expert committee, promised to be appointed within two days time. The Left parties had recommended the names of Madhav Godbole and E A S Sarma. The former has occupied important secretarial posts in the central government, the latter was secretary in the ministry of power during the UF government. Neither of them can be described as being of the Left. However both have a reputation for probity and impartiality, which is what the present situation sorely requires. The Left parties kept only the interests of the state in mind while proposing these names, chief minister was also inclined to accept them. There was however opposition from the energy minister, Padmasingh Patil. The two members suggested by him - energy economist Kirit Parikh, and Pachauri were both considered to be Enron supporters. Kirit Parikh had discredited himself by being part of the committee which expeditiously recommended the revival of the project including Phase II, after Enron’s Rebecca Mark met Shri Bal Thackeray. Padmasingh Patil is well-known as a protégé of Sharad Pawar. Ultimately a compromise was reached the committee appointed with Godbole as chairman,and Sarma, Parikh and Paushari as its members -Ed.

After the Celeste visit, the finance minister Jayant Patil stated that the state government would pay the Enron bills as long as it was able, and after that it would approach the centre for assistance. This is a notable difference from the position taken by the chief minister. Evidently efforts are being made by the friends of Enron to get the centre to purchase the Enron Phase II power through the national power companies, which would then be supplied to other states. The new minister of power, Suresh Prabhu is from the Shiv Sena, and is expected this by these quarters to somehow 'manage' this. The earlier governments of Sharad Pawar (Congress) and the SS-BJP, out of foolishness or corruption, or both, had signed agreements imposing an extortionate burden of thousands of crores of rupees each year on Maharashtra. It is unlikely that other states of the country will agree to take this atrocious and unsustainable burden of extortion on their shoulders in order to bail out Enron and its friends in the state and central governments.

Though the government of Maharashtra may be undecided about its future course of action in the face of the American threat, the people of the state are becoming increasingly convinced that the state cannot afford the Enron project, and the time has come to agitate on this important issue of survival. The Left and democratic parties must provide leadership to these genuine concerns of the common people.

The Left parties in their meeting on January 28 decided to launch a new phase of the struggle with a mass demonstration at the gates of the Dabhol Power Company on March 1st and a massive rally in Mumbai on March 23. Preparatory rallies in ten districts so far, have met with a huge response.

That this issue has become an issue of grave importance to the entire country has been emphasised by Enron's threats of invoking the counterguarantee given by the centre. A major economic, political, and even constitutional crisis is clearly in the offing for the country, over the unaffordable Enron project.