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Dabhol: Short Circuit

As every school boy in India knows, Enron also financed Dabhol Power Company in India, which also went bankrupt six years ago, but has now been revived, without Enron

By the time this appears in print, two top executives of a now bankrupt company called Enron Corporation will have been safely lodged in prison in Texas, USA. Kenneth Lay and Jeffery Skilling, former chief executives, if convicted, could face decades in prison.

The timing is perfect. As every school boy in India knows, Enron also financed Dabhol Power Company in India, which also went bankrupt six years ago, but has now been revived, without Enron. The company has started producing power after a long hiatus and started feeding the grid just as Lay and Skilling were being hauled before the court in Texas for fraud. And what about Rebecca Mark, the Enron lady behind Dabhol who masterminded the project and negotiated it with politicians in Delhi and Mumbai and was at one time on first-name terms with most of them? She quit Enron conveniently just before it collapsed and has not been heard of since.

Rebecca rang me out of the blue one morning and said she wanted to see me. I was at that time looking after the economic policies of the Bharatiya Janata Party and advised the party on Dabhol and other issues.

Rebecca Mark turned out to be quite a gal, as they say in New York. But she couldn't fool me. She was only a business school graduate while I was a full-fledged engineer who had designed power stations before turning to economics. I told her over sandwiches and tea that Dabhol was far too expensive for a plant of that size and could not cost more than $2 billion, not $3 billion which was Enron's price tag. Knock off that extra billion and you will have no problem, I told Rebecca Mark .

“But why are you so concerned?” she asked. “It will be our headache, not yours.”

“It will not be your headache,” I told her, “For you will not be there after a couple of years. And it is we who will have to pay through the nose.”

The Maharashtra State Electricity Board (MSEB) refused to purchase power from Dabhol Power Company at what it considered prohibitive prices and the power station was shut down.

Enron made a lot of noise back in Texas but the company was on the point of collapse at the time and Rebecca Mark was gone with the bonus of over half-a-billion dollars, according to rumours.

I have never been a great admirer of multinational companies and the so-called business gurus, many of Indian descent, who flit from seminar to seminar depositing their wisdom on us mortals.

Quite a few of the companies of these gurus - have gone bust in the past few years and several hot-shot CEOs are in prison. It is only in India that they are treated like demi-gods.

Just before Enron's collapse, The Economist of London - which is actually a mouthpiece of multinational companies - carried a long piece on Enron, praising it to the skies. Two weeks later, Enron was gone.

Companies like Enron are essentially political institutions and not economic ones. Enron is reported to have paid over half-a-billion dollars to the Republican party's election fund. Although it is supposed to be a company dealing in oil and gas, it did not have a single engineer on its staff. An engineering company without engineers can only be headed for disaster!