Friday, November 27, 2009

Dabhol power project

November 1993: The Indian government gives approval for Enron's Dabhol power plant, located near Bombay on the west coast of India. Enron has invested $3 billion, the largest single foreign investment in India's history. Enron owns 65 percent of Dabhol. This liquefied natural gas powered plant is supposed to provide one-fifth of India's energy needs by 1997 [Asia Times, 1/81/01, Indian Express, 2/27/00] It is the largest gas-fired power plant in the world. Earlier in the year, the World Bank concludes that the plant is "not economically viable" and refuses to invest in it. [New York Times, 3/20/01] Enron apparently tries to make the plant financially viable by investing in gas fields in nearby Uzbekistan (see June 24, 1996), but it cannot get that gas to Dabhol without a gas pipeline through Afghanistan (see June 24, 1996 and June 1998 (B)). Construction of the plant is abandoned just before completion (see June 2001 (J)).

June 24, 1996: Uzbekistan signs a deal with Enron "that could lead to joint development of the Central Asian nation's potentially rich natural gas fields." [Houston Chronicle, 6/25/96] The $1.3 billion venture teams Enron with the state companies of Russian and Uzbekistan. [Houston Chronicle, 6/30/96] On July 8, 1996, the US government agrees to give $400 million to help Enron and an Uzbeki state company develop these natural gas fields. [Oil and Gas Journal, 7/8/96] However, the deal is later canceled when it becomes apparent a gas pipeline will not be built across Afghanistan, and there is no easy way to get the gas out of the region (see November 1993 and June 1998 (B)).

June 1998 (B): Enron's agreement to develop natural gas with the government of Uzbekistan is not renewed (see June 24, 1996). Enron closes its office there. The reason for the "failure of Enron's flagship project" is an inability to get the natural gas out of the region. Uzbekistan's production is "well below capacity" and only 10 percent of its production is being exported, all to other countries in the region. The hope was to use a pipeline through Afghanistan, but "Uzbekistan is extremely concerned at the growing strength of the Taliban and its potential impact on stability in Uzbekistan, making any future cooperation on a pipeline project which benefits the Taliban unlikely." A $12 billion pipeline through China is being considered as one solution, but that wouldn't be completed until the end of the next decade at the earliest. [Alexander's Gas and Oil Connections, 10/12/98]

June 2001 (J): Enron's power plant in Dabhol, India, is shut down. The failure of the $3 billion plant, Enron's largest investment, contributes to Enron's bankruptcy later in the year (see December 2, 2001). Earlier in the year, India stopped paying its bill for the energy from the plant, because energy from the plant cost three times the usual rates. [New York Times, 3/20/01] Enron had hoped to feed the plant with cheap Central Asian gas, but this hope was dashed when a gas pipeline through Afghanistan was not completed (see June 1998 (B)). The larger part of the plant is still only 90 percent complete when construction stops at about this time. [New York Times, 3/20/01] It is known that Vice President Cheney lobbies the leader of India's main opposition party about the plant this month. [New York Times, 2/21/02] A lawsuit is in motion to get additional government documents released that could reveal what else the US did to support this plant (see October 17, 2002 and February 7, 2003 (B)). Enron may eventually restart the plant (see October 18, 2002).

Central Asian oil, Enron and the Afghanistan pipelines. For a separate page of these entries only, click here.

Dabhol Power Company

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