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Uncertainty marks Kerala's stance on Enron power project

D Jose in Thiruvananthapuram

The 513 mega-watt Enron power project at Kannur in north Kerala has once again run into rough weather.

The Central Electricity Authority has returned the proposal for a categorical "yes or no" from the Communist-led government.

The communist-led state government is not politically reconciled to the prospect of welcoming the US multinational.

The state government had opposed the Enron participation in the Rs 15 billion project promoted by K P P Nambiar and Associates in April 1997. Ever since, it has been taking a nebulous stand on the project, especially when the project comes up before the CEA for techno-economic clearance.

The letter the government sent on the eve of the crucial CEA meeting on March 23 to accord the final clearance was non-committal -- neither for nor against Enron.

Representatives of the Kerala State Electricity Board -- it has a power purchase agreement with the promoter -- and the state government were present at the meeting. Apparently, they refused to commit to anything without consulting the political bosses.

It is learnt the CEA refused to give the clearance in the absence of a clear-cut position of the state government.

While Enron was expecting an automatic clearance from the CEA in view of the neutral position adopted by the state government, sources said that the latter felt a positive recommendation from the government was imperative for the smooth execution of the project.

This, according to sources, is in the light of the initial reservations expressed against the project by the government, the criticism of the promoters by the KSEB for frequent revision of project costs, and the mounting demand in Maharashtra for reduction of the cost of power produced at the Dhabol project.

The demand for a 30 per cent reduction in the tariff is gaining strength in Maharashtra now. Various pressure groups there have also demanded the cancellation of the second phase of the project.

The KSEB wanted the project cost to be brought down considering the present slump in the prices of turbines and other components due to global competition.

Enron's Indian partner Nambiar has been claiming that the project costs were structured in a manner that will enable the company to supply power at a rate cheaper than that of the Kayamkulam project of National Thermal Power Corporation.

Although the government has no serious disagreement with the promoters of the project on this score, lack of political resolve in the Communist Party of India-Marxist, which heads the government, has put it in a fix.

It may be recalled that the then Kerala power minister Pinarayi Vijayan, who opposed the project, is now the state secretary of the party, which has a crucial say in policy matters. Moreover, Vijayan owes allegiance to Politburo member and Left Democratic Front convenor V S Achutanandan, who has a strong grip over the party apparatus and the government.

Achutanandan has been ideologically opposed to the entry of multinationals in power sector.

Vijayan had communicated the state's position on the project to the Centre in a letter. He said that the "Enron controversy" had brought a kind of notoriety to the Dabhol project in Maharashtra. So the Kerala government does not want its project to languish in the middle of protests and controversies.

The state government had taken a non-committal stand on the project after the Central government rendered the need for state clearance irrelevant by raising the foreign investment approval limit from Rs 10 billion to Rs 15 billion.

The political bosses have been keeping mum on the project ever since the limit was raised.

Enron was quite optimistic of passing the final hurdle and launching the work on the naphtha-based project by next month.

However, the announcement in this regard by Enron International vice-president Gregory Blair at Cochin on March 11 saw the resurgence of the environmental lobby. A convention convened by the environmentalists at Kannur recently has vowed to resist the project at any cost.

The convention has formed squads to prevent Enron from starting work on the project at Irinavu.

A massive rally is scheduled to be organised by the end of April to mobilise public opinion against the project.

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Kerala