FACTS againest MYTHS V0L-IV-9-1997
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- FACTS againest MYTHS V0L-IV-9-1997
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INFORMATION BULLETIN
97 VOL IV #9
VIKAS ADHYAYAN KENDRA
MYTHS' ABOUT POWER
-by Abhay Mehta
payments due to DPCby the MSEB under the
terms of the contract The State Government has
I following the so-called renegotiated agreement put a lien on all its assets - past, present and future
- in this respect. What is more, the interpretation
by the Government df Maharashtra the other
J of the State Guarantee is through the application
parties involved in the whole issue viz., MSEB and
of English though all the contracting parties are
DPC signed an agreement on August 1996 for the
Indian entities, constituted under Indian law! The
supply of around 2000 MW of electricity to the
Republic of India, in turn has counter guaranteed
MSEB in the form of available capacity and gas
the payments due to DPC. In the case the
for a period of 20 years. The payments constitute
Government of Maharashtra defaulted in its
one of the largest contracts (civilian or military)
guarantee,
the Government of India would be
in the world and the single largest contract in thiscountry’s history. Payments amount to about $! I l (liable for some of the payments due. It would
1300 m. in the first year. Total payments amountI [\.'directly deduct from the constitutionally
to about $ 35,000 million dollars (Rs. 1,25,000' “I i sanctioned share of revenues due to the State of
crores) over the life of the contract. The payments!/ i Maharashtra in case of the GOI having to make
are linked to various indices including the oil pricepl Jjany payments. The Republic of India too has
index etc., so an exact estimation is completely^ Jfstaked all its assets (including those abroad, save
and military) in surety of the payments
contingent on assumption of the rate of change in! y (diplomatic
fe
w S'
due to DPC by MSEB.
various indices. In any case, a conservative low? A
end estimate of the NPV of this stream of payments/ '■('•Though a facade of claims both the government,
about $17 billion to about $23-25 billion at thej'
and the Enron power corp., justify these
^Biddle end.
-..■^developments.
Indeed, the terms for the purchase of electricity
™
by a utility, the MSEB, are unprecedented in tHe\ /g™ : £nro" ts
™ money and
country’s history with payments governed By V t&nology in India's development.
various agreements. These agreements include the A FACT : True but at what cost and at who’s cost?
PPA, the Guarantee by the State of Maharashtra/ '""
. minimum
• •
'(Even the
payments, over the contracts,
the State Support Agreement, the Counter
total well over $ 30 billion. This is for an forex
Guarantee by the Union of India and the Triparti te __ investment of about U$1.6 billion at best, perhaps
Agreement between the GOM, the GOI andjthe
substantially less.
RBI. The terms also include the ‘de facto’ import
/There is absolutely no transfer of either
of nearly everything including the equipmentand'x
its benefits.
the fuel, no transfer of technology, and paymints X technology
tecnnoiogy or
or its
benefits. The
1 ne operating
operating efficiency
efficiency
more or less totally in foreign exchange. Itfec/ W1, [° ^SEB is substantially less than that
includes a guarantee from the GOM that ifth<
Wed
A heat me °f 7605 Btu/™ «
case of default in payments by the MSEB, theS tfte
aWed f°r MSEB against heat rate of 7243
of Maharashtra would be liable for all
^“^cturer to Enron.
# 9 ’97
|
FOR PRIVATE CIRCULATION ONLY
|
Page I
Enron simply appropriates most of the difference.
This amounts to about 4 % of the fuel bill which
starts at Rs. 600 crores for the First Phase and
around Rs 2600 crores for the full project at old
oil prices. [A higher heat rate means more fuel
consumption for each unit of electricity]. Even
this high heat rate is not guaranteed over the life
of the contract. If the turbines decrease in
efficiency over time, this is treated as a change in
costs under the PPA and of course MSEB pays
the difference. Interestingly, BHEL’s turbines can
currently operate at efficiencies in the range of
those granted by Enron to MSEB.
MYTH : Enron is just another player in the
private sector. It enjoys no special priveleges or
concessions,etc. as an investor in India.
FACT : Officially,allowed profits [the return on
equity (ROE)] has been guaranteed at 58.03 % (pre
tax)/31.05 post tax to Enron. It is however, much
higher than that. The IRR in real dollar terms is
about 30%. In contrast, the public sector utilities
(NTPCfor example) theROE, post tax, has been limited
by law to 12%, the existing private sector (The Tata
Electrical companies, Calcutta Electric etc.) wherepost
tax ROE is limited by law to 16%; utilities in the US
where profits are limited to a maximum 13% orfor
that matter anywhere in the world.
Moreover, the law has been deliberately changed
at the specific request of Enron Inc. For example
a 5 word addition to the statute specifically changes
the ROE from 16% to 31.05%. This involves
additional payments to Enron alone, to the tune
of over $ 3.5 billion over and above the
‘guaranteed’ ROE of about $ 4 billion. Together,
direct profits and subsidies at the exchequer’s
expense exceed dreams of mere avarice and greed.
The above profits of over $ 7.5 billion over the
life of the contract' do not include the cream.
Incentive's to induce Enron to invest include tax
holidays which areextendable, exemptions from
duties and levies including sales, duties on sale of
electricity, octroi etc. It does not include fringe
benefits like charging Rs 3.65 lakhs each time for
turning the turbine on, fuel management fees of
$2.5 million,Wees for even injecting the fuel etc.,
etc. ad infinitum. Of course additionally, the
Operations fan'a Management fees payable to a
Enron Subsidiary total over Rs 65 crores in the
first year ofytn| first phase alone, ad nauseum.
FACTS against MYTHS
MYTH: The Shiv Sena-BJP Government secured
a better deal with Enron.
FACT : Lest we forget: The State Government
had first canceled the project on the basis that it
was unsustainable, that it would “adversely affect
Maharashtra”, that it was against “Public Policy”
and “public interest” and “against the interest of
the state”. In a solemnly verified suit, it had
submitted to the Hon’ble Court, on oath, that “the
said Agreement is null and void ab-initio, interalia, on account of its being violative of several
statutory provisions, public policy, consumer
interest, public interest and interest of the State
suffers from the vice of misrepresentation by the
1st Defendant and/or its principal shareholder
ENRON and is conceived in fraud.” However, it
had abruptly changed its stand, purportedly to
renegotiate the deal, contending to have effected,
inter alia, a substantial reduction in tariff.
The Government now admits that the cost of Phase*
I (695 MW) of the renegotiated project has not
been reduced, but in fact has increased without
any reduction in the tariff whatsoever.
Additionally, the renegotiated deal involves a
substantially larger contract for 2184 MW as
opposed to 695 MW in the original contract. It
involves contractually binding payments by the
MSEB to the Company increasing from about $
400 m. (Rs. 1380 crores) a year in the old contract,
to payments of about $ 1.45 b. (Rs. 5000 crores),
for both phases every year and possibly much
higher, for a period of 20 years.
MYTH: Enron did not transgress any State Laws.
FACT: As a sequel to corruption, Enron violated
all regulatory laws-and. bypassed all checks ani
safeguards to obtain dishonest and fraudulent
clearances. They even refused to give the CEA
details of costs which Enron was bound to give.
The evaluation of the project by the CEA and
World Bank were negative. Despite having come
to the conclusions, inter alia, that the cost were
‘very, very high’ and the foreign exchange outflows
were excessive, the CEA gave or was forced to
provide clearance.
Although it was a purely commercial contract,
every aspect of this matter was treated by the
government and Enron as secret and no
information is available to the public. The Official
Secrets Act is made applicable to this project.
#3 '97
Page 2
MYTH : There have been no human rights
violations by ENRON.
FACT : Constitutionally, the right to plan the
development and self governance lies with the
‘panchayats’. Each of these ‘panchayats’ have
passed resolutions opposing the project and its
siting and there is active protest and objection by
the local population as a general body of public.
The local population largely boycotted the last
parliamentary elections on this issue. Enron,
however, in collusion with the State and Central
governments bulldozed the area and its inhabitants.
Despite an estimated requirement of 200 acres of
land, 647 hectares (1617 acres) of land has been
acquired forcibly by the government under
acquisition statutes (which is an anachronism and
ought not to be permitted especially at a time when
market forces are ruling the rooste). The region
ifaces further acquisition Notifications for over
20,000 acres has been issued for project related and
other purposes.
Land acquisition has deprived over 3000 persons
of their livelihood. Related acquisition will be on
a devastatingly large scale. A proposed gas pipeline
will require further acquisition of land and is
intended to pass through the centuries old main
village of Anjanvel. Apart of depriving persons of
their livelihood and creating imbalances in an
otherwise stable society, the direct rights violation
have been gross.
There has been unanimous opposition to the
project from the local population and the elected
‘Panchayats’. There have been stray instances of
violence in defence by individuals clearly out of
^frustration over the betrayal of their own judicial
and administrative system. The State above all has
placed its police and RPF at Enron’s disposal.
Reportedly, Enron hired the local police force.
Peaceful demonstrations have been fired upon and
broken up by lathi charges and shelling of tear
gas. There has been large scale and arbitrary arrests
and preventive detentions of thousands of innocent
persons without warrants, terrorising the local
villagers. With false cases kept pending against them
with the view to keep their protests at bay,
❖ Administrative authorities have been exteming
innocent persons and thereby dishousing them.
The statistics are as follows:
❖
Arrests/Detentions: Approximately
3000 from October 94 to June 97
FACTS against MYTHS
❖
❖
❖
❖
Externment/externment notices : 2/10
in 1995/1996
Instances of lathi charges : 5
Shooting: 2
Peoples homes have been invaded,
women’s privacy abused by the police
to the extent of dragging one woman out
from the toilet and the inhuman beating
of a lady and her handicapped (spastic)
nephew.
MYTH : The ENRON project has not been
involved in any fraud or corruption.
FACT : Not so! The Government itself had filed
a suit — swearing that the contracts were induced
by fraud and corruption — in the Mumbai High
Court. It stated that
❖
The project was “unsustainable”; that it
would “adversely affect Maharashtra”, that it was
against “public policy” and “public interest” and
“against the interest of the state”;
❖
That “the said Agreement (the PP A) is null
and void ab-initio, inter-alia, on account of its being
violative of several statutory provisions, public
policy, consumer interest, public interest and
interest of the state, suffers from the vice of
misrepresentation by the 1st Defendant and/or its
principal shareholder ENRON and is conceived
in fraud.”
After a patently dishonest settlement, the
government unconditionally withdrew the suit
without any action.
A senior functionary of Enron, Ms. Linda Powers
had stated that Enron paid $20 million for
‘educating’ Indians apart from project development
expenses. Moreover, the fact of cheating and fraud
are clear from manner in which everything has
gone Enron’s way during negotiations. All thes.e
and numerous others, were known to'the
government who negotiated to their-detriment and
in favour of Enron. Each of these, incidents are
criminal offences under Indian corruption laws but
no action has been taken. No private prosecution
is possible without Government sanction.
.
r
•
M
The benefits ‘negotiated’, to Enronts advantage,
above Enron’s original offer to Enron are:
i. Guaranteed purchase/payments beyond.original
demand;
r 1
ii. excessive lands granted well over Enron’s
requirements
y \l
#9’97
Page 3
iii. On misdeclared interest rates itself, Enron
makes hidden profits of $7 million per annum on
phase I (of 740 Mw). The total project is of 2184
Mw.
iv. Every turbine has a design heat rate. This is the
amount of heat (and therefore, fuel) required to
produce one unit of electricity. By declaring a
higher heat rate, Enron charges for much more
fuel than it actually requires. In connivance with
the government and the State Electricity Board,
Enron has been granted much higher heat rate than
designed. On Heat rate differential over the design
heat rate Enron makes at least $ 12 million per
annum.
❖
that all ecological and environmental laws
including Indian Guidelines on Siting of Thermal
Projects and the Coastal Regulation Zone
notifications and other guidelines internationally
acceptable be enforced strictly and the project
evaluated in that context on all ecological and
environmental counts, and if found violating the
violations be cured or the project scrapped if not
cured or curable;
❖ that the rights of livelihood and traditional
rights of local inhabitants be revived and those
deprived of lands and/or livelihood or income be
rehabilitated in full restitution or recompense;
❖ An investigation into corruption and bribery
v. The State (Maharashtra) Government had
by Indian and US laws;
cancelled the project on grounds of fraud,
❖ a public and independent investigation into
corruption, expensive power etc. Upon
the validity of all clearances granted to the project
‘renegotiations’ and private meetings, the project
and the realtariffs of project be investigated ancU.
was revived. At that time Naphtha'prices were
/disclosed and, if found to have been misrepresented?/
depressed and, in order to show power tariff as'
o or suppressed, the project be scrapped;
having gone down, it was agreed that the
‘renegotiated’ project (Phase I) would use Naphtha I ❖ that the project, its viability and sustainability
as the primary fuel. The State Government and JL be evaluated in the context of the reservations
MSEB have agreed to pay Enron $ 10.5 million yii expressed by the World Bank and the Central
for the
alleged VWH
conversion
of the
plant to
AVA
VAAV- CXAA^gj^XA
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W Naphtha.
A ’I CIJLS AAUAACl. : — • Electricity Authority;
A year earlier the Ministry of Petroleum had been jYl
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that all information connected with and
informed that the plant was even at that time, a y \|
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made Lpubhc
UUUHL cUlll
and ctVcUl'dUlC
available
miill'iniol nlnnt nnn Ttrnc nacirrnori tn
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multiruel
plant and was designed to also run
on ji\ /fl
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y rto the case presenters herein prior to the hearing;
Naphtha. Consequently, Enron is being paid
10.5 million for ‘conversion’ from Diesel toj y* that, in general, it be declared that, and the
Naphtha when the plant could always run on bothjV/Government of India and other governmental
fuels.
I
■■
i compulsory
1
authorities
be directed' to ensure that
^Requisition laws be not used for private or purely
vi. The State Electricity Board and the state
commercial projects in any sector;
government actively and dishonestly falsified
❖
the public’s right to information must be
figures and data to show the project as viable and
protected and strictly enforced;
®
its tariff as reasonable.
Consequently, it is necessary:
❖
That the project be scrapped;
❖
In accordance with the desire of the local
inhabitants and the gram panchayats all work on
the project be stopped immediately and the project
be scrapped;
❖
that no force ought to be used to stop or
hinder any peaceful demonstration and there must
be no arrests or externment orders made against
persons opposing the project and all conventions
on human rights and all rights of expression and
protest be fully respected and followed and that
the coercive powers of the State must not be used
in aid of or at the instance of Enron;
' FACTS against MYTHS
'
❖ that the public’s right of expression, peaceful
protest and peaceful assembly be scrupulously
respected and no force or coercive, preventive or
intimidatory action be taken to suppress, or other
wise affect, such rights.
MYTH: The geographical location and the choice
of fuel, etc. of the project were considered in
India's best interest.
FACT : Given the ‘fact’ that power plants will
be set up and will continue to do so, the choice of
fuel and the location are certainly not in the best
interests of the country, the state and region. For
instance, the choice of fuel. Natural gas per se is
less polluting than coal. But ‘standard’ technology
_
9. W
Page 4
enables coal to be nearly as ‘benign’ as gas
particularly in terms of emissions of SO2.
However, in terms of the gross amount of CO2
produced (1 kg of coal produces more CO2 than
gas) and the problem of ash disposal remain.
Electricity Board (MSEB) by representing that the
project was a 740MWproject originally proposed by
theMSEB sometime in 1980s], Theproject lies in afault
areaprone to earthquakes and has experienced tremors
as late as in April 1996.
In 1993, at the about the same time the Enron
PPA was being negotiated, the company tried to
obtain enormous reserves of gas and oil off the
western coast of India about 350 km north of
Dabhol. The Government choose to hand the fields
to Enron for a song. Enron obtained these fields
and is producing gas from the fields. This gas which
could have been used for power plants, preferably
peaking, is being sold to the Government. The
payments is in foreign exchange. The company is
being paid $2.97 to $ 3.11/MMBTU of gas. This is
about 50% more than the price received by Enron
in the USA and 230% more than its fields in the
Jj/est Indies. Interestingly enough, we would be
paying the same company considerably more
(atleast $4.5 MMBTU per Enron), in the form of
gas imports for the Dabhol power plant!!
Theproject is substantially differentfrom the earlier
project, about 3 times bigger than theprojectfor which
various clearances, including water clearance was
obtained. The first phase fuel was changed from
distillate no 2 to Naphtha. No environmental
assessments for Naphtha appear to have been carried
out.
MYTH : All environmental clearances were
obtained as per the requirements set down by law
and no laws safeguarding the ecology ofthe region
were breached.
FACT: Enron suppressed relevant and necessary
data/facts in their Environment Impact Assessment
(a legal requirement). The effect is that its
environmental clearances are invalid but it has been
permitted to continue construction. The
environmental case per se is relatively weak (i.e.
by comparing it to coal as is being done by DPC
etc.). The manner in which the clearances were
obtained is a gross violation of law.
Theplant is to be located at Dabhol.
Existing guide lines for siting of
thermal power plants would have
precluded this in the first place,
given the ecologicallyfragile nature
ofthe region. Theproject is located
on the estuary ofthe Vashishti river
which
contains
valuable
mangroves, supports marine and
bird life and myriad flora, fauna
includingprotectedspecies offauna,
and biological life, is down river
from the Koyna Dam and has been
allocated waterfrom Koyna. [The
water allocation is fraudulently
obtained by the Maharashtra State
FACTS-againstMYTHS
Breaches ofLaw
Statutorily binding and standard governmental
guidelines ''Environmental Guidelinesfor Thermal
Power Plants'1, were breached asfollows:
Siting criteria requirements were breached. The
requirement ofa 5 km buffer zone between the High
Tide Line and theplant isflagrantly breached (Clause
2.2.2). Theproject is located near mangroves, and the
constructionjetty directlyfaces mangroves on the other
side of the estuary within 500 metres ofthe jetty; the
project is nearAnjanvelfort (breaches ofClauses 2.2.1,
and 2.2.6). Further, Rehabilitationplan were not made
(Clause 3.4 and 4.3.1). Disaster Management Plans
were not drawn up and/or were not drawn up
adequately. In particular, no serious note has been
taken of the fact of storage of huge quantities of
inflammable material in a seismic zone. All clearances
were obtained by inadequate disclosure offacts.
The Ministry of Environment and Forests (MoEF)
requires that each project promoter submits
Environmental Impact Assessment (EIA) reports.
Initially a RapidEIA can be submitted on which the
MoEF gives conditional clearance, but a
[Enron original offer
'Negotiated' by government
Land 200 acres
640 hectares (1617 acres)
Assumed interest rates
Higher rates declared substantially
lower than declared
Minimum State
commitment : 74%
increased to 90%
Enron guarantees 90%
availability
State guarantees 90% purchase
Fuel : LNG
changed to Naphtha/Diesel for phase I
Heat Rate 7450 Btu/kWh
increased to 7605 Btu/kWh
Design Heat rate : 7243
(for older model) Btu/kWh]
’S7'
Page 5
Comprehensive EIA is required/forfinal clearance.
Enron subm itted its Rapid ElA report to the MoEF in
June 1993 andprovisional clearance had been granted
on that basis. The Comprehensive Report was
submitted to the MoEF in June 1994.
The DPC claims that the EIA report is a confidential
document, not even to he made available to the public,
including thepeople living near theproject site. This is
astonishing, since every project must have an impact
on the local people who are an integral part of the
environment.
DPC in a reply insisted that "The Environmental
Impact Assessment report is a document that we are
not at liberty to circulate... “
The MoEF clearances are given on the assumption that
the data in the EIA report are correct and complete.
The EIA claims that the data on which it is based "were
obtained by site visits, discussion with local officials and
with a few selectedpeople ofthe area". Thepersons in
the site area, however, emphatically assert that not a
single one of them has been asked any questions by
Enron’s consultants.
The EIA report states that the land to be acquired is
"wasteland", "unused land", "not veryproductive and
people grow only one rainfed kharifcrop ofpaddy, ragi
(Eleusine coracana) orwari (Panicum milliaceum)".
The horticulture is said to be "poor". "The vegetation
on the project site is scrubby and sparse because ofthe
rocky soil..." Localfarmers, however, insist that about
50% of the land to be acquired is under crop
cultivation, 5% under horticulture, 10% kept for
pasture and 35% underprivateforests. They cultivate
13 cereals, pulse and oilseed crops, often more than one
a year, with good yields. They also grow 17 species of
fruit trees.
the siting of large scale projects in and around their
lands".
That the whole process of obtaining environmental
clearances was a farce is perhaps evidenced by the by
the remarks ofthe EA C members in the same report:
"We might mention that as we were setting offfor
Dabholform Chiplun we were informed by Mr. Iyer
that the Ministry of Environment had accorded
environmental clearance to the thermal plant of
Dabhol Power Company. This came as a surprise as
wefelt that it would have been in orderfor the Ministry
to obtain our committee’s report before
communicating any approval to theproject authorities.
We make thispoint because it is obvious that theproject
would be unworkable at thepresent site if, perchance,
thejetty site isfound unsuitable."
Apartfrom the obvious hazards ofstorage ofmassive
quantities ofLNG in an ecologically sensitive zon^^
components of.theplant are in violation ofthe Coaster'
Regulation Zone Notification. The company has cut
and leveled hills on the shoreline and reclaimed land,
both activities being banned by the Law. Thefueljetty
is being constructed in bestprawn intensivefishing and
spawning grounds in the entire district.
MYTH: The courts have exonerated Enronfrom
all alleged affences etc. against the people.
In their "Report on Field Visit to Dabhol", on 19th
February 1994, submitted by three members of the
Environmental Assessment Committee (EAC), the
committee stated that:
FACT : Not only have the courts exonerated
Enron but the failure of justice has been total.
Various parties filed litigation against the project/
Enron. None has been considered on merits by
Indian Courts. The first challenge was filed by
members of a political party which subsequently
assumed power in Maharashtra, negotiated a
settlement with Enron and then withdrew th^
petition effectively barring others from recourW
to Courts. All other petitions challenging the
project has been rejected by\Qourts on .technical
grounds and there has-been no^reviewof any-o'f
the public’s grievances.
"...as we proceeded along the route to the jetty site,
several groups of local residents submitted a
memoranda... detailing their objections to the Enron
project... To begin with, we discovered that local
communities were unaware ofthe DPCplans till very
recently. It was,for instance, only three days before we
arrived that thefirst noticesfor land acquisition were
received by villagers. This has caused considerable
discontent among the villagers and though our
itinerary was not public knowledge we were stopped
at least eight times along the route by peopleprotesting
Two petitions were filed challenging compulsory
land acquisition. In Enron’s case, land has been
acquired at rates between $ 625 per acre (for mango
orchards) to $ 375 per acre (depending on land
use). The petitions have not been realty considered
by Courts which have merely ^enhanced the
acquisition rates nominally by about $ 250 per
acre (on an ad hoc basis) and dismissed the petitions
without considering any rehabilitation package.
Currently, lands in that area-are valued at upto $
10,000-20,000 per acre. An aCrhlof mango
■ FACTS against MYTHS
#9 *97
Page 6
plantation yields upto $ 2,500 per acre per year.
The lands have been acquired at 30% of their
annual yields. Further, such acquisition completely
ignores the fact that even fallow land serves major
purposes in village/rural life, e.g. grazing, firewood
and regeneration.
Almost 70% of affected persons have refused to
accept any compensation. One environmental
petition was filed but was subsequently
compromised. Serious environmental issues remain
outstanding.
All parties have been denied justice by Indian
Courts and governmental authorities. The
Supreme Court of India has refused to even
cursorily examine the Project.
Tell-tale Glimpses into ENRON's "Track Record"
Action Alert from NAPM* : Enron in Kerala
On August 17,1998 officials of the Enron power corp, arrived at the Kannur power
project area at Irinavu, Kerala with equipment for soil testing and geological surveys.
The local villagers, however, protested against the unloading of the equipment and
eventually forced the officials to pack up. The Enron officials moved to another area
1km away. Here again local villagers protested and demanded Enron to move. Finally,
on August 19, the Enron officials were compelled to leave the area.
The people of Kerala as in Maharashtra are demonstrating against the Kannur power
project launched by the Chief Minister’s nephew KPP Nambia and Enron which has
since undertaken projects in Gujarat and West Bengal. Ironically, though the CPM
in Maharashtra has been opposed to Enron’s Dabhol power project it seems to port
Enron’s project in Kerala!?
In Kerala, 176 acres of prime agricultural land has been acquired for the US 400
million dollar project. There are also 5000 acres that will be required for the
privatization of the port, which is also directly connected to Enron.
Environmentalists, fisherfolk and villagers are all rallying against this project. The
fisherfolk and the environmentalists decry the water pollution and the effluents
which threaten the fish stocks which, in turn, jeopardizes the livelihoods of the
fisher folk and compromises the aquatic, ecosystems in the area. The Association for
the Protection of the Environment (APE),Kannur and the Azhikkal Port Action
Committee are just two of the organziations opposing the proposed project. The
Yuvajana Vedi and Samajwadi Jana Parishad political parties are also opposing the
Enron project in Kerala.
What is the rationalization behind this project? What are the benefits that the people
are supposed to receive? There is a power shortage in Kerala and the project is justified
as providing power to a power starved state. The reality is that Enron has a history
of providing extremely expensive electricty, which is a problem in itself for the local
people.The Dabhol Power Project in Maharashtra is a poignant example of this.
These heightened prices also threaten to inflate the surrounding prices significantly.
Over-priced power is not a viable and acceptable solution to Kerala’s so-called power
shortage as is the case in other parts of the country.
Enron has a history of corruption and criminal proceedings in various projects of
theirs throughout the world. Naturally, the people of Kannur do not want power at
the cost of their livelihood.
* National Alliance for People's Movement
FACTS against MYTHS
# 9’97
Page 7
Subject: ENRON: Watchdog Calls for Investigation into the Enron Bidfor
Wessex Water, UK
Ofwat Customer Service Committes
Watchdog Calls For Investigation Into the Enron bid for Wessex Water
The water watchdog, the Owat Wessex Customer Service Committee (CSC), on August
6,1998 called for the bid made by the Enron Corporation (Enron) for Wessex Water
Pic to be referred to the Monoplies & Mergers Commission.
Customers have raised a number ofconcernsabout the prospect ofwater and sewerage
services in the region being passed into American ownership. The CSC also considers
that the short period allowedfor consultation has made it difficult for the issues to be
examined properly.
Sheila Reiter, Wessex CSC Chairman, said:
"There is no precedent in the water industry for a bid ofthe kind made by Enron. The
company is not experienced in water and sewerage issues and has little direct contact
with consumers. Customers have no means of measuring its past performance. Ifthe
bid is allowed to proceed unchallenged, a precedent may be setfor other acquisitions
to be made from those inexperienced in water and sewerage enterprises.
"The CSC believed that there are sufficient customers* concerns to provide grotfptis
for a full and thorough investigation as to whether the effects ofanjftake&per maglje
against the public interest**.
; ■
3?^ /
As Enron Corporation has no water interests.in the UK there is no dii^mari^fefgrence
to the Monopolies and Mergers Commission (MMC). However, bfaruse*tb€assets of
Wessex Water pic are valued at more than £70 million, the Secretary of State for the
Board of Trade can decide to refer it to the MMC. He will receive advice from the
Director General ofFair Trading (DGFT) under normal merger rules. Prior to this,
the DGFT will receive the views of the. Director General of Water Services (the
Director).
■ The CSC represents the interests ofcustomers ofBoumemough & West Hampshire
Water, Bristol Water, Choldedrton & district Water & Wessex Water;
■ The CSC has three main tasks: to identify the main concerns of customers and to
consult and make representations to the water companies; to investigate complaints
from customers; and to advise and report to the Director on particuloar issues affecting
customers.
ACKNOWLEDGEMENT: We are most greateful to Abhay Mehta in preparing this issue.
M R3CS3 BSMI CKBi tZS3> CEM CSHk ■■ U.1T 8301 1,1
E33O OECI I8S3I EEB8
Facts Against Myths is a monthly bulletin offactual
information on a number ofdevelopment myths and
fallacies, etc, including information against alien
development models, paradigms and false concepts
on caste, creed and gender.
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