Dabhol Power Company

The Dabhol Power Company was a company based in India, formed to manage and operate the Dabhol Power Plant. The Dabhol plant was built through the combined effort of Enron, GE, and Bechtel. GE provided the generating turbines to Dabhol, Bechtel constructed the physical plant, and Enron was charged with managing the project through Enron International.

The infrastructure development

Starting in the mid 1990s, Unocal and its partners planned to build a 1,000 mile gas pipeline from Turkmenistan to Multan, in Pakistan. Cost: about $2 billion. Also considered was a route from Iran to Multan which was seen as feasible due to Iran's huge oil and gas reserves. However, In 1996 when the Sanctions against Iran were imposed, the FBI blocked the plan, and it was forcibly cancelled. A proposed 400 mile extension from Multan to New Delhi would bring some of the gas into India's network of gas pipelines. Cost: $600 million.

A sea route from Gwadar, Pakistan, to Dabhol, India, was never considered despite both locations being coastal towns.

Dabhol Power Station

Main article: Dabhol Power Station

The plant was to be constructed in two phases. In March 1995, the ruling Congress Party in Maharashtra lost to a nationalist coalition that had campaigned on an anti-foreign investment platform. In May, hundreds of protesting villagers swarmed over the site, and a riot broke out. Human Rights Watch and Amnesty International eventually charged the security forces guarding Dabhol for Enron with human-rights abuses; Human Rights Watch blamed Enron for being complicit. On August 3, the Maharashtra ordered the project to be halted because of "lack of transparency, alleged padded costs, and environmental hazards." Construction ground to a halt. By then, Enron had invested about $300 million into the project.

Phase One

Phase one was set to burn naphtha, a fuel similar to kerosene and gasoline. Phase one would produce 740 megawatts and help stabilize the local transmission grid. The power plant's phase one project was started in 1992 and finally completed in two years behind schedule.

Phase Two

Phase two would burn liquefied natural gas (LNG). The LNG infrastructure associated with the LNG Terminal at Dabhol was going to cost around $1 billion.

In 1996 when India's Congress Party was no longer in power, the Indian government assessed the project as being excessively expensive and refused to pay for the plant and stopped construction. The Maharashtra State Electricity Board (MSEB), the local state run utility, was required by contract to continue to pay Enron plant maintenance charges, even if no power was purchased from the plant. The MSEB determined that it could not afford to purchase the power (at Rs. 8 per unit kWh) charged by Enron. The plant operator was unable to find alternate customers for Dabhol power due to the absence of an open free market in the regulated structure of utilities in India. From 1996 until Enron's bankruptcy in 2001 the company tried to revive the project and spark interest in India's need for the power plant without success. The project was widely criticized for excess costs and deemed a white elephant. Socialist groups cited the project as an example of corporate profiteering over public good. Over the next year Enron reviewed its options. On February 23, 1996, Maharashtra and Enron announced a new agreement. Enron cut the price of the power by over 20 percent, cut total capital costs from $2.8 billion to $2.5 billion, and increased Dabhol's output from 2,015 megawatts to 2,184 megawatts. Both parties committed formally to develop the second phase. The first phase went online May 1999, almost two years behind schedule, and construction was started on phase two. Costs would now ultimately climb to $3 billion. Then everything came to halt. The MSEB refused to pay for all the power, and it became clear that getting the government to honor the guarantees would not be an easy task. Although Maharashtra still suffers from blackouts, it says it does not need and cannot afford Dabhol's power. India's energy sector still loses roughly $5 billion a year. Today, Dabhol, in which Enron had invested some $900 million, sits silent. This plant was taken over by Ratnagiri Gas and Power Private limited in July 2005.

Dabhol Today

The power plant Phase I which was re-named Ratnagiri Gas and Power Pvt Ltd (RGPPL) started operation in May 2006, after a hiatus of over 5 years. However, the Dabhol plant ran into further problems, with RGPL shutting down the plant on 4 July 2006 due to a lack of naphtha supply. Qatar based RasGas Company Ltd. started supplying LNG to the plant in April 2007.

The Dabhol Power plant consists of 3 blocks, each consisting of two GE make frame 9 gas turbines and one GE steam turbine. Block 2 commissioning work and Gas turbine 2A trial runs started on 25 April 2007. The Dabhol Power Plant Project is operational as of April 2009 with 900 MW RLNG fired running capacity but there are problems due to non-availability of operational insurance, also the decision is largely dependent upon political developments in the country as well as performance of newly repaired rotors. As 1 each of the combined cycle generator unit (total 3) is under shutdown.

External links

1. Good and credible information, from a US House of Representatives report, 2002

2. Interesting though non-precise case study on Dabhol from IIT Madras

See also

• Trans-Afghanistan Pipeline