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Context of 'June 2001: Enron Shuts Down Expensive Indian Plant After Afghan Pipeline Fails to Materialize'

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The Dabhol power plant.
The Dabhol power plant. [Source: Enron]The Indian government approves construction of Enron’s Dabhol power plant, located near Mumbai (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 the Dabhol liquefied natural gas power plant, intended to provide one-fifth of India’s energy needs by 1997. (Nayar 2/27/2000; Allison 1/18/2001) It is the largest gas-fired power plant in the world. Earlier in the year, the World Bank concluded that the plant was “not economically viable” and refused to invest in it. (Dugger 3/20/2001)

Enron’s $3 billion Dabhol, India power plant runs into trouble in 1995 when the Indian government temporarily cancels an agreement. The plant is projected to get its energy from the proposed Afghan pipeline and deliver it to the Indian government. Enron leader Ken Lay travels to India with Commerce Secretary Ron Brown the same year, and heavy lobbying by US officials continue in subsequent years. By summer 2001, the National Security Council leads a “Dabhol Working Group” with officials from various cabinet agencies to get the plant completed and functioning. US pressure on India intensifies until shortly before Enron files for bankruptcy in December 2001. US officials later claim their lobbying merely supported the $640 million of US government investment in the plant. But critics say the plant received unusually strong support under both the Clinton and Bush administrations. (Burger 1/18/2002; Milbank and Blustein 1/19/2002)

Vice President Cheney is holding a series of secret energy task force meetings to determine the Bush administration’s future energy policy. Starting at this time, Enron leader Ken Lay and other Enron officials take part in a least half a dozen of these secret meetings. After one such meeting, Cheney’s energy task force changes a draft energy proposal to include a provision boosting oil and natural gas production in India. The amendment is so narrow that it apparently is targeted to only help Enron’s troubled Dabhol power plant in India. (Milbank and Blustein 1/19/2002)

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 in December. 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. (Dugger 3/20/2001) 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. The larger part of the plant is still only 90 percent complete when construction stops around this time. (Dugger 3/20/2001) Enron executives meet with Commerce Secretary Donald L. Evans about its troubled Dabhol power plant during this year (Stevenson 2/21/2002) , and Vice President Cheney lobbies the leader of India’s main opposition party about the plant this month. (Stevenson 2/21/2002)

Enron’s logo.
Enron’s logo. [Source: Enron]Enron files for Chapter 11 bankruptcy—the biggest bankruptcy in history up to that date. (Curwen 1/10/2002) However, in 2002 Enron will reorganize as a pipeline company and will continue working on its controversial Dabhol power plant. (Houston Business Journal 3/15/2002)

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