SC reopens Enron issue

The Supreme Court on Wednesday reopened the issue of legality of the power purchase agreement between US power company Enron and the Maharashtra State Electricity Board. It issued a notice to the Centre, Enron, the Maharashtra government and the Dabhol Power Corporation. This move comes seven years after the Centre for Indian Trade Unions ( Citu) filed its appeal against the Bombay high court order dismissing its petition.

Earlier, the Supreme Court had rejected Citu's plea that the validity of the whole project should be examined. It had decided to probe only the accountability of the state government and its officials in the ill-fated project which is still entangled in legal knots.

However, all these years, it had not actually gone into the question of accountability. Today, the Bench headed by Chief Justice RC Lahoti expanded the scope of the appeal to include all questions regarding the agreement.

Rajiv Dhavan, counsel appointed by the court, submitted that several events subsequent to the dismissal of the Citu petition by the Bombay high court necessitated a second look at the agreement.

In 1997, the court felt that the project was fairly well advanced, and the Maharashtra told the court that the cost of power had been reduced and made reasonable.

Therefore the court declined to examine the validity of the contract and the clearance given by the Central Electricity Authority. All these assumptions have now been proved wrong. Even the Comptroller and Auditor General of India had criticised the state government for unrealistic pricing of power.

Tracing the history of the Dhabol project, CITU alleged that though cheap power was promised earlier at Rs 2 per unit, it was later increased to Rs 4.95 per unit.

The $ 3 billion dollar mega power project was set up in Maharashtra by Enron and its associates in 1996 after signing the agreement in 1993. The state electricity board's refusal to pay higher price for power led to a series of cases resulting in Enron closing its power generation since May 2001.