The Enron Saga



Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

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Introduction

In 1996, Rebecca Mark, CEO, Enron Corporation, managed to wrest the controversial Dabhol Power Company (DPC) from the jaws of death. Five years later (2001), the survival of DPC was at stake. Both DPC and the Government of Maharashtra (GoM) have been accused of corruption and economic insanity. With the controversy regarding the price of power still raging and the latest payments crisis that the Maharashtra State Electricity Board (MSEB) faced, both Enron and GoM were desperately looking for a solution.

The MSEB was not able to lift even the first phase supply fully. It was caught in a vicious circle with high fuel prices leading to low off take of Dabhol power into the grid. This in turn caused the unit capacity cost to rise. In October 2000, the price of Dabhol power touched Rs. 7.09 per kWh, due to the high price of fuel and the worsening exchange rate.......

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In January 2001, responding to Business World's query on the state government's stand, Padmasinh Patil, energy minister, GoM, said, "We will set up a review committee shortly. There are complex issues to work out". Analysts felt that the possibility of Enron selling out or invoking penal clauses in its contractual agreement with MSEB, to exit could not be ruled out.

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