Enron Chairman Denies Call for India Sanctions

The chairman of Houston-based Enron Corp. told India’s prime minister that he had not advocated U.S. sanctions against India if the company fails to get the $1 billion it spent to build a controversial power plant here, a company official said Sunday.

Kenneth Lay had outraged Indian officials with his reported comments in an interview with the Financial Times, slamming the government over the project--India’s largest foreign investment.

Lay was quoted as saying by the paper: “If they try to squeeze us down to something less than cost then it basically becomes an expropriation by the Indian government, and that would send an incredibly damaging signal to the international capital markets and investment community as to making any future investments in India.”

He reportedly told the newspaper that there are U.S. laws “that could prevent the U.S. government from providing any aid or assistance or other things to India going forward if, in fact, they expropriate property of U.S. companies.”

Chief minister Vilasrao Deshmukh of Maharashtra state, where the plant is located, criticized what he called “the strong-arm tactics of Enron.”

The plant stopped production in May after its sole customer, the Maharashtra State Electricity Board, canceled a 7-year-old power purchase agreement. Enron says the board had no right to cancel.

Federal representatives and officials of the Dabhol Power Corp., an Enron subsidiary, are trying to resolve differences that have threatened to shut down the $3-billion project.

The two-phase project was to be the world’s biggest natural gas-fired power plant, able to generate 2,184 megawatts once completed.

In a letter to Prime Minister Atal Behari Vajpayee, Lay said, “I have not asked anyone in the U.S. government to consider sanctions. I did not say that the Dabhol Power issue had been expropriated.” An Enron official in Bombay read excerpts of the letter to Associated Press on condition that he not be identified by name.

Politicians in Maharashtra state say DPC’s electricity is overpriced and demanded the renegotiation of the purchase agreement between the company and the state utility.

Enron has said it wants to sell its 65% stake in the Dabhol Power Co. project for a minimum of $1 billion. The utility holds a 15% stake, and General Electric Co. and Bechtel Corp. each have a 10% stake.