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The imperialists have
been eyeing India’s huge power sector to gain a share of the massive Rs.26,000
crore market. For that the numerous Electricity Bills passed by the Central
government has aimed at the privatization of the power sector. This
privatization hands over India’s power sector to the MNCs and the local
compradors. The stranglehold of foreign capital of such a crucial sector as
power has not only important economic implications but also implications
regarding the sovereignty of the country. For foreign powers and their lackeys
in India to have control over such a strategic sector as power they can hold the
country to ransom by cutting off the supply.
Through this
sell-out, while the MNCs gain a big market and huge profits it seriously impacts
the lives of the masses. In order to maximize their profits the pliant
government has raised electricity prices enormously and plans to raise them
still further. The high rates are crushing not only the poor but also the middle
classes, in both urban and rural areas. The peasantry, who is already neck deep
in debt, has to now pay huge sums for their electricity bill in order to boost
the profits of the MNCs/compradors. But the process has just started; once the
privatization is complete the prices of electricity would have increased many
fold. Not only this, privatization will badly hit the electricity employees who
will have to face retrenchment, increased work-load and casualisation of labour.
The nefarious deeds
of the parties in power show to what extent they are prepared to go to sell
India’s power to the TNCs and in the process putting a backbreaking burden on
the Indian people. The Enron episode goes to show the extent to which they will
go. The agreement signed at the earlier stages of the economic reforms entailed
buying power from Enron at Rs.7 per unit when at that time the MSEB was
purchasing it at between Rs.1 & 2 per unit. That means to give windfall profits
to Enron the masses would have to pay a minimum of Rs.8 per unit. All the major
political parties were involved in the signing of this notorious agreement — at
the Maharashtra level it was a first Sharad Pawar who was primarily involved;
then it was Bal Thackery’s Shiv Sena;; and at the Centre the first 13-day
government of Vajpayee did only one job, which was to sign a counter-guarantee
for the Enron agreement. Even after considerable hikes over the past few years
the electricity price is about Rs.3-4 per unit.
The recent events in
Maharashtra — the power shortage and the public anger against the MSEB (Maharashtra
State Electricity Board) — have been accompanied by the State governments
decision to privatize power supply and to also re-start the Enron (called the
Dahbol Power Corporation — DPC) company. The orchestrated campaign against the
MSEB and the state-wise power cuts was a clear ploy to create the necessary
environment for the immediate steps announced to privatize power distribution in
Maharashtra and to restart the Dahbol plant at humiliating terms (once again).
The present Finance Minister, has been the chief legal advisor in India of the
collapsed Enron company for it to recover its dues. Also it is the present
Planning Commission deputy Chairman, Montek Singh Aluwalia, who, as the then
finance secretary, gave the Centre’s counter-guarantee to Enron. With such a
bunch of Enron dalals and stooges in power we can well understand what would be
the fate of the new deals being struck.
Background to the Sell-Out
It was the biggest
foreign deal in India involving FDI of a massive $3 billion. The plant was to be
based fully on LNG imported from the US oil giants in the Middle East. The two
US TNC giants, GE and Bechtel, owned 10% share each in the Dabhol plant. The
Indian banks (IDBI, IFCI, SBI, ICICI) have loaned a huge $1.3 (over Rs.6,000
crores) to Enron — unlikely to be ever recovered. In the first phase the plant
began to generate 744 mw of power in 1999 and in the second phase another 1444
mw of power was to be added. The MSEB was to buy the full amount of the power or
else pay a penalty of 90% of the value. This agreement was given a guarantee by
the Maharashtra government and the first phase was counter-guaranteed by the
Centre. So, Enron made sure that if the MSEB did not pay up, the money would be
given by the Maharashtra government. And if the latter did not pay the Centre
would have to pay.
Two years later, in
2001, the highly profitable MSEB which had been pushed to bankruptcy due to the
high payments to Enron, rescinded on the agreement and stopped payments to it.
Meanwhile, in the US, Enron, which had risen to become the seventh largest TNC
in the US and was the biggest donor of the Bush election campaign, was involved
in high level fraud and deceit. It went into bankruptcy cheating the American
public of billions. In India, its two partners, General Electric and Bechtel,
(both of which are also close to the Bush administration — both are heavily
involved in Iraq) bought out Enron’s 65% share for a pittance of $20 million.
{65% of a $3 billion project would amount to roughly $2 billion or $2,000
million!!}Now, these two giant companies own 86% of the DPC.
Since 2001 this DPC
plant (of which only the first phase was ready) has remained closed. The Godbole
review Committee, in a report presented in 2001, suggested the plant be
restructured and re-negotiated. He openly stated that the government, while
signing the agreement, had allowed the DPC to massively inflate costs and charge
to huge amounts for electricity. The two mafia TNCs have clamped a case on MSEB
for a huge Rs.26,000 crores for breaking the agreement. Besides this, the Indian
Government has been forced to spend to spend crores in arbitration in
international courts. Recently in London and ‘independent’ arbitration panel
awarded Bechtel damages of $125 million (Rs.550 crores) from Maharashtra and its
agencies. Now a US court has attached the 15% share of MSEB in the DPC as it has
not paid this amount by the due date of May 27th. Bechtel’s two affiliate in
Mauritius and Netherlands have filed two additional claims against the GOI to
recover the value of their lost investments in DPC which could total $ 6 billion
(i.e. a gigantic Rs.2½ lakh crores!)
Not only did Enron,
in its two years rob the country (through MSEB) of millions of dollars; not only
has it swallowed up the massive Rs.6,000 crores lent it by Indian banks; the
TNCs now want to further rob the country of millions more through ‘damages’,
‘arbitration’ etc. and our servile rulers are quietly paying up as they
themselves have swallowed crores of rupees while sighing the agreement and even
now in finding a solution.
Reconstruction Package — A double
sell-out
The government is now
promising to pay all the foreign liabilities while it plans to not only write
off the Rs.6,000 crores of Indian Bank loans, it is asking them to lend another
Rs.1,500 crores to re-start the plant. To settle the issue the UPA government
has set up a GoM (Group of Ministers) headed by the Defence Minister(???),
Pranab Mukherjee, to organise the sell-out. It is asking the NTPC and GAIL to
help re-start the plant.
The government has
agreed to pay out a massive Rs5,600 crores bailout package to the foreign
promoters and lenders of the dubious US power company and its contractors. The
amounts include $ 230 million to offshore lenders; $450 million to Export Credit
Agencies; $138 million to Overseas Private Investment Corporation; $111 to OPIC
political risk insurance; and $350 million to GE-Bechtel’s stake and dues. This
amounts to a total pay-out of a massive $ 1.3 billion to the imperialists. All
these are amounts owed by the bankrupt Enron which now is being paid by the
Indian government.
All the deals are
being conducted in complete secrecy, without any disclosure to the media or even
to parliament. And when the matter was raised in the Rajya Sabha the Minister of
State for personnel, Pachuri, said "it is improper to give out details since
the issue is at negotiation stage". So, the entire deal will be conducted
secretly and finally it will be disclosed only when it is all over!!! The GE
chief (CEO) was in India recently and he was given the importance more than that
of a prime minister of another country. He met the Prime Minister and the
ministers of power, finance and commerce and industry. After dragging the
country through international courts he has now said he is willing to
immediately start the plant — no doubt n his terms.
Not only this, the
massive pay-out to the foreign lenders is planned to be done through funds taken
from the Employee’s Provident Fund (EPF). In Feb.2005 the government set up a
Gas and Power Investment Company Ltd (GPIC) for this purpose. The GPIC, of which
the Indian Banks are a part, has asked the EPF Commissioner for the funds to be
collected through bond floated by the GPIC. Such risky investments by the EPF go
against its own rules which states that it must only invest in government
securities. With the massive new investment pumped into the Dabhol plant
amounting to over Rs.13,000 crores (Rs.5,600 to the foreigners + Rs.1,500 crores
to be raised by GAIL & NTPC + the write-off of the Rs.6,000 crores lent by the
Indian banks) it is clear that the DPC will be unviable unless the centre gives
huge subsidies of the electricity charges are hiked up enormously . This is over
and above the high cost of imported LPG that will be used as the main fuel.
But, revival they
will to keep the imperialists happy.
High Cost to the Country and its
People
While the Enron, BE,
Bechtel and their Indian agents have made huge money without even generating
much electricity the country will suffer gigantic losses and the people are
being forced to pay the high cost of the electricity. These TNCs not only made
vast sums in the first two years of payment at the rate of Rs.7 per unit, but
also through penalties, arbitration agreements and fraudulent credit and
insurance charges. Why should India pay all this when it has been defrauded by
these companies? Why should the foreign creditors be paid and not the huge loans
given by the Indian banks? Why should employee’s savings be used to pay the
foreign creditors? The reason for all this is that those taking the decisions
are their agents for which they get fat commissions. Those that struck the first
deal are none other than all who are in power in key positions. And the chief
person behind today’s economy, the Finance Minister, was de facto on the Enron
pay-roll as their lawyer.
The people of the
country must demand that all details of the agreements past and present be made
public and not done in secrecy. They must try all these culprits in a public
trial demanding the disclosure of the funds they swallowed, which should be paid
back with compound interest. They must demand compensation from Enron and the
other two TNCs. Electricity for the poor, middle classes and the peasants must
be subsidized while that for the rich must be charged at high rates.
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