Dabhol Case Study1
Dabhol Case Study1
Power Plant
Agenda
160000
2007
140000
Capacity (MW) 120000
2002
100000
80000 1997
60000 1995
40000
20000
0 1947
Time
Case Facts
Private
4%
Center
31%
State
65%
Trend in Power Generation according
th
to the 8 Five Year Plan (1992-1997)
Private Sector Participation
8.65.9 The public sector alone will find it difficult to raise sufficient
resources to invest on new power generation projects for meeting the
rapidly increasing demand for electricity in the coming years. The
Eighth Plan, therefore, places considerable emphasis on
attracting private investments for power development. The
major changes in policy announced recently by the Government are
expected to promote private sector participation in power development
in the coming years. As already stated, the feasible addition of 30,538
MW during the Eighth Plan includes 2,810 MW of private sector
projects. It is expected that about 3,000 MW of additional
capacity will materialise over and above what has already been
envisaged as indicated above in the private sector during the Plan period.
This will supplement the capacity additions in the public sector.
Power Distribution in India
SEB’s (State Electricity Boards) had a monopoly of
power distribution within the states
Many SEB’s were close to bankruptcy at the time of
the project as indicated in balance sheet in the next
slide
Tariffs were less than operating costs
Agricultural users got large subsidies (contribute only
to 4% of revenue)
Industrial users set up captive power plants
Capacity Utilization was low (Plant load Factor of
about 50%)
Large T&D losses (22%)
Regulation of the Indian Power
Industry
The Industry was regulated at the Central or
National Level
Central Government’s Ministry of Power was
responsible for regulating and were in charge
of decisions on
Capacity additions
Pricing/Tariffs
Power-related investments
General Environment in India
Central Central/State
Government Government
Enron
Strategies Strategies
Strategies
•Comprehensive Contracts •Build support among public
•Stagger Technology transfer
•PPA •Build support among media
•Undertake investments in
•Payment Guarantee •Transparent bidding process
•several stages
•International Arbitration •Bilateral ties with home countr
Enron followed most Enron followed few •Invest WB, IMF have leverage
Of these Enron followed none
Of these Of these
Conclusion
Enron had initiated this project since it was in line with
its strategy
Enron had structured the project as a PPP very carefully,
building in guarantees into the contract, signing PPAs that
would ensure that the power that they generated would be
bought etc. Yet the project failed.
They may have benefited by slowing down their investment
strategy
They should have been more transparent in their approach
Enron should have made more attempts to garner political and social
support since these were the key elements that led to project failure
Trust and relationships and perhaps some innovative and
flexible contracts might have been more successful than
relying purely on the contract
Thank you!