The Senate investigators set out to pin the blame for the Enron debacle on the Bush administration, but when they find out about Dabhol, they’ll have to pin it on Clinton-Gore – where it belongs.
Dabhol was a harebrained, eco-wacko-endorsed scheme to reduce pollutants and carbon dioxide emissions in India by burning imported liquefied natural gas instead of coal. As the multibillion dollar Enron project neared completion and it became obvious to everyone just how hare-brained it was, Enron’s fate was sealed.
So why pin the blame for that on Clinton-Gore? Because the Clinton administration enabled the Dabhol project. Clinton-Gore made it happen.
Enron had bought seats on the administration’s trade missions to India, sitting alongside officials of the U.S. Export-Import Bank and the U.S. Overseas Private Investment Corporation.
In 1995, in the midst of a trade mission to India, Bank and OPIC officials announced their approval of a package of loans and loan guarantees for the construction of a 740-megawatt electric power plant, next to a liquefied natural gas facility which was authorized in 1993 for construction by Enron at Dabhol, India. Surprise, surprise! The power plant was to be built by Enron, too.
In 1997, it was announced that the $2.9 billion Dabhol project would include an additional 1,400 megawatts of generating capacity and an increased-capacity liquefied natural gas terminal.
The whole Dabhol project was scheduled to be completely operational in the fourth quarter of 2001. Enron owned 65 percent of the project. General Electric provided the generators and owned 10 percent. Bechtel Corp. did the construction and owned 10 percent. The only customer for the electricity, the Maharashtra State Electricity Board, owned 15 percent.
An Enron subsidiary, Dabhol Power Corporation, planned to operate the completed facility and to supply the necessary natural gas. Enron had obtained 20-year contracts with the state-owned Oman LNG for 1.6 million tons per year and with Abu Dhabi Gas Liquefaction Company for another half-million tons. In January 2000, Enron, Mitsui O.S.K. Lines and Shipping Corporation of India signed a joint venture agreement to construct, own and operate a liquefied natural gas tanker.
Such a deal.
But, as the Clinton administration must have known, no one but an eco-wacko would even think of replacing India’s coal-fueled power plants with plants burning natural gas. Burning coal is the cheapest way to generate electricity and is relatively insensitive to the price of coal. But the cost of generating electricity with natural gas is highly dependent upon the price of natural gas. And that goes double for imported liquefied natural gas.
This particular gas had to be pumped out of the ground in Oman, sent via pipeline to the brand-new $2 billion Oman LNG terminal, liquefied at a considerable cost, transported by tankers across the Indian Ocean to the Enron terminal, re-gasified, and then burned to generate electricity. As natural gas prices rose during 2000, electricity became so expensive that Enron’s sole customer couldn’t pay for it. The electricity board fell $240 million behind in payments to Enron and then, essentially bankrupt, stopped all payments in early 2001.
In May 2001, under pressure from creditors, Enron shut down the 740-megawatt unit – which had gone online only two years before – and stopped construction on the almost-finished second unit. Ten thousand construction workers were laid off and Dabhol Power Corporation essentially ceased to exist
With the Dabhol project in the toilet, Enron’s stock started its kamikaze dive. As the stock price plummeted, other deals wherein Enron stock had been pledged as collateral began to come unglued.
The Bush administration refused to come to Enron’s aid on the Dabhol project. However, OPIC still hopes to find a buyer for the $3 billion Clinton-Gore project. Fat chance. Even if they gave it to you, you probably couldn’t generate electricity at a price the Indians could afford. That’s how hare-brained the scheme was.
Maybe that’s what the global-warming eco-wackos wanted all along. Burning natural gas produces less carbon dioxide and fewer pollutants than coal. But not burning either produces neither.
If that was the plan, the joke’s on the eco-wackos. Construction of the Kudankulam nuclear power plant is scheduled to start on March 31, 2002. Groundwork for the plant’s foundations has been completed, and onsite housing for thousands of construction workers has been built. Russia is supplying the two VVER light-water reactors and the estimated $2.5 billion in financing. The two 1000-megawatt plants will be providing affordable electricity to the Indians by 2007, without emitting carbon dioxide or pollutants of any kind.