The document provides a case analysis report on the Dabhol Power Plant project in Maharashtra, India. It summarizes that the Maharashtra government signed an agreement with Enron Corporation in 1992 to build a power plant to address the state's power needs. However, political and contractual issues led to repeated cancellations and renegotiations of the project. These issues along with the bankruptcy of Enron ultimately caused the project to fail in 2001. The plant was later revived and commissioned in 2006 under new ownership.

1. Case analysis report on
Dabhol Power Plant
Presented by-
Jayesh Bhanushali(19)
Jigar Khunt(20)
Kishan Pandya(21)
Lokesh Kumar(22)
Manoj Kumar Mishra(23)
Maulik Amin(24)
Adani Institute of Infrastructure Management(AIIM)

2. Introduction
 To fulfil the power deficiency of state, the Maharashtra government singed an MoU with
Enron Corporation in 1992.
 The cost of project was estimated to be 3029 Cr.
 The PPA was signed in 1993 for 20 year power supply to MSEB.
 The Phase-I was designed for a capacity of 695MW.
 It was planned that under phase-II the plant capacity will be increased to 2015MW from
695MW.
 The work of project commenced from February 1994.
 In 1995 the government changed, the GOM decided to cancel the phase-II of project and
suspend the work of phase-I in aug1995.
 The renegotiation happened in 1996 and the contract was restructured.
 In 1999 the government changed again and same story was repeated.
 2001 the contract failed.

3. Background
 Dabhol Power Company (DPC) was promoted in March 1993 as a 100 per cent foreign
owned private unlimited liability company incorporated in India by Enron Corp., USA
(Enron), Bechtel Enterprises Inc., USA (Bechtel) and General Electric Co., USA, (GE).
 In 1995 the election of a new government(BJP) that was not supportive of the project led to
renegotiation of tariff rates that reduced the profitability of the private firm.
 In 1999 the political scenario changed and congress came to power and again the same
story repeated.
 The committee submitted a report on reduction of charges per unit in PPA but DPC denied
to do so in negotiation process.
 At the same time its main sponsor Enron got stuck in Corruption charges in USA, which
results in its bankruptcy.
 And this dampened the bargaining position of DPC.

4. Parties involved

5. Details of power plant
 Phase 1
 Capacity: 740 MW,
 Cost: $ 1.078 billion
 Fuel: Naphtha
 Operations began: 1999
 Phase 2
 Capacity: 1, 275 MW
 Cost: $ 3.5billion
 Fuel: LNG
 Construction suspended
 Total capacity: 2, 015 MW
 Originally estimated cost of plant: $ 2.8 billion
 Capital cost calculated by DPC: Rs. 4.5 crore/MW (’96)

6. Contractual framework
Enron
80%
Bechtel
10%
GE
10%
MSEB
0%
1993
Enron Bechtel GE MSEB
Enron
50%
Bechtel
10%
GE
10%
MSEB
30%
1998
Enron Bechtel GE MSEB
Enron
65%
Bechtel
10%
GE
10%
MSEB
15%
Finally
Enron Bechtel GE MSEB

7. PPA details
 Power Purchase Agreement for 20 years
 Implemented on BOO basis
 MSEB guaranteed to buy 90% of power capacity
 MSEB to receive 30% profits of DPC annually
 MSEB to bear any increase in fuel price
 MSEB to guarantee a min. fuel purchase
 MSEB to pay DPC $ 220 million per year

8. Payment Security mechanism
 Multi layered payment security mechanism was established for both regular
payment and termination related payment.
 The security mechanism consisted of
 Letter of credit
 Guarantee from GOM
 Counter guarantee from GOI
 Escrow account covering MSEBs cash collection from selected region.
 If GOM failed to pay the company has the potential to seize any state asset.

9. Controversies
 The Government imposed allegation that the procedure adopted for setting of the plant
was unethical and unlawful.
 Lack of competitive bidding (transparent procurement method)
 No EIA (environmental impact assessment) was carried out.
 One-sided MOU signed in 20 days and totally in favor of DPC (World bank).

10. Interest of Investors
 Domestic landers filed a petition in MHC to prevent DPC from issuing final terminate
the PPA.
 Domestic Leander are in favor of acquiring the assets and then sale it to interested
parties.
 Foreign investors are in favor of equity sale of project.

11. Conclusion
 The Dabhol power project was rechristened as Ratnagiri Gas and power Pvt. Ltd.(RGPPL).
 The first phase of plant operation was commissioned with a capacity of 740MW on 1st
MAY 2006.
 The major stake holders were NTPC and GAIL, they were technically assisted by BHEL,
GE and BECHTEL.