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EDITORIAL
Matter
of Honour
Throwing
Enron out is no substitute for poor negotiating skills
 There
has been no dearth of advice about what should be done with the Dabhol
Power Corporation (DPC). Dabhol, a subsidiary of Enron, the American MNC,
has an agreement with the Maharashtra State Electricity Board (MSEB) that
could theoretically send the latter into liquidation. It supplies power
at a dollar-denominated rate, which obviously rises as the rupee falls.
A variety of "experts" has recommended everything from nationalisation
to unilaterally breaking the power purchase agreement (PPA). Precedents
have been cited for the second course, notably Croatia and Costa Rica.
It is easy to be swayed by figures, particularly allegations like "at
Rs 7 per unit, this is the world's most expensive electricity". The
fact is, turfing out Enron will do India great harm. For one, the company
was one of the biggest contributors to George Bush's presidential campaign
and has enormous influence on the White House. Second, of the $3-billion
capital investment in the DPC project, $1.2 billion has been borrowed
from Indian institutions.
A larger
issue is at stake as well. One of India's touted advantages over competitors
such as China is its legal system. A contract has, or should have, a certain
sanctity here. To renege on the one with Enron is simply not on, especially
after a Congress government signed the original agreement and a Shiv Sena-bjp
regime renegotiated it. To some degree India's half-baked reforms are
responsible for the mess. DPC uses naphtha as fuel for its phase I plant.
This leaves it hostage to volatile oil prices. Since India restricts futures
trading in petroleum, Dabhol is not at liberty to hedge. Next, MSEB buys
no more than 60 per cent of Dabhol's power. Economy of scale implies the
more power the plant produces, the cheaper each unit will become. The
PPA can be reconfigured to allow DPC to sell to other agencies as well.
The solution lies in making the best of an imperfect deal, not in grandstanding.
Mandate
Bengal
The EC has to ensure a clean election in CPI(M) country
 In
four months' time, West Bengal votes in an assembly election that gives
it an option between Scylla and Charybdis. Chief Minister Buddhadev Bhattacharya
is by all accounts a decent man but in no apparent control of communist
cadre gone berserk. His main rival is Mamata Banerjee, a tantrum-happy
termagant who derives ghoulish pleasure in walking into the prime minister's
drawing room skull and bones in hand. Somewhere between extreme indifference
and extreme reaction lies the truth- and the hapless, beleaguered citizen
of Bengal. Political violence, largely subterranean in the 24 years the
CPI(M)-led Left Front has ruled, is now as everyday an affair as it is
in Bihar. Cretinous and criminalised trade unionism is another headache.
The incineration of two jute mill executives just outside Kolkata on January
13 was Bengal's very own version of the Graham Staines killing.
For two
decade CPI(M)-inspired violence, at any rate intimidation, has gone hand
in hand with "scientific rigging". The term, really, is shorthand
for a near-perfect system that involves manipulating electoral rolls,
coercion of officials and bogus ballots. To suggest this phenomenon alone
has been responsible for the Left Front's five successive victories would
be unfair; to pretend it isn't widespread would be self-deluding. This
summer the Left Front faces its strongest challenge ever, making an uncorrupted
election all the more vital. President's rule, whatever Mamata may say,
is not the answer. Rather, the Election Commission (EC) needs to display
the evangelical zeal it reserved for Bihar in 1995. Laloo Yadav still
won-but only in a fair contest. After he has finished with the EC's golden
jubilee celebrations, Chief Election Commissioner M.S. Gill should take
a flight to Kolkata.
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