Sucheta Dalal :Cabinet clears repeal of SICA winding up of BIFR (20 August 2001)
Sucheta Dalal

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Cabinet clears repeal of SICA, winding up of BIFR (20 August 2001)  

The Dabhol Power Company, has indeed come a long way — from extreme arrogance to the much-needed humility. After years of hogging news space because of its skill in “educating” Indian policy makers, politicians and the media, it is issuing full-page advertisements to explain its side of the story. From a stage, where a triumphant Rebecca Mark (who had just inked a deal with the Maharashtra government) haughtily told journalists that being a private company Dabhol did not need to disclose even its internal rate of return, it is now announcing its returns through paid advertisements. The problem is that the multinational still does not get it. It continues to harp about jobs, schools and hospitals, when it is clear that all this is built into its high cost tariff, which the State is unable to pay. Although its advertisements suggest transparency, it has threatened legal action against the Maharashtra State Electricity Board (MSEB), if the latter obeys an order of the Electricity Regulator and hands over the Power Purchase Agreement (PPA) to the NGO, Prayas. It is a little late in the day to talk about being the largest foreign direct investor when even the lay person knows that Indian institutions have much more to lose by investing in Enron. Also, no other State is willing to buy the Dabhol power at anywhere near the rate that it was billing Maharashtra. We have indeed come a long way from 1994.

Dropped price

Sources close to Enron claim that the US company is very clear that it will have to get out of India — the Dabhol Power Company imbroglio along with its problems in California is tarnishing its reputation and causing havoc to its share price. It has to cut its losses and get on with business. Also, after the Godbole committee report, its bank of sympathisers is badly depleted. The question is, how much will it settle for to quit? Enron lobbyists who earlier planted news reports saying that it would cost us over Rs 30,000 crore plus to get rid of Enron may like to note that it is now willing to quit with just a $1 billion. This is about a tenth the original claim and the official negotiations are yet to begin.

Supporting Bhushan

A Senior Executives Meeting (SEM) of financial institutions (FIs) held on January 18, 2001, considered the reports of MECON and Ernst & Young on the steel industry and noted this view: “At current steel prices, no new steel plant would be viable and a long term view was necessary on steel prices looking to the capital intensity of such projects.” That is why, many institutional chiefs have privately supported the Steel industry’s efforts to cut production and hike prices. This makes ICICI decision to fund another greenfield project by Bhushan Steel even more curious — especially since the steel projects have brought the lending institutions to ruin. As a private institution, ICICI has already declared that it is not answerable to government but will its savvy institutional shareholders and foreign investors ask it why it refuses to look at the macro picture when it comes to this particular company?

No e-data for JPC

A lot has changed between JPC-I of 1992 and JPC-II of 2001 — and most of the change has been in level of automation in Indian markets. Trading volumes had soared on the two major stock exchanges to over Rs 10,000 crore a day, as investors clicked into a single trading screen to execute orders. Information Technology companies also led the bull run, which triggered this scam. Try telling all this to the joint parliamentary committee. While MPs have asked thousands of relevant and irrelevant questions, some of which require volumes of data to be provided as answers, they have refused to accept any of the information in electronic form. No floppies, CDs or electronic mail for the JPC. Every thing has to be printed out in 40 copies with Hindi translations and sent to the JPC Secretariat at an enormous cost to those under scrutiny. Maybe IT minister Pramod Mahajan needs to start his e-governance campaign with JPC members as his first target. If members of the highest executive body in the country are averse to receiving data and information in electronic form then e-governance is certainly a long way off.

Vanishing aspirin

It is now recommended as a first aid for heart patients before being rushed to hospital. Yet, after the drug control authorities slashed aspirin prices on June 29, 2001 several leading brands such as Ecospirin, Colsprin, Disprin have suddenly become scarce. Suddenly this once discredited and acidity causing drug is much in demand. In fact, consumer organisations have demanded that manufacturers be compelled to keep supply lines open at least for heart patients.

-- Sucheta Dalal