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Enron
The Enron Controversy:
Techno-Economic Analysis and Policy Implications

Girish Sant and Shantanu Dixit PRAYAS

Subodh Wagle CEEP, University of Delaware, USA

The Enron Controversy, Prayas, Sept. 1995

4 Ÿ The Enron Controversy

Contents

Summary 1. Power Purchase Agreement (PPA) Between Dabhol Power Company and Maharashtra State Electricity Board: Structure and Implications 2. The Enron Deal: Why the First Stage Should Be Cancelled 3. The Enron Controversy: Alternative Options For Electricity Generation In Maha rashtra

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14 36

41

4. MNCs: New Development Messiahs and Old Justifications: Investigating Enron s Claims of Providing Development Assistance To India 49 5. Roots of Enron Controversy: Fundamental Ills of Power Sector 62

The Enron Controversy/Prayas/September 1995

GlossaryŸ 5

Glossary
BHEL: Bus-bar: CEA: Co-generation: GoI/GoM: GT: IPP: IRR: MSEB: NTPC: PLF: SEB: Lakh: Million: Crore: $: kWh: MW: Bharat Heavy Electricals Ltd. Point at which power is fed to the grid by a power plant Central Electricity Authority Efficient generation of power and steam simultaneously (usually in industry) Government of India / Maharashtra Gas Turbine (used for power generation) Independent Power Producer Internal Rate of Return (a measure of profitability) Maharashtra State Electricity Board National Thermal Power Corporation Plant Load Factor (capacity utilisation) State Electricity Board 100 thousand 1000 thousand 10 Million U.S. $ = 32 Rs (in 1995) one Unit of electricity Million Watts (power)

The Enron Controversy/Prayas/September 1995

Preface
PRAYAS is a voluntary initiative in the fields of energy, health, and learning and parenthood. Members of the Development & Energy Group of PRAYAS have been working on various issues in the power sector for last four years. The major effort was a two and half year study on alternative planning for the power sector of the state of Maharashtra in India. A report based on this study


References: The Enron Controversy, Prayas, Sept. 1995 Roots of Enron Controversy Ÿ 63
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