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May 21, 1998 |
Showing Enron the door was light job, but how long will Kerala grope in dark?D Jose in Thiruvananthapuram
Years ago, a senior external affairs ministry
official who had seen something of the
world wisely stated: "No country gives international organisations a red carpet welcome as does China. And the only place where they (international organisations) need armed
escorts is Kerala!"
The statement, true to the tradition of all such
statements, is a
little blown-up, especially the Kerala bit (for the moment, let's leave the Chinese and their red carpets alone!). But only a little: if not an armed escort, foreign businessmen who come
shopping in Kerala do need to be pretty nimble on their feet.
Or else, they would find themselves out on an
ear, double-quick.
Which brings us to the Enron
case, a case in point.
The rejection of the United States multinational's
proposal for a 513 mega watts project in
Kannur, though keeping firmly with the tradition, has bewildered
many in the Communist-ruled
state. The state is reeling under
its worst power crisis, the government imposed 100 per cent
loadshedding on industrial consumers last year, and the
prospects, at best, looks as worst
as before -- and the E K Nayanar government goes and
calmly necks out the Americans who
could solve the problem!
Enron, for the uninitiated, had proposed to enter
the state in a big way. What made it impossible for
them was not the objection of the Centre for Indian
Trade Unions -- which had tooth and nail fought the
Dabhol project
in court and outside -- but a gentleman named V S Achutanandan who, incidentally, has quite a few bones to pick with the
Kerala CM. Though Achutanandan does not meet
eye to eye with the trade
union lobby, he was as passionate as they about
banning Enron. The Communist Party of India-Marxist politburo
decided to reject the project after Achutanandan and
CITU president S Balanandan spoke against Enron.
For his part, Nayanar, who had promise to
make Kerala a power surplus
state before he leaves office in 2001 and who was favourably inclined
to the project, had to remain a mute witness.
So where does that leave Kerala? In complete darkness, that's where.
"Unless two mega projects are not put
in place," warns a Kerala State Electricity Board
official who requested anonymity, "Nayanar's dream will
remain a dream."
Two projects in the next few years, he agrees, is distant
possibility in a state like
Kerala, which could not make any
addition to its power generation capacity for more
than two decades.
In which case, it is quite safe to
assume, Nayanar's dream might even turn
into an electrifying nightmare. Consider the
situation: The installed capacity of
the state will have to be increased from the
present 1,500 mw to
about 5,000 mw to wipe out deficit. This, at the present price
level, requires an investment of Rs 110 billion. Besides,
large investment is also required for creating infrastructure
for transmission and distribution.
"The state would need about Rs
20 billion to improve the transmission system
alone," confesses another senior KSEB official.
"Where will this money come from if the
government shuts its doors to private and foreign
investors? " asks Professor B A Prakash of the
economics department, Calicut university, "The government seems to
be wanting to get all the power projects monopolised
by the government-owned KSEB. The financial position of
the board and its way of functioning, however, do not give any scope
for optimism."
The power deficit in the state has been galloping as a result
of racing urbanisation. The deficit jumped from 28 per cent
in March 1996 to 37 per cent in
March 1997.
"Power shortage is one of the major reasons for the severe
recession that Kerala economy faces today," Prof Prakash observes.
Cochin Chamber of Commerce president A K
Ashraf is another person who doesn't believe in Nayanar's
dream. He says the ongoing projects are not sufficient to tide
over the crisis. "The government should not have
put a spoke into the Enron project," he says, "It should have been more
open in the light of the wave of liberalisation
sweeping across
the country."
The arguments that Enron's
capital costs are exorbitant and tariff high
have no basis, Ashraf
says -- in any case, couldn't they have thrashed out
the matter with Enron and K P P Nambiar (whose Rs 14.17
billion project is part
of the Kannur package, envisioned to
make Kerala a power surplus state)?
"What
was the need for taking a hasty decision even before looking at
the financial tie-up?" wonders Ashraf, "They should have allowed
the Enron to come in first and then tried to solve the problem
instead of saying a big no in the beginning."
Ashraf said the electricity coming from West Bengal
was not a solution to the crisis. Many industrialists are not
willing
to purchase it as it is prohibitively costly.
By bringing power from West Bengal, the government has imposed
a severe financial burden on the KSEB.
Malabar Chamber of Commerce president P
V Gangadharan, too, is a man who wants desperately to see
the Enron in Kerala. The state will not have
enough power by 2000 unless the Kannur project
is in place, he pronounces.
Interestingly, Nambiar, the promoter of the
project, appears
to be the only one who's unperturbed about
the political hue and cry going on -- he is sure his
baby will make it.
"I am hundred per cent confident that the project
will be implemented with Enron as
the co-developer," he says, "I will fight it out."
The cost of the
power generated by the Kannur project would be cheaper than
that of the National Thermal Power Corporation's Kayamkulam project, Nambiar, a former secretary to the Government
of India, said.
He said he had agreed to tie-up with the Enron after it
showed willingness to invest another Rs 40 billion for developing
the LNG terminal and the
Azhikal port -- these investments would revolutionise Kerala's industrial scene.
"I am
presenting the whole thing before the people of
Kerala. Will they
say no to it?" Nambiar noted that the people of Kannur have
not raised any objection to the project.
Which is quite creditable, considering
the local resistance encountered by similar projects
in the past.
The Kannur project, incidentally, is the first major
private initiative
in Kerala. Earlier, Kerala had been shunning private investments
in power sector
as it had surplus power, thanks to the commissioning
of the Idukki hydel project in the 70s. The scene took a turn for worse as more and more power intensive units came
up in the public and
private sector, lured by cheap power.
But to take on the fresh load, the government could not
commission any project after Idukki. Several state proposals
failed to pass the environmental
test. Powerful local
resistance was another reason, as hydel projects always resulted
in largescale displacement of people
and deforestation.
In this regard, the Silent Valley project
is a glaring example. It was shot down
by the environmentally-conscious people. The Lower Periyar project,
promised by Indira Gandhi in place
of the stalled Silent Valley, is still languishing for permission in
the environment
ministry.
Considering the mounting resistance to hydel projects,
the previous Congress-led government had
lined up several fuel-based
projects in the private sector. However, with the Communist-led
government assuming power in the state, many of these have been packed
off. And the remaining, like the Kannur project, are finding it hard
to overcome the ideological hurdles of
the Communists.
All of which, combined, are likely to leave Keralites groping
in the darkness.
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