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Enron in India: The Dabhol Disaster

by Pratap ChatterjeeSpecial to CorpWatch
July 20th, 2000

Just before dawn on June 3, 1997, police officers forcibly entered the homes of several women in Veldur, a fishing village in western India, dragging them into waiting police vans and beating them with sticks. The only "crime" committed by these women was to lead a peaceful protest against the environmental impact of a massive new natural-gas plant being built near Veldur by Enron.

Enron began work on the 2,015 megawatt Dabhol plant in early 1995 with the help of Bechtel and General Electric at an estimated cost of $2.8 billion. That year the company began clearing ground 100 miles south of Bombay on several hundred acres of porous red rock and shrub-covered hills that make up a volcanic outcrop overlooking the Arabian Sea.

According to Amnesty International, one of the women who was arrested in 1997 was Sugandha Vasudev Bhalekar, a 24-year-old housewife whose husband Baba Bhalekar, was a known leader of the protests. At the time of the arrest she was three months pregnant. She testified to the Judicial Magistrate:

"At around 5 in the morning, when I was in the bathroom, several male police with batons in their hands forcibly entered the house and started beating members of [my] family who were asleep.... Being terrified, I told them from inside the bathroom that I was taking a bath and that I would come out after wearing my clothes. I asked them to call for women police in the meantime and to ask them to wait near the door.

"But without paying any attention to my requests, the policemen forcibly opened the door and dragged me out of the house into the police van parked on the road. [While dragging me] the police kept beating me on my back with batons. The humiliation meted out to the other members of my family was similar to the way I was humiliated.... My one-and-a-half-year-old daughter held on to me, but the police kicked her away."

Enron denies any role in this. "The Dabhol Power Company does not employ, second or subcontract police officers at the site. By law, we are required to offset the cost of police officers placed near our site if police officials deem it necessary to preserve law and order when protests occur. We have no authority over their actions," the company claimed in a November 17, 1997 letter.

However, a January 1999 report by Human Rights Watch (HRW) investigators found that Enron was directly paying police salaries. Police Sub-Inspector P.G. Satoshe, who was in charge of this operation, told HRW Enron was picking up the tab for policing Dabhol. "I calculate the number of officers there and according to the (government set) rates, submit a report to the superintendent of police in Ratnagiri... I do not handle any money. The company pays directly to the government," he told HRW.

These forces committed human rights violations in at least thirty demonstrations in 1997 that HRW directly investigated; and they were stationed at the site when police beat protesters at the company gates on three occasions.

Several eyewitnesses also told HRW that a helicopter that was reportedly contracted to the company was used to allow police officers and other state officials to monitor protesters during demonstrations.

"The company could not have been ignorant of the human rights abuses committed by police whom it paid; frequently those abuses sparked further protest, company representatives were in contact with government officials, several cases received press attention, there were legal proceedings, and the company had information sources among its contractors in the villages..." states the HRW report.

Kenneth Roth, HRW's executive director, says Enron's involvement in India has only worsened the human rights situation. "Enron has invested in a democratic country, in a region with no significant strife -- and human rights abuses there have increased," he said.

To add insult to injury, the Maharashtra State Electricity Board (MSEB) wants to pass the skyrocketing cost of the Dabhol plant on to consumers. In May 2000, the Maharashtra Electricity Regulatory Commission shot down a proposal for an 18.9% rate hike ordering the MSBE to limit rate increases to 6.5%.

The reason for the massive proposed rate hike? In 1999 MSEB bought a quarter of its power from the newly completed first phase of the Dabhol power project at Rupees 4.14 per kilowatt hour (roughly 10 US cents) almost double the average local cost of producing electricity and more than three times as much the cheapest producer. What's more, the price of Enron's energy is slated to rise to 33 cents per kilowatt hour by 2017!

The ruling of the Electricity Regulatory Commission but may prove to be a financial nightmare for the Maharashtra government which gave Enron the go-ahead to complete the $1.87 billion second phase of the Dhabol Power Project, the world's largest independent natural gas-fired power plant, by 2001.

Meanwhile, below the power plant at a secluded beach known as Smuggler's Cove, Enron is laying plans for a future expansion of its gas network by preparing the groundwork for India's first natural gas terminal and a 200 mile natural gas pipeline along the western coast of Maharashtra. The company also has active projects in the Indian states of Gujarat, Andhra Pradesh and Karnataka.

For the full HRW report see http://www.hrw.org/reports/1999/enron/.