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Forget communism, Kerala welcomes Enron

D Jose in Thiruvananthapuram

The Communist Party of India-Marxist, which had strongly opposed the setting up of the Dabhol Power Project in Maharashtra by the Enron Power Energy Corporation Inc, has done a volte face in Kerala, where it rules, and rolled out the red carpet for the United States-based multinational company. The state government has cleared the setting up of a 513-mw power project at Kannur by K P P Nambiar and Associates Pvt Ltd in collaboration with Enron. The CPI(M)-led Left Democratic Front government is extremely hopeful that Enron's entry into Kerala will trigger off a massive industrial investment in the state.

The project is expected to cost Rs The clearance came early this months after political confabulations at the highest level. Following the state government's clearance, an agreement has been signed between Enron and Kannur Power Projects Limited (KPPL), a company established by the Nambiar group, for executing the project. Interestingly, Enron will pick up 74 per cent equity of the Rs 14.7 billion project. However the day-to-day management will vest in a committee in which both the firm will have equal representation.

K P Nambiar said that two leading international banks have agreed to finance the project up to $280 million. The project, conceived as a combined circle system expandable up to 1000 mw or more, is scheduled to be completed in 27 months after the commencement of construction work.

The Kerala government-owned Kerala Infrastructural Development Corporation (Kinfra) has already started the work of acquiring about 196 areas of land on the banks of the Valapattanam river in Kannur for the project. The project will initially function on Naphtha but later on switch over to natural gas.

The Nambiar group has already drawn up plans for expanding the port facilities at Azheekal in association with Enron for facilitating the import of liquefied natural gas. Enron plans to import 10 million tonnes of LNG per year. The Nambiars are also planning an LNG terminal at Azheekal.

The Kerala government is examining the possibility of supplying the gas to other industrial power users through dedicated lines from Azheekal. At present, it is awaiting the details of the tie-up and draft report for further action on the project.

Incidentally, the Kannur project is the first joint venture mega power project to come up Kerala, besides being first major foreign project in the state after liberalisation. The establishment of an LNG terminal at Azheekal will also facilitate the proposed mega petrochemical complex in Kasargod.

The present Left Front government has clearing been taking a soft line towards multinationals. The government had made it clear that it will encourage multinationals in areas where they are most needed. Chief Minister E K Naynar had made three trips abroad seeking foreign investments to accelerate the industrial development of the state. However, the visits have seen few major international player show any interest in this communist-ruled state, which boasts cent per cent literacy and ranks first in the human development index in India.