It was only the other day that the Supreme Court had justified the fuel linkage provided by the state government to three independent power producers (IPP) including KPPL. However, the LDF Government will reconsider the project if KPPL could tie up with a new partner after renegotiation. The techno-economic clearance for the project will be given by the Union Government only if the State Government approves the financial closure.

"Since KPPL has elected Enron International Limited, a wholly owned affiliate of Enron International, as its joint venture partner which was at the centre of a raging controversy, which had achieved a kind of notoriety and created a lot of confusion and agitation, public anger, litigation and protestagainst Dhabol Project, we are not in a position to agree to the financial structure proposed," says the letter by the state government to the union government.

"We don't want our Kannur Power Project to languish in protests and controversies. The Enron controversy has proved Enron tried to get away with imposing highest capital cost, complex tariff structure to benefit the company, high rate of return which was exorbitant."

"Hence the basic character of the company is questionable. Moreover, the contemptuous attitude of Enron towards India revealed through their claims of providing development assistance to India in the Dhabol project also makes the financial tie-up of KPPL with Enron unacceptable to the state,"says the letter.

Interestingly, all three writ petitions challenging the PPA signed between the MSEB and Dabhol Power Company in 1993 in Delhi and Bombay High Courts were dismissed. The Supreme Court had also dismissed the special leave petition filed against the judgment of the Bombay HighCourt. The Bombay High Court had observed, "The factual position that emerges from the above discussion leads to the conclusion that the petitioners have not been able to place on record before this court any material justifying their allegations as regards corruption, bribery, fraud..."