The Indian government has granted approval to the US company Enron to enlarge its area of business in the country’s power sector. The company wants to become involved in transmission and distribution, renovation and modernization and the distribution of fuels to power plants.
The new areas of interest were outlined in an application to the Foreign Investment Promotion Board (FIPB). The FIPB approved the US company’s request to amend a foreign collaboration agreement signed in 1997. The latter allowed Enron to set up a holding firm to develop power generation projects in India and to become involved in liquid natural gas infrastructure schemes associated with power plants.
Under the terms of the FIPB approval, Enron India will develop projects initially before forming a new project company to handle each scheme. For every project, Enron India will have to seek the approval of the FIPB.
The US company’s ambitious plans may be thrown off course by the effect of sanctions, imposed on India for testing a series of nuclear devices. The US government, which imposed sanctions immediately after the tests took place, has already persuaded the World Bank to postpone the approval of $800 million in loans to India.
Enron is involved in construction of the Dabhol power plant in Maharashtra. The company does not believe this project will be affected by the sanctions. UK power companies have also indicated that for the moment at least, they will continue to invest in India.