What lessons about the requirements for successful investment in India can other foreign companies draw from Enron’s experience with the Dabhol Project? Answer: The Dabhol power plant was initiated in 1992 and took nine years to commence operation. Within this time they face many problems but they never gave up they fought back for their project and at last they gave a successful project to the people of India From this Dabhol project the other foreign companies can get many lessons from Enron’s experience with the Dabhol project and can use this experience for successful investment in the market of India.
When Enron was build the Dabhol project Mark had deep negotiations with the Indian federal government and the state government of Maharashtra as well. If anyone wants to in India they should know how to choose the perfect place for their production. Like Enron choose Dabhol for their power project. They were also aware of the political realities in India. Getting approval of any project in India was really too time consuming and lengthy process as well. They were also good in the legal power. Enron know how to sue any government if they were doing bad deeds with Enron.
The Maharashtra government was accusing Enron that it is doing Illegal things so Enron threaten to pursue arbitration in London. On the other hand Enron also build a public relation by making the people believe that they were doing for Indian people’s welfare when they got bad reputation in the media and in the mind of peoples. And after that the people of India supported a lot to start their project again. The media and the common people are very important if any country wants to invest successfully because it helped them to take the support from the mass.
They were also successful to bring the vote of confidence from that time USA president Bill Clinton. He permits to that project and provided his support. May 1999 Dabhol Phase I (740 megawatts) begins generating power. Mark suggested that if anyone’s Intention is to solve the problem and help the country for a long run anyone can make success in any project. She also added that India has a strong government system though it is quite shaky. The Dabhol Project reflected India’s commitment of encouraging the foreign direct investment though this case showed the shifting political landscape, bureaucratic rules and the rosscurrents between national and state government. At first it was a successful project for Enron but slowly the power project was going down. In 2001 the state of Maharashtra stopped paying for Dabhol as of its $22 million December 2000 bill. The state subsequently seeks to cancel the power purchase agreement. After that Enron started arbitration proceedings. On November 9 2001, Enron disclosed a stunning $586 million in previously unreported losses.