Orient Longman, 2000, 226 pp.
Review by Romi Mahajan
Two of the most important material consequences of the wave of liberalization
and privatization that has swept the globe over the last decade and a half
are: (1) The selling for a song of publicly-owned infrastructure to private
corporations and (2) The granting by newly liberalizing states of huge
forward contracts, on onerous terms to the nations in question, to multinational
corporations. These two factors have already led directly to the retrenchment
of millions of working people and to the further immiseration of already
impoverished populations. On the other hand, they have created enormous
wealth for large corporations that can no longer guarantee for themselves
super-profits from the already saturated markets in their home countries.
Enter the power sector, one of the most important areas of any economy.
Power generation and distribution is a several hundred billion dollar industry
and is highly susceptible to the type of corrupt and one-sided arrangements
that have come to define the process of brigandage that has been variously
called liberalization and free-marketization. In the power sector,
perhaps no corporation has had more success than Enron in subverting democracy,
violating human rights, and ensuring a perpetual state of bankruptcy and
beggary in the countries where is erects its mammoth plants. No case is
more monstrous in its implications than the one of Enrons 2115 Megawatt
power plant located in Dabhol, on the coast of Maharashtra, Indias most
wealthy province. The story of this boondogglehow the deal flouted all
acceptable financial, technical, legal, and moral normsreads like fiction
of the absurd.
Power Play, Abhay Mehtas meticulously researched and well-documented expose
of the machinations of the $60 billion dollar, Houston-based Enron Corporation
and the collusion of Indian officialdom with it is one of the most important
indictments of neoliberal globalization that I have seen. With painstaking
detail, Mehta describes the ways in which Enron flouted Indian law, pressured
international agencies, managed the large media, and ran roughshod over
the Indian people to win the largest contract, military or civilian, in
the history of India, one that will ensure it a cash flow of over $30
billion over the next 2 decades.
Mehta discusses the projects inflated capital costs, the fact that the
State Electricity Board in Maharashtra is contractually obligated to buy
Enron power at a rate that is up to ten times higher than the cost of domestically-generated
power, the fact that the state government has been forced to back down
existing coal-based power plants, and the financial and contractual irregularities
that force not only the state of Maharashtra, but also the sovereign Republic
of India, to guarantee paymentswhether or not the power is generated and/or
consumed. Enron demanded an exorbitant guaranteed rate of return and, furthermore,
ensured that the contract is vetted in English, not Indian, Law. For an
18 percent increase in Maharashtras installed capacity for power generation,
the state has hypothecated 70 percent of its total budget to Enron. All
this in a state that already had an installed capacity that exceeded even
its peak demand load for electricity.
Enron is famous for its violation of human rights in Latin America and
Asia and for its flouting of environmental standards wherever it sets up
power plants. Its chair, Kenneth Lay, is a key benefactor of the Republican
Party. Mehta argues that a divestment campaign is necessary in order to
show Enron that it cannot get away with murder. The growing movement against
the unfettered power of corporations would do well to put Enron on its
list of worst violators; Mehtas book provides shocking information that
is invaluable in the fight and includes a primer on the power industry.
Even those of us who are inured to the excesses of corporations and consider
it a matter of normalcy that corporations dont believe in free markets,
but in captive markets, will be shocked at the sheer magnitude of the Enron
scam in India, one of the poorest countries in the world. Power Play is
the best book on the subject. Z
Romi Mahajan is a doctoral student in Communications at the University
of Texas, Austin.