In the wake of the failure of the US energy company Enron, the fates of Enron energy companies around the world are now under discussion. These include Enron-owned operations in the Philippines, India and Australia.
In the Philippines the US company owns an oil-fired power plant in Batangas in the south of Luzon and a second at Subic Bay, north of Manila. Both were set up under build-operate-transfer deals with the government and supply power to the state-owned National Power Corp (NPC). The supply contract for Batangas expires in 2003 and that for Subic Bay in 2009.
The government wants to buy these two power contracts and is likely to be seeking a good deal in the face of Enron’s difficulties. Enron has already offered a 12 per cent discount to NPC, which, the energy minister has said, is due to be privatised later this year.
In India, the Gas Authority of India Ltd is considering a joint deal with Tata Power and BSES to buy Enron’s 65 per cent stake in the $2.9 billion Dabhol power project. Preliminary discussions have started with a view to acquiring the entire holding. The deal is also likely to lead to acquisition of the 20 per cent stake held jointly by plant constructors GE and Bechtel.
Enron had been trying to withdraw from the project last year following a dispute with the Maharashtra State Electricity Board. In September the company had attached a $1.2 billion price tag to its stake but Indian bidders are thought to be offering less than half this amount. Enron has confirmed that talks were underway but that no formal negotiations had taken place.
Separately, a deal between British Gas and Enron Oil and Gas India for purchase of the Enron operation has expired following Enron’s collapse. Discussions are continuing, British Gas said, and a deal could be concluded in the first quarter of the year.
Enron Australia, which controls around 20 per cent of the country’s electricity derivatives market, is also being eyed by potential buyers including US companies such as Duke Energy and AEP. Seventeen companies are said to be interested in the business including a number of banks.
•Enron has agreed to sell Enron Wind, its profitable wind turbine asset, to GE. The company has refused to disclose the sum being paid. As Enron is in bankruptcy the deal depends on approval for Chapter 11 reorganisation in US courts. GE will provide operational support for wind farms currently owned by Enron that will pass to Enron Wind.
