Enron prefers India to China for investment
Mon, Dec 06, 1999
Aziz Haniffa
Philadelphia (Pennsylvania): US energy giant Enron International prefers to invest in India rather than China notwithstanding all the difficulties it experienced in India, according to chairman and chief executive Joseph Sutton.
Sutton said the preference was based essentially on the fact that India is a vibrant democracy and China is an authoritarian state.
Sutton, the keynote speaker at the fourth annual Wharton India Economic Forum of the Wharton School of the University here, said, "Our investment preference is for India and not China... because of the government, because of the people, because of the systems in place there, particularly the legal system."
He acknowledged that China's economy is growing faster than India's, including in the infrastructure area that is the focus of Enron International, but, Sutton said, "because they (China) are abandoning democracy, to sustain that will be much more difficult, particularly to a foreign investor. So we are focussed on India."
The Enron power project in Dabhol, Maharashtra, was sanctioned, then scrapped and eventually revived by two different state governments. The Dabhol plant began production earlier this year.
Sutton asserted that Enron "is really bullish on India... We are the largest foreign investor in India and one of the largest businesses in India and we are going to expand more and more."
"India's greatest strength and advantage in the world is the education of its young people and don't ever underestimate that. India has a better secondary education system than the United States does," he said.
Sutton, who said Enron has perhaps become "more famous for its work in India than any place else in the world," said despite all the political upheavals in the country, "India has probably the most stable government of any government we ever worked with."
"India has changed governments five times in the last four years, (but) what I've told people is only a stable (system of) government can transition government peacefully five times in four years," he said.
However, he acknowledged that if governments don't change so frequently, "you can get some work done. The problem you have with transition is that every time you change government, you lose a couple of months and it's hard to get anything pushed forward in a concrete way."
"India, like a lot of new democracies, is infatuated with politics," he said. This infatuation, according to him, was "an obstacle in India's growth. If India can get over it, it's going to take off like wildfire."
He also had praise for India's much maligned bureaucracy, saying it helped to sustain the country's "well defined checks and balances system in the government," which was one of its greatest assets in addition to its "very good legal system."
Sutton said while everybody slams the Indian bureaucracy, "I want to tell you, the bureaucracy saved the day for Enron in India. That system of checks and balances stayed steady" when the political system was undergoing continuing upheavals.
"I'm not advocating a bureaucracy, one that's mired in issues, in infinite details and problems when you are trying to do something," he said. "But it's important to have a professional systems of checks and balances in any government and India provides it."
About the status of Enron's investment in India, Sutton said Dabhol Phase One is in operation, producing power for the Maharashtra State Electricity Board (MSEB). "They (MSEB) own 30 per cent of the project and I am happy to report that they've paid us on time every month so far," he said.
He said Phase Two of the Dabhol project, for which financing of $3 billion has been completed and construction is currently under way, "will be in commercial operation end of 2001."
Sutton's advice for potential investors in India was to find a market and exercise patience. "We took no short-cuts. We got 442 clearances. We at one stage had 42 legal opinions. We put together financing with 15 international banks," he said.
"Be absolutely persistent. Don't quit," he said. "In India if you are persistent and if you are right in an issue, ultimately you will win, unlike in some countries."
India Abroad News Service |
