Enron Corp. Planning Exit Strategy From India Power Plant

Enron Corp. would like the Indian government or one of the lenders on a dispute-plagued power project to buy out the Houston-based energy company's majority stake, officials said.

Such a sale of its 65 percent stake is the best way to go as long as it provides Enron a "complete recovery of capital costs and related expenditures," company spokesman John Ambler said in Saturday's editions of the Houston Chronicle.

Enron has invested $875 million in the Dabhol power plant project.

The plant stopped production in May after its sole customer, the Maharashtra State Electricity Board, told Enron it was canceling a 7-year-old power purchase agreement.

Enron contends the board didn't have the right to cancel. The company also denies the board's allegations that Enron has not lived up to its contract.

Jeff Dietert, an analyst with Simmons & Co. International in Houston, said he doesn't anticipate the matter will be resolved quickly.

Enron's public statement of its willingness to sell sends a signal to companies that might be interested, said Dietert, who added that the energy giant would be well served by resolving the protracted dispute.

"The stock is going to be much better off after the issue is settled," he said.

Dietert said the sharp rhetoric associated with the conflict between Enron and Indian officials have cast a shadow over the company's stock.

Enron chairman Kenneth Lay visited India earlier this month and was hopeful a solution could be worked out after meeting with the country's finance and energy ministers.

Uncertainty has clouded the $3 billion project, India's largest ever foreign investment, after Indian politicians argued the state could not afford Enron's prices and called for renegotiating the purchase agreement.