The controversy over Enron Corp.'s $2.5 billion power project in India has finally ended. Five years after plunging into India, the Houston-based company has started building its liquefied-
natural-gas power plant. To reach this point, Enron had to reverse a cancellation of its contract, secure approvals from three successive governments, and win 24 lawsuits.
Rebecca P. Mark, 42, chairman and CEO of Enron International, is largely credited with rescuing the project. Today, Enron is India's largest, most visible international investor. Mark visited India in February to announce that she was spearheading an additional $10 billion of investment in the power sector. She spoke with BUSINESS WEEK special correspondent Manjeet Kripalani in New Delhi.
Q: How did you get the deal cleared?
A: I think what worked was that we never stopped talking. Our contract allowed us to arbitrate through legal international means, so we did, through Indian and international courts. Everyone realized a solution was necessary. Once the project got started, there was a layer of people [in government] who supported it. Our faith was in these decision-makers.
Q: Do you see the Enron case as precedent-setting?
A: I don't think the process of reform would be moving so quickly had it not been for this. [Cancelling our contract] was such an interruption of the process, it just could not [be allowed to] happen. Many people all over the world looked at the situation and decided this was something we don't want to see happen again.
We [also] had to walk a fine line. We were being abused. People said all kinds of things about us, but we could not defend ourselves. We had to bite our tongues and sit quiet.
Q: What do you think you did right or wrong in India? What did the Indians do right or wrong?
A: I think most people thought [our project] was too grandiose, that [liquefied natural gas works only in] industrialized countries like Japan. They said no, you can't do that for India; India only burns coal. The problem is, not enough people, in India and the world, look forward.
Another thing people thought we did wrong was not taking a local partner. But all the local partners with multinationals in power projects in India have gone nowhere. Also, the government would not let us take on a partner, because they wanted maximum foreign direct investment.
People also thought we didn't do it "the Indian way," whatever that means. We were extremely concerned with time, with getting everything down to the letter, because time is money for us. People thought we were pushy and aggressive. But you have to think of the massive bureaucracy we had to move. How do you move a bureaucracy that has done things one way its entire collective life? You have to be pushy and aggressive.
What the Indians did, you can't say it's "wrong." People got heated up by the politicians, who got involved in things that were really commercial debates, not political ones. They didn't understand the minefield they were walking into.
Q: Do you think you priced the deal too high initially?
A: We came on in a period of such restrictions that we simply had to price in the risk. In India, you're supposed to have 20% import duty on equipment. But when it comes right down to it, very common in a project is that it didn't end up being 20% but whatever the customs inspector wanted it to be on the day you got there. So you have to price that risk in. We were coming to a process that was new to us. We had no model to follow.
Q: How has the role of foreign investors in India changed since Enron's troubles first began?
A: The role of the foreign investor will become easier, clearer. We hope our troubles have smoothed the way for others. That Enron was able to win 24 lawsuits in India should give comfort to other investors coming to India.
Q: How is the investment climate in India now? How does it compare with China, for example?
A: When Enron first came into India five years ago, everyone was looking China-ward, whereas Enron was earmarking major investments for India. This year, at [the World Economic Forum in] Davos, there was a total change. Most people who had gone into China were now redirecting their focus to India.