Dabhol chief quits in Enron India dispute

Enron Chairman Kenneth Lay continues to tour India, meeting with officials to solve its six-month dispute

By staff and wire reports

MUMBAI, India -- The president and CEO of Enron's embattled Dabhol Power Co. subsidiary quit Tuesday.

Neil McGregor left to "pursue other challenges," he said, after his contract expired June 30, adding that he stayed on to welcome Enron Chairman Kenneth Lay.

Lay is now visiting India in the hopes of resolving a bitter six-month dispute between Dabhol and its client, a local power board.

"One has to move on in life," McGregor said. He added he was leaving for Singapore, where he worked with Enron before joining Dabhol.

Lay continues meetings with officials

Houston-based Enron owns a 65 percent of Dabhol Power Co. Its stake in the $3 billion power-plant project is the biggest investment by an overseas company in India.

But the project has run aground in a dispute with Maharashtra State Electricity Board, which owns 15 percent.

The board, which serves westerly Maharashtra and India's business capital, Mumbai, claims Enron charges too much for power. It has defaulted on millions of dollars in payments.

The second phase of the power plant was due to come into play in June. But the contractors mothballed it, as Enron and Maharashtra slapped each other with legal notices terminating their deal.

Looking for a solution

Lay met for two hours Monday with India's power minister, Suresh Prabhu.

"It was a productive meeting and we had constructive discussions," Lay said. "Dabhol is a difficult problem but we agreed that it needs to be resolved quickly."

He was due to meet Tuesday with Indian Finance Minister Yashwant Sinha. India has so far declined to step into the dispute.

Enron has made moves to pull out of the project, including the use of political force majeure, normally used to dissolve business deals disrupted by coups.

But Lay said Enron has not decided whether to pull out of the project.

"It is premature to say that. It will depend on the solution we are able to work out," he said. "We have been and continue to be very committed to India."

Lay is also slated to meet Maharashtra state officials later this week.

Reuters contributed to this report.