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Enron to set up fully owned subsidiary

Kevin James in New Delhi

With all the major controversies behind it, the US power multinational Enron Corporation has decided to strengthen its presence in India. It is setting up a fully owned holding company for undertaking all its future investment plans in the country.

The holding company, to be started with an initial capital of $50 million, will launch several downstream projects, mainly for creating infrastructure facilities for importing and supplying liquified natural gas (LNG) to power generation companies in the country, according to sources close to the MNC. Besides, LNG could be used by its own mega power plant coming up in Maharashtra.

To achieve this objective, Enron proposes to go in for joint ventures with local partners, which will set up jetties, terminals and pipeline networks.

Although Enron is yet finalise the location of these projects, sources said the projects will come up near major fuel-based power projects.

Enron's decision to enter the fuel supply segment is significant as a large number of the 50 independent power projects approved by the government are fuel-based. Being the first major player in the segment, the multinational is expected to corner a larger chunk of the business.

The MNC also plans to start more power generation companies in India. However, no concrete decision has been taken so far in this regard.

Industry circles in New Delhi point out that Enron has been quite bullish of late despite the political uncertainties and the poor ratings by Standard and Poor. The company's top brass including its CEO Rebecca Mark have been asking other foreign companies to invest in India.

Enron is the latest multinational to join the league of MNCs which have either set up or are in the process of setting up a fully owned holding company in India. As per the new guidelines for foreign direct investment, foreign companies are allowed to launch fully-owned holding companies.

Korean multinationals Samsung and LG Electronics, Japanese MNCs Cannon and Marubeni, Australia's Gutteridge Hasking and Davey, Canada's Lottex Management Inc and Meridian Peak Resources Corporation, France's Sait Mining SA, Germany's Merck KGAA and Huge Kern Und Libers GMBH, The Netherlands's Ansaldo Singnal NV and Van Mello International BV and Singapore's Rotary Engineering Limited and Three Bond Singapore Pte Limited are among those which have set up wholly-owned holding subsidiaries in India.