BUEC342 Lecture Notes - Lecture 10: Dabhol Power Company, Power Purchase Agreement, Maharashtra
11 Jan 2017
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Political risk: risk created for an investor by actions of host government. Political risks: political violence (war, insurrection, military coup, terrorism, strikes, expropriation/nationalization, broken contracts, currency risks (politically motivated devaluation, inconvertibility, trading risks (embargoes, non-delivery of prepaid goods, kidnap/ransom. Benefits from political risk: less competition, purchase assets at a lower price. Metalclad in mexico: u. s based waste disposal company, recruited by mexico to build facility there 1993, mexico denied building permit and shut down operations, metaclad sued the mexican government under nafta ch. I(cid:374)(cid:448)ested i(cid:374) the e(cid:374)erg(cid:455) se(cid:272)tor earl(cid:455) (cid:1005)99(cid:1004)"s: result was the dabhol power company. Joint project between enron, bechtel enterprises, and ge. Creates one of the largest gas-fired power plants in the world in the. Indian state of maharastra: the dpc and the maharastra state electricity board (mseb) sign an a power purchase agreement in 1993, construction begins in 1995, plant begins operation in 1999, 2001 new party elected in india.
