Dabhol Debacle : Mixed Economy At Work

A mixed economy is not capitalism. It is rule by pressure groups. It is an amoral, institutionalized civil war of special interests and lobbies, all fighting to seize a momentary control of the legislative machinery, to extort some special privilege at one another’s expense by an act of government—i.e., by force. In the absence of individual rights, in the absence of any moral or legal principles, a mixed economy’s only hope to preserve its precarious semblance of order, to restrain the savage, desperately rapacious groups it itself has created, and to prevent the legalized plunder from running over into plain, unlegalized looting of all by all—is compromise; compromise on everything and in every realm—material, spiritual, intellectual—so that no group would step over the line by demanding too much and topple the whole rotted structure. If the game is to continue, nothing can be permitted to remain firm, solid, absolute, untouchable; everything (and everyone) has to be fluid, flexible, indeterminate, approximate. By what standard are anyone’s actions to be guided? By the expediency of any immediate moment.

In 1992, the intricate networks of the pull peddlers across the governments of 2 countries resulted in the creation of the Dabhol Power Plant project. Frank Wisner, ex-ambassador of the USA in India, enabled the creation of the Dabhol Power Company, an investment company owned by Enron, General Electric, Bechtel and Maharashtra state government’s Power Development Corporation, to get a $2.8 billion contract from the Indian government to construct a power station in India, thanks to Wisner’s influence on the Indian government.

Construction was planned in two phases starting in 1992. Phase one was set to burn naphtha, a fuel similar to kerosene and gasoline. Phase two would burn liquefied natural gas (LNG).

In March 1995, the ruling Congress Party in Maharashtra lost to a nationalist coalition that had campaigned on an anti-foreign investment platform. This coalition created a riot against the power plant in May 1995, by mobilizing hundreds of local villagers. The Dabhol Power Company did what it was programmed to do. It tried to protect its property by using force in retaliation to force of the rioters.

In 1996, the Indian government assessed the project as being excessively expensive and refused to pay for the plant and stopped construction. The Maharashtra State Electricity Board (MSEB), the local state run utility, determined that it could not afford to purchase the power (at Rs. 8 per unit Kwh) charged by Dabhol Power Company. The plant operator was unable to find alternate customers for Dabhol power due to the absence of an open free market in the regulated structure of utilities in India. The company kept trying to revive the project and spark interest in India’s need for the power plant without success.

Socialist groups cited the project as an example of corporate profiteering over public good. Over the next year Dabhol Power Company reviewed its options. On February 23, 1996, Maharashtra and Dabhol Power announced a new agreement. Dabhol Power cut the price of the power by over 20 percent, cut total capital costs from $2.8 billion to $2.5 billion, and increased Dabhol’s output from 2,015 megawatts to 2,184 megawatts. Both parties committed formally to develop the second phase. The first phase went online May 1999, almost two years behind schedule, and construction was started on phase two. Costs would now ultimately climb to $3 billion. Then everything came to halt. The MSEB refused to pay for all the power, and it became clear that getting the government to honor the guarantees would not be an easy task.

In 2000, it was selling electricity to the Maharashtra State Electricity Board for Rs. 4.67/kwh. While the Board was only charging residents of Maharashtra Rs. 1.89/kwh. In 2001 it was shut down, after the Maharashtra SEB, refused to pay the bills for Nov 2000 and Dec 2000.

The power plant Phase I which was re-named Ratnagiri Gas and Power Pvt Ltd (RGPPL) started operation in May 2006, after a hiatus of over 5 years. However, the Dabhol plant ran into further problems, with RGPL shutting down the plant on 4 July 2006 due to a lack of naphtha supply. Qatar based RasGas Company Ltd. started supplying LNG to the plant in April 2007.

The Dabhol Power Plant Project is operational as of April 2009 with 900 MW RLNG fired running capacity but there are problems due to non-availability of operational insurance, also the decision is largely dependent upon political developments in the country as well as performance of newly repaired rotors.

India’s energy sector continues to lose roughly $5 billion a year.

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Bhopal Tragedy: Some Politically Incorrect Facts

The Indian government had its heavy hand on every aspect of the Bhopal plant, from its design and construction to its eventual operation. Initially, the facility merely imported raw pesticides, such as one called Sevin, and then diluted, packaged and shipped them. This was a relatively safe and simple operation. But, in accordance with industrial policy, Union Carbide was under constant pressure from the government to cut imports and reduce the loss of foreign exchange. To do this, Carbide was required by its state-issued operating license to transfer to the Bhopal facility the capability to manufacture the basic pesticides and, subsequently, even their ingredients. Everything was to be “Swadeshi.” i.e. “Indianized.” Even the chemical production processes used in Bhopal were developed by Indian researchers .

To produce Sevin, carbon tetrachloride is mixed with alpha-naphthol and a chemical known as methyl isocyanate, or MIC (the chemical that leaked in the accident). Liquid MIC is a highly unstable and volatile chemical, and a deadly toxin. . . . MIC was not required in Bhopal while the factory simply packaged Sevin, its final product. But the logic of “industrial self-sufficiency” and “technology transfer” required the manufacture of Sevin from scratch—and that meant dealing with its hazardous ingredients, including MIC.

So in 1971, the Union Carbide factory opened a small plant to manufacture alpha-naphthol, and began to import and store MIC—a chemical which never had to be in India in the first place, except to satisfy the Indian government.

In 1977, based upon projections of growing demand, the Bhopal factory began to increase its alpha-naphthol facilities dramatically. A new $2.5 million plant—designed, of course, by an Indian consulting firm—was built. Ten times larger than most similar plants, it at once displayed design problems of scale: equipment would not work or would turn out to be the wrong size. Ultimately, faced with an inoperable alpha-naphthol facility, the factory’s management decided to [open an MIC production facility in 1980].

What had begun as a Carbide subsidiary for packaging pesticides was now a government-directed business manufacturing and storing a deadly chemical in a technologically backward culture. Those were not business decisions. Those were political decisions.

One last element of government policy helped lay the groundwork for the pending disaster. The area around the plant had been deserted at the time Carbide moved in. But in 1975 the local government, in a re-zoning scheme, encouraged thousands of Indians to settle near the plant by giving them construction loans and other inducements. In effect, government first helped to make the plant unsafe, and then drew the people into the path of the coming gas cloud.

Add to all this the fact that after the plant was opened, the technologically trained Americans who built and ran it were sent packing and were replaced by under-educated locals—most of them friends, relatives, and cronies of local officials. They allowed operations to continue despite the fact that all five redundant safety systems had been broken for months. One of the incompetents let water from a hose leak for hours into one of the chemical tanks, which caused a dangerous reaction. The night-shift employees were all sipping tea in the lunch room while gauges indicating rising gas pressure in the tank went off the top of the scale—allowing a pipe to rupture and gush deadly gas into the sleeping community nearby.

No, the Bhopal disaster was not the result of American capitalism: no American capitalists were permitted to be present at or in control of the plant. The gas leak was instead the result of technology decisions and subsidies directed by politicians.

Source: “Bhopal: The Fruit of Industrial Policy,” July 19, 1985 The Intellectual Activist, Vol. 4, No. 2 later excerpted by the Wall Street Journal on Dec. 3, 1986.

Conclusion

If you know justice is blind, and if you still believe blindly that Greedy Corporate American Pigs are the root of all evil, investigate the above claims for yourself. Use your Freedom of Information Act, 2002 and you will find that Government policies can also be the root of some evil.

gov.sg wants to buy a piece of every business because

gov.sg wants to buy a piece of every business because they want to hold them captive on the island. The only thing that stops gov.sg from succumbing to collectivism/liberalism is the freedom of businesses to leave the country if things get worse for them.

But since gov.sg uses a stolen concept. i.e. an ideology of economic freedom without its antecedent truths, it is an unstable model for economic freedom. Sooner or later it is bound to need economic slavery for self-sustenance and to achieve its collectivist welfare goals.

When such a time comes, they will need businesses under their ownership. Any businesses that are too healthy without government ownership or do not intend to succumb to government investment is going to be the black sheep of the .sg society. They will be continually portrayed as evil by the .gov.sg media.

Once all such individualists are gone or enslaved by the government, all that will remain are collectivists who lie that their ownership of private property is merely a means to public service.

As long as people are extremist about extremism being wrong, there will be no place on this planet with a sustainable economic freedom. So my advice to people who make money is: keep your interests mobile.

Dear “people who pretend they’ve read Atlas Shrugged”:

Dear “people who pretend they’ve read Atlas Shrugged”,

Thanks to the standard bad reviews you’ve preached over and over until it got boring, some curious beings among us have actually read it and now think that you were lying. Seriously, I read Atlas only because some pretentious fucker on TV told me it sucked because of “so and so” and I got curious why should he get so sensitive about it if it sucked so bad.

Advice for bad reviewers, Don’t get so passionate in your bad reviews or people will actually start thinking you desperately don’t want the world to read it. Our species only made it so far because of our affinity for disobedience a.k.a curiosity. If you don’t want anyone to read a book, ignore it.

Nanny USA

There was a time when the Americans had really good kick out of making fun of Singapore for being a Nanny state. They blamed the government here for trying to get control every little details of its individual’s lives. Now it looks like USA is the real nanny. The new salt bill proposes to ban salt in New York because the government thinks salt is killing people. They prevent businesses from failing or succeeding because they think people ought to stagnate where they are. If people get better they ought to pay everyone for it. If people get worse everyone else ought to pay for it. Today I had an American tell me that he paid the lowest taxes of his life while he was in Singapore. While a prof of mine who is on a sabbatical in USA has a hard time filling the complex tax forms.

I think the American liberals are real conservatives of USA because they try to conserve the present instead of letting its people make a greater tomorrow.