New Delhi: United States on April 17 warned that shutdown of Enron-operated Dabhol Power Plant following a bitter payment controversy could affect investment prospects in India.

Without naming either Enron or Dabhol Power Company (DPC), Vicky A Bailey, Assistant Secretary in US Department of Energy, told an Indo-US Conference on Natural Gas that, "recent problems in the power sector have created serious concerns about the investment climate in India's electric power sector and the creditworthiness of potential consumers of natural gas."

"The key message here is that what happens in the power sector can affect investment prospects in the natural gas sector when electric utilities are the end user of the gas," she said.

US Embassy Deputy Chief of Mission Albert Thibault said Dabhol was a reflection of problems facing power sector in India.

Doubting sanctity of the contract would mean death of potential investments, he said.

Maharashtra State Electricity Board (MSEB) had in 2001 scrapped its contract to buy "expensive" electricity from Enron-promoted DPC leading to shutdown of the 740 MW Phase-I and stopping work on 1,444 MW Phase-II and adjacent LNG import facility.

Bailey prescribed that India adopt an regime which has independent and transparent regulator, market based competition and market based pricing, stable fiscal and legal framework and sanctity of contracts.

PTI