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U.S. power giant Enron Corp.

said Wednesday it may pursue damages if forced to scrap its Dabhol Power Co. subsidiary. "That's one of the options available to us," Enron spokesman John Ambler told CNN. But he added that the company is not pursuing termination damages yet. Media reports suggest Enron will seek to claim $3.5 billion to $5 billion. Talks to renegotiate Enron's deal with Maharashtra state were cancelled Wednesday. The chief of the government-backed committee, which has yielded absolutely no fruit, resigned. Enron to attend talks Houston-based Enron owns a 65 percent stake in the $3 billion Dabhol power-plant development. But the nine-year old project has run aground. Its partner Maharashtra claims that the power is too expensive and that it cannot absorb it all. The Maharashtra State Electricity Board (MSEB), which owns a 15 percent stake in Dabhol, owes Enron $45 million in unpaid bills. On Saturday, Dabhol issued a preliminary termination notice, the first step in pulling out of its deal to supply MSEB. Enron executives have also been leaving India. Ambler would not elaborate on what steps Enron would take if it is forced to pull out of Dabhol, citing the ongoing legal back-and-forth. The company would likely also claim a $300 million termination fee. The MSEB is considering issuing Dabhol with a

termination notice of its own, according to the Economic Times of India. It was to make that decision after a meeting later Wednesday, the newspaper stated. But a committee set up by Maharashtra state to renegotiate its power-purchase agreement with Dabhol collapsed. Panel chief Madhav Godbole resigned amid political bickering. Enron India representatives were slated to attend the talks. Maharashtra had given the panel a month to explore a new deal, which it says is key to Dabhol's future. The temporary collapse of negotiations is a major setback. But Enron had in any case said it is taking part only as a matter of courtesy. The company does not see grounds to revisit the power-purchase agreement. "There are some needs first for people to live up to their contractual obligations," Ambler said. He said the company was attending for informational purposes, not to negotiate. Karnataka state revisits power deals In issuing the termination notice, Dabhol found fault with the Indian government as well as Maharashtra state for hampering the project. It noted that the Indian government did not even bother attending the first round of Dabhol talks. Critics portray Enron as a profiteering multinational charging too much for the power. Maharashtra state includes Mumbai, India's business capital. On Tuesday, the southern state of Karnataka said it had been emboldened by the fracas to reopen

power-supply deals it had finalized with 11 private companies. "Enron is a lesson for all of us," V.P. Baligar, chairman of the state power company told Reuters. Observers worry that Enron's problems, coming after companies such as Cogentrix pulled out of deals in India, will scare away overseas investors. India is one of Asia's fastest-growing economies, but faces a desperate need for electricity generation in the next decade. Companies looking to set up operations in India are often put off by the vast amount of red tape involved.