Message-ID: <9431470.1075859822022.JavaMail.evans@thyme>
Date: Tue, 13 Mar 2001 17:18:00 -0800 (PST)
From: bruce.lundstrom@enron.com
To: rob.walls@enron.com
Subject: Dabhol -- A Brief Legal Update
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Gentlemen -

Dabhol events over the last week to 10 days have not been encouraging:

We made claim against the GOI Guarantee for the December invoice.  Under the 
terms of the GOI Guarantee, the GOI has 30 days (of which about 23 are left) 
to make payment.  The December invoice is now about 50 days overdue.

The issuer of MSEB's letter of credit has stated publicly that it will not 
renew MSEB's letter of credit posted under the PPA.

We are preparing an arbitration against MSEB based on MSEB's 
"mis-declaration" claim of offset against the January invoice.  The "meet and 
discuss" is scheduled to take place this Friday.  An arbitration proceeding 
could then be filed in early April on this issue.  Linklaters is preparing 
the arbitration submission.

We believe that 5 public interest suits have recently been filed in Nagpur 
(another city in Maharashtra).  It is possible that one of the suits has 
already been "admitted" by the judge or judges without Dabhol Power Company's 
participation in the admission evaluation (which is apparently quite 
unusual).  We continue to investigate the nature of these suits.  We are not 
entitled, as a matter of right, to see the suits until we have been served 
and have designated our counsel.

The project continues to be assaulted on a number of regulatory fronts:

-   We have been ordered to cease testing on Phase II of the plant.  The 
Maharashtra Pollution Control Board (MPCB) contends that we do not have the 
proper permit to test (although this position is different than the position 
MPCB ultimately took on Phase I).

-  The Chief Minister in Maharashtra has stated publicly that he has directed 
the Maharashtra Pollution Control Board to scour the plant and find a reason 
to shut the plant down for environmental deviations.  Local officials (who 
were more balanced based on long-standing relationships with DPC) are 
apparently being replaced by officials who will likely be quite zealous.

-  A local administrator has ruled that some of our quarry leases are not 
valid.  We will appeal this ruling but DPC still needs to quarry until late 
this year.  The local administrator's ruling may further encourage other 
persons to contest the validity of other leases (if only to seek a second 
"windfall" payment for the same land).

Bruce