Message-ID: <4633025.1075863433014.JavaMail.evans@thyme> Date: Mon, 30 Jul 2001 13:31:37 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: FW: From The Enron India Newsdesk - July 28 - 30 Newsclips Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst -----Original Message----- From: =09Kohli, Sandeep =20 Sent:=09Monday, July 30, 2001 9:02 AM To:=09Kaminski, Vince J Subject:=09FW: From The Enron India Newsdesk - July 28 - 30 Newsclips Vince, This may interest you. It appears that we havemade public our desire to pu= ll out of Dabhol. Regards, Sandeep. -----Original Message----- From: =09Varma, Nikita =20 Sent:=09Monday, July 30, 2001 8:29 AM To:=09Varma, Nikita Subject:=09From The Enron India Newsdesk - July 28 - 30 Newsclips Monday, July 30, 2001, http://216.34.146.167:8000/servlet/Form Enron wants govt to buy Dabhol stake=20 THE TIMES OF INDIA Saturday, July 28, 2001, http://timesofindia.indiatimes.com/articleshow.asp= ?catkey=3D-2128682902&art_id=3D2002500911&sType=3D1 Enron wants govt to buy its Dabhol stake=20 Similar articles as above were also reported as follows: THE HINDU Monday, July 30, 2001, http://www.hinduonnet.com/thehindu/2001/07/28/storie= s/0128000d.htm Enron wants to pull out of Dabhol project=20 THE HINDU Monday, July 30, 2001, http://www.hinduonnet.com/thehindu/2001/07/29/storie= s/0229000k.htm Enron wishes to sell DPC stake , Mahesh Vijapurkar=20 THE HINDU BUSINESSLINE Monday, July 30, 2001, http://www.blonnet.com/stories/0230562a.htm Sale of stake best option, says Enron=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ECONOMIC TIMES Monday, July 30, 2001, http://economictimes.indiatimes.com/today/30infr03.h= tm FIIs okayed DPC loans as provided for Int arbitration=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ASIAN AGE Monday, July 30, 2001, http://www.asianageonline.com DPC lenders offered loan on neutral basis ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- BUSINESS STANDARD Monday, July 30, 2001, http://www.business-standard.com/today/test2.asp?men= u=3D4 Centre to keep off Dabhol spat=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE FINANCIAL EXPRESS Monday, July 30, 2001, http://www.financialexpress.com/fe20010730/eco2.html MSEB, FIs plan roping in Centre for picking Enron equity in DPC , Sanjay Jo= g ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE TIMES OF INDIA Saturday, July 28, 2001, http://timesofindia.indiatimes.com/articleshow.asp= ?catkey=3D-2128682902&art_id=3D1386716043&sType=3D1 'Four states not to buy power at current rates'=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE TIMES OF INDIA Saturday, July 30, 2001, http://timesofindia.indiatimes.com/articleshow.asp= ?catkey=3D-2128682902&art_id=3D1865483429&sType=3D1 Maharashtra's offer unrealistic: DPC=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE HINDU BUSINESSLINE Saturday, 28 July 2001, http://www.blonnet.com/2001/07/28/stories/1428564j.= htm Demand for DPC power only at `particular' price=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ECONOMIC TIMES Monday, July 30, 2001, http://economictimes.indiatimes.com/today/30infr01.h= tm Maharashtra to pay Rs 788cr penalty to MSEB, Girish Kuber=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ECONOMIC TIMES Monday, July 30, 2001, http://216.34.146.167:8000/servlet/Form Enron wants govt to buy Dabhol stake=20 =20 US energy group Enron on Saturday said it wanted to sell its stake in the D= abhol Power Company either to the Indian government or to the project's len= ders. "As the largest investor in the DPC, Enron believes that selling its = interest either to the government of India or to the project's lenders is t= he best approach to resolve the protracted dispute," a spokesman for its In= dian unit said. This follows comments made by Enron chairman Kenneth Lay in= Friday's issue of Financial Times that Enron is looking to exit from its I= ndian venture. The Dabhol Power Company, 65 per cent owned by the Enron, is= locked in a bitter dispute with a local utility over a payments default. "= We want out," said Enron's Chairman Kenneth Lay in an interview with the Fi= nancial Times. DPC which is India's biggest direct foreign investment, had = signed a contract to supply power to a state-owned utility, the Maharashtra= State Electricity Board, from its gas-based plant on the state's west coas= t. But MSEB stopped buying power in May calling it expensive and defaulted = on payments jeopardising the project's future.=20 "We have made it pretty clear to the government leadership we are now at a = point where we would like to be taken out and we think most of our partners= do," Lay said in the Financial Times. Besides Enron, the other shareholder= s in DPC are US group General Electric and Bechtel which own 10 per cent ea= ch and MSEB with 15 per cent. Earlier this month Lay had a meeting with Ind= ia's finance minister Yashwant Sinha to try and resolve the issue but talks= ended without any solution. "We have fought this once before, put it back = together, fixed the contracts, but we don't want to do that again and have = the same problems in a few years," Lay was quoted by the paper as saying. D= PC's power plant is being built in two phases. The first phase of 740 mw is= up and running and the second phase of 1,444 mw is 97 per cent complete. S= ome analysts say India's attempts to resolve the Enron dispute is a test ca= se of its ability to attract more foreign investment. Last week US assistan= t secretary of state on South Asian affairs, Christina Rocca, said the prob= lems surrounding India's investment climate could be summed up in a five-le= tter word, "Enron". "I have to emphasise that it will be difficult for inte= rnational investors to view India favourably until it (Enron issue) is reso= lved and in a reasonable manner," she said. (Reuters ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE TIMES OF INDIA,Monday, July 30, 2001 Enron wants govt to buy its Dabhol stake=20 US energy group Enron Corp said on Saturday it wants to sell its stake in t= he Dabhol Power Company either to the Central government or to the project'= s lenders."As the largest investor in the DPC, Enron believes that selling = its interest either to the government of India or to the project's lenders = is the best approach to resolve the protracted dispute," a spokesman for it= s Indian unit told Reuters. This follows comments made by Enron chairman Ke= nneth Lay in Friday's issue of Financial Times that Enron is looking to exi= t from its Indian venture. The Dabhol Power Company (DPC), 65 percent owned= by the Enron Corp, is currently locked in a bitter dispute with a local ut= ility over a payments default. "We want out," said Enron's Chairman Kenneth= Lay in an interview with the Financial Times. DPC, which is India's biggest direct foreign investment, had signed a contr= act to supply power to a state-owned utility, the Maharashtra State Electri= city Board (MSEB), from its gas-based plant on the state's west coast. But = MSEB stopped buying power in May calling it expensive and defaulted on paym= ents jeopardising the project's future. "We have made it pretty clear to th= e government leadership we are now at a point where we would like to be tak= en out and we think most of our partners do," Lay said in the Financial Tim= es interview. Besides Enron, the other shareholders in DPC are U.S. group G= eneral Electric and Bechtel which own 10 percent each and MSEB with 15 perc= ent. Earlier this month Lay had a meeting with Finance Minister Yashwant Si= nha to try and resolve the issue but talks ended without any solution. "We = have fought this once before, put it back together, fixed the contracts, bu= t we don't want to do that again and have the same problems in a few years,= " Lay was quoted by the paper as saying. DPC's power plant is being built in two phases. The first phase of 740 MW i= s up and running and the second phase of 1,444 MW is 97 percent complete. S= ome analysts say India's attempts to resolve the Enron dispute is a test ca= se of its ability to attract more foreign investment. Last week U.S. assist= ant secretary of state on South Asian affairs, Christina Rocca, said the pr= oblems surrounding India's investment climate could be summed up in a five-= letter word, "Enron". "I have to emphasise that it will be difficult for in= ternational investors to view India favourably until it (Enron issue) is re= solved and in a reasonable manner," she told a meeting in New Delhi. ( REUTERS ) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ECONOMIC TIMES, Monday, July 30, 2001 FIIs okayed DPC loans as provided for Int arbitration=20 INTERNATIONAL lenders of Enron's Dabhol Power Company, including the US gov= ernment's Overseas Private Investment, have said they extended loans worth = about $444 million to the project only because the PPA provided for settlem= ent of disputes by neutral international arbitration. "Had the PPA not prov= ided for settlement of disputes before arbitration panel in a neutral forum= , we would not have disbursed loans worth about USD 444 million," DPC's 11 = foreign lenders have submitted in an application seeking intervention in th= e energy major's petition, to be heard by the Supreme Court next week. "The= PPA constitutes the project's backbone as DPC's entire revenues were to be= received from Maharashtra State Electricity Board and were the basis for o= ur decision to extend the said loans to the $3-billion project". The FIIs s= ay that MSEB knew that the cost of developing and building the project woul= d be obtained, in substantial part, from loans provided to DPC on a "non-re= course" basis by them and other lenders. "MSEB had expressly confirmed, agr= eed and acknowledged that monies due to DPC from itself would be paid direc= tly to an account (escrow in this case) created for our benefit and securit= y", they said. Emphasising for international arbitration in dispute resolut= ion between DPC and MSEB, the FIIs submitted before the Supreme Court that = the arbitration provision to be held in London, a neutral international loc= ation under the UNCITRAL rules, was "critical factor in their decision to f= und the project". (PTI)=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ASIAN AGE, Monday, July 30, 2001 DPC lenders offered loan on neutral basis Dabhol Power Company's lenders, including the US government's Overseas Priv= ate Investment Corporation, have said that they extended loans worth about = $444 million (Rs 2,088 crore) to the project only because the PPA provided = for settlement of disputes by neutral international arbitration."Had the PP= A not provided for settlement of disputes before the arbitration panel in a= neutral forum, we would not have disbursed loans worth about $444 million,= " DPC's 11 foreign lenders said in an application submitted to the Supreme = Court seeking intervention in the energy major's petition, to be heard by t= he Court next week. "The PPA constitutes the project's backbone as DPC's en= tire revenues were to be received from Maharashtra State Electricity Board = and were the basis for our decision to extend the said loans to the $3 bill= ion project." The FIIs say that MSEB knew that the cost of developing and b= uilding the project would be obtained, in substantial part, from loans prov= ided to Dabhol Power Co on a "non-recourse" basis by them and other lenders= . (PTI) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- BUSINESS STANDARD, Monday, July 30, 2001 Centre to keep off Dabhol spat=20 The Centre is unlikely to intervene directly in the Dabhol problem despite = Enron's willingness to sell its interest in the 2184 mw project to the gove= rnment. Power ministry sources said the government has made its intentions = very clear on this issue on several occasions that any direct intervention = by the Centre was highly unlikely as it would face severe opposition from o= ther states. "There is absolutely no change in that stance at present," sai= d an official. The Centre was inclined to play the role of facilitator only= in arriving at a solution to the problem, and the central government's rep= resentative in the re-negotiation committee set up by the Maharashtra gover= nment had already been asked to expedite the proceedings, he said. Enron in= a statement on Saturday said that as the largest shareholder in Dabhol Pow= er Company (DPC), the company believed that selling its interest either to = the central government or to the project's lenders was the best approach to= resolve the protracted dispute between DPC and the Maharashtra State Elect= ricity Board (MSEB). It stressed that any sale would need to be on terms pr= oviding a complete recovery of capital costs and related expenditures. The = company pointed out that the Dabhol issue was clearly having an adverse eff= ect on the confidence of potential foreign investors to India. "Pursuing a = buyout option could help resolve the dispute in a timely manner protecting = India's investment climate and interests of DPC's stakeholders," said the s= tatement. The company said that while DPC remained open to discussing other= viable solutions, it had serious concerns about getting embroiled in a ser= ies of re-negotiations. It pointed out that no realistic proposal was offer= ed to the company as yet, and no progress had been made in securing creditw= orthy buyers that can purchase power at a price that was reasonable for new= -generation plants. The statement said that until the issue was resolved DP= C intended to continue pursuing all other remedies under the PPA, such as i= nternational arbitration, to resolve the issue in a way that protected the = rights of DPC sponsors, lenders, fuel suppliers and LNG ship owners.=20 Pressure tactic, says lenders=20 Lenders to DPC are unmoved by the company's demand that they take over the = project and dubbed it as a pressure tactic. The company had said in a press= release on Saturday that the best solution would be for the Union governme= nt or the lenders to take over the project. "We need to run our banks and i= nstitutions and not a power project," said one senior banker involved in th= e project. The lenders however accept the fact there is a sense of urgency = and the government must get into the act faster. At the London meeting last= week, DPC showed its willingness to run Phase II of the project on naphtha= but MSEB is not willing to give its nod to commissioning of the Phase II= =20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE FINANCIAL EXPRESS, Monday, July 30, 2001 MSEB, FIs plan roping in Centre for picking Enron equity in DPC , Sanjay Jo= g Maharashtra State Electricity Board (MSEB) and Indian financial institution= s (IFIs) are planning to make a last ditch effort to rope in the BJP-led go= vernment at the Centre for picking up the Enron equity in the Dabhol projec= t through its undertaking as their funds amounting to over Rs 2,500 crore i= n addition to a guarantee of Rs 3,900 crore to offshore lenders are involve= d in the project.The MSEB has contributed nearly Rs 800 crore to pick up 30= per cent equity in the Dabhol phase-I and the IFIs have collectively lent = Rs 1,738 crore for both the phases plus a guarantee of Rs 3,900 crore to of= fshore lenders. MSEB and IFIs sources told The Financial Express that the E= nron chairman Kenneth Lay's statement on Enron's desire to pull out of Dabh= ol project has not come as a rude shock, but as an expected one. However, t= hese sources said that if Enron wants to be out of 2,184 mw Dabhol project,= their exist should take place after "tough" negotiations with an active in= volvement of the Union government. They have projected various scenarios including the Enron, General Electric= and Bechtel collectively agreeing to recover about 50 to 60 per cent of th= e total equity of $900 million in the Dabhol project from the Industrial De= velopment Bank of India, which is a rupee lender consortium leader. The MSE= B and IFIs are aware that the Enron and other equity holders will insist on= the full capital recovery and that they will be quite keen on purchase of = their equity with interest at par by the new buyer. However, MSEB and IFIs sources are of the view that due to their hard barga= ining in the presence of the Centre, the Enron and other stakeholders may a= rrive at certain compromise so that they can recover a substantial amount b= locked in the project. Secondly, in view of cut in the equity, the loan amo= unting to over $1.2 billion could be restructured at the lower interest of = 12 per cent and that the moratorium period should be increased. Thirdly, th= e Centre will lend a financial support to its undertaking to pick up majori= ty equity and take over the Dabhol project, they feel. According to MSEB an= d IFIs, in another scenario, the state-run Gas Authority of India Ltd (Gail= ) and Indian Oil Corporation (IOC) should be asked to take over the liquifi= ed natural gas (LNG) project in a serious bid to cut the tariff. The per un= it tariff, which has been average at Rs 8.80, may come down to Rs 2.20 to R= s 2.40 per unit. The Dabhol Power Company is believed to have spent nearly = Rs 2,500 crore on the LNG project. Moreover, the MSEB, which is at present doubtful over the fate of its equit= y of Rs 800 crore, may pick up 51 per cent equity and appeal to the Mumbai = based utilities Tata Power and BSES for taking up the balance equity in the= Dabhol project. The MSEB and IFIs are keen that the impending issue be res= olved amicably, especially to avoid the legal battle in India and arbitrati= on in London. A section of MSEB is confident that the power purchase agreem= ent (PPA) on the issue of misdeclaration and default on the availability of= power by DPC can be proved null and void and there will be no need for the= payment of any compensation to DPC. This will enable the take over of Dabh= ol project by an Indian entity quite possible. Lay seems using pressure tac= tics Mr Lay's statement on Enron pull out is being seen in the political ci= rcle as a pressure tactic, especially when the Supreme Court is hearing the= DPC's petition on August 6. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE TIMES OF INDIA, Saturday, July 28, 2001 'Four states not to buy power at current rates'=20 Maharashtra deputy chief minister Chhagan Bhujbal said on Saturday that tho= ugh four states have expressed their willingness to purchase power from the= Enron-promoted Dhabol power project they are not in a financial position t= o buy them at the prevailing tariff. "All wish to purchase power but not at= the current rate", Bhujbal said after a function organised by ex-serviceme= n. Four states, Madhya Pradesh, Delhi, Karnataka and Punjab had agreed to b= uy power from Enron's troubled Dabhol Power Project at a tariff as low as R= s 1.65 to Rs 2.60 per unit during a meeting Godbole Renegotiations Committe= e had with prospective buyer states on July 26 here. Replying to a query re= garding the US giant's desire to pull out of the power project in India, he= quipped, "jinko jaana hai wo jayenge, unko koi rok nahi sakta" (those who = wish to leave will leave, no one can stop them). He, however, expressed hop= e that the current Enron imbroglio would be settled after the Supreme Court= delivers its verdict. The state government would deal with the issue depen= ding on the verdict of the Supreme Court, Bhujbal added.( PTI ) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE TIMES OF INDIA,Monday, July 30, 2001 Maharashtra's offer unrealistic: DPC=20 US energy major Enron's Dabhol Power Company (DPC) on Friday said that pric= e proposals made by four states to draw power from the Dabhol project "were= totally unrealistic", even as Godbole renegotiations committee reported a = stalemate in the talks with DPC. Referring to the offer of Karnataka, Delhi= , Madhya Pradesh and Punjab to buy power at a tariff as low as Rs 1.65 and = Rs 2.60, DPC said, "unfortunately these are totally unrealistic proposals, = unattainable by new generation liquid plants, including those set up by the= public sector". On the other hand, after meeting DPC officials on Friday m= orning, Madhav Godbole told reporters that currently talks with DPC had rea= ched a stalemate with interested states quoting lower prices than the US en= ergy major's expectation. After discussions with four states and receiving = communications from Haryana and Rajasthan, he said that all these were read= y to draw DPC's 1,444 mw phase-II power at an average rate of Rs 2 to Rs 2.= 25 per unit. "An overall demand for DPC power is at around 800 mw to 1,000 = mw, but not all of these is a base load one. Moreover, it is for more than = half a year, mainly non-monsoon months of November to May," Godbole said. H= e added that the states had informed the commission that each of them had a= regulatory framework in the form of an electricity regulatory authority in= place and was bound by a merit dispatch order, which did not allow them to= buy costly power (like DPC's) so long as cheaper tariff was available in t= heir own state.( PTI ) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE HINDU BUSINESSLINE, Saturday, 28 July 2001 Demand for DPC power only at `particular' price=20 =20 THE Godbole panel today conveyed the power-offtake proposals of six States = to Dabhol Power Company (DPC) officials. The company was told that there wa= s combined demand for 800-1000 MW power at not more than Rs 2.50 per unit. = ``One thing is abundantly clear. There is demand for (DPC) power at a parti= cular price. If the price increases the demand may not be large'' Dr Godbol= e told reporters. `` We have told Enron that the need for 800 to 1000 MW DP= C power is not at baseload, nor is it an all-year-round demand. The States = will require this power only between the months of April to November and th= e demand will fall during the rainy season,'' he said.=20 Karnataka, Punjab, Delhi and Madhya Pradesh made representations to the pan= el yesterday. Rajasthan and Haryana have presented written proposals asking= for 300 and 100 MW each. While Madhya Pradesh has asked for power at Rs 1.= 65 per unit, other States have said they will not pay more than Rs 2.25 to = Rs 2.40 per unit. According to Dr Godbole, the company officials will ``tak= e up the matter with lenders and collaborators'' before the next meeting wh= ich is expected to be held in August. Meanwhile, according to DPC, the powe= r purchase proposals presented by various States ``are totally unrealistic = and unattainable by new generation liquid fuel plants including even those = in the public sector such as NTPC's Kayamkulam''. Dr Godbole had suggested = that DPC power ``at competitive rates'' could replace captive power in a nu= mber of States. He said though DPC had earlier agreed to reduce tariffs by = 50 paise, this would no longer be easy as the project has seen cost escalat= ion after stoppage of phase II work. `` Our dialogue with Enron is bogged d= own by two issues-- the plant load factor at which the unit is run and the = price of power,'' Dr Godbole said. He said there was a need to take a `` se= rious look at whether demand projections in the country are realistic''.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------- THE ECONOMIC TIMES, Monday, July 30, 2001 Maharashtra to pay Rs 788cr penalty to MSEB, Girish Kuber=20 =20 MAHARASHTRA has decided to pay Rs 788 crore to the ailing Maharashtra State= Electricity Board to compensate it for the damage it has caused the power = utility through tariff concessions to various sectors. Padmasinh Patil, the= state's energy minister, had wanted to give tariff concessions to farmers,= which was objected to by MSEB. Even the Maharashtra Electricity Regulatory= Commission asked the state's energy department to restrain its generosity.= The MERC had asked the government not to offer concessions at the cost of = its SEB and directed it to make a budgetary provision if it wanted to go ah= ead with its plan. Accordingly, Mr Patil announced last year that the state= government will compensate the board. The MERC had set a deadline of Octob= er 2001 for sanctioning the compensation. The supplementary demand presente= d to the state assembly makes this provision. "It has been decided to give = subsidy to MSEB to compensate the loss arising from supplying electricity a= t concessional rate to agricultural and powerloom consumers with effect fro= m May 1, 2000," said the demand by the state's finance ministry.=20 Currently, concessions of 55 per cent and 33.33 per cent in the electricity= bills is given to powerloom and agricultural consumers. The total expendit= ure involved in the proposal is estimated to be around Rs 788 crore. The is= sue of offering concessions to powerloom and agriculture consumers has been= hanging fire for the last couple of years. The board last year had raised = the tariff for agriculture and powerloom consumers which was opposed by the= state government for obvious reasons. The government announced a roll-back= of the tariff hike only to be prevented by the MERC from doing so. The MSE= B will now be charging Rs 600 per one horse power pump, bringing down the r= ate from Rs 1,400, and Rs 185 per loom down from the earlier rate of Rs 300= . The government has also decided to waive 55 per cent of the Rs 110 crore = unpaid dues from powerlooms. Delayed payment charges for the defaulters has= also been waived and they have been granted three instalments for clearing= old dues. According to MSEB's own admission, more than 118 lakh of the tot= al 130 lakh consumers are being supplied subsidised power.=20