Message-ID: <23919926.1075863441572.JavaMail.evans@thyme> Date: Tue, 28 Aug 2001 07:00:14 -0700 (PDT) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: FW: From The Enron India Newsdesk - August 28th Newsclips Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Kaminski, Vince J </O=ENRON/OU=NA/CN=RECIPIENTS/CN=VKAMINS> 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:=09Tuesday, August 28, 2001 8:08 AM To:=09Raymond, Maureen Cc:=09Kaminski, Vince J Subject:=09FW: From The Enron India Newsdesk - August 28th Newsclips Maureen, You will find articles 1 & 2 very pertinent to your mail yesterday. We wil= l meet today at 1.00 p.m. as planned to discuss further. Regards, Sandeep. -----Original Message----- From: =09Varma, Nikita =20 Sent:=09Tuesday, August 28, 2001 6:24 AM To:=09Varma, Nikita Subject:=09From The Enron India Newsdesk - August 28th Newsclips THE FINANCIAL EXPRESS, Tuesday, August 28, 2001 Enron impact takes its toll, FI lenders scrips plunge on bourses, Sharad Mi= stry & Laxmikant Khanvilkar=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE ECONOMIC TIMES, Tuesday, August 28, 2001 FIs initiate search for buyers for Enron stake, Samik Dasgupta & Soma Baner= jee=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE ECONOMIC TIMES, Tuesday, August 28, 2001 Dabhol dispute unfortunate: Govt ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE FINANCIAL EXPRESS, Tuesday, August 28, 2001 Omar terms Dabhol 'unfortunate experience' ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE TIMES OF INDIA, Tuesday, August 28, 2001 Power Play (Editorial) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE TIMES OF INDIA, Tuesday, August 28, 2001 Enron denies seeking sanctions over Dabhol, Sanjay Dutta=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE TIMES OF INDIA, Tuesday, August 28, 2001 'Enron has not discussed Dabhol with Bush', Vidyadhar Date=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE FINANCIAL EXPRESS, Tuesday, August 28, 2001 Enron impact takes its toll, FI lenders scrips plunge on bourses, Sharad Mi= stry & Laxmikant Khanvilkar=20 THREE major financial institutions - ICICI, IDBI and IFCI - are witnessing = an increased selling wave on the bourses over the past few trading sessions= , thanks to their collective exposure in the controversial Enron-promoted $= 3 billion Dabhol Power Company (DPC). The total exposure in DPC of these FI= s, and a few banks like the State Bank of India and Canara Bank, including = foreign currency guarantees, works out to over Rs 5,500 crore. Little wonde= r, therefore, that investors fear more red ink splashed over the balance sh= eets of the FIs and are hurrying to move out of their investments in these = FIs.=20 The stock prices of all the three FIs have been sliding. While the stock pr= ice of IDBI and IFCI have touched new lows of Rs 16 and Rs 2.90, respective= ly, that of ICICI is still holding at around Rs 50-55 levels. Early this mo= nth, IDBI was quoted at Rs 19.90, IFCI at Rs 3.60 and ICICI at Rs 59.30. IC= ICI, however, had touched Rs 51 on August 9, a new low from previous levels= . This clearly indicates that, plagued by the rising share of non-performin= g loans (NPLs) to total assets of all the three FIs, the share prices of th= ese FIs have came under severe pressure.=20 Analysts tracking the banking and FI counters say that the sliding trend is= feared to be continued over the days and weeks ahead, especially because o= f the tightening of the non-performing assets guidelines by the Reserve Ban= k of India (RBI). Moreover, the kind of trading activity witnessed at these= counters is alarming. While the volume of share trade is substantial, ther= e is a sharp fall in the stock prices of these stocks. Quite clearly, these= are no good indicators, at least for the time being. However, these compan= ies disbursal/approvals to DPC are well within the stipulated RBI norms, i.= e., 15 per cent of total disbursal/ approvals.=20 For example, ICICI's gross NPL as of March 2001, stands at a whopping Rs 5,= 988 crore. Power sector leads the approval and disbural list of ICICI at Rs= 6,424 crore and Rs 2,400 crore, respectively. Its exposure in the power se= ctor, which stood at Rs 8,531 crore or 11 per cent of the total exposure of= Rs 77,279 crore, has been on the decline. Last year they stood at 11.6 per= cent of Rs 65,495 crore. On the other hand, IDBI's stock price is on the s= lide since the beginning of this month. It is currently quoting at Rs 16. T= he counter is experiencing heavy volumes with daily volumes being in the ra= nge of 35,000 plus. The situation is worse for IFCI which is quoting below = par for quite sometime now. Further, the scrip has been losing steam since = August 2, when it was quoting at Rs 4. Currently, it is quoting below Rs 3.= =20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE ECONOMIC TIMES, Tuesday, August 28, 2001 FIs initiate search for buyers for Enron stake, Samik Dasgupta & Soma Baner= jee=20 THE SEARCH for getting a buyer for Enron's equity in the Dabhol power proje= ct has started with financial institutions initiating discussions with pote= ntial buyers. FIs have been entrusted with the responsibility of preparing = a roadmap for Enron's exit and finding a solution to pending MSEB payments.= The first job for FIs is to determine the actual cost required to complete= the Dabhol project. Although, about 96 per cent of the project is complete= , the stoppage of work for the past few weeks has led to cancellation of co= ntracts and possibilities of the cost escalating. With Enron having already= announced its unwillingness to pump in additional resources, the new inves= tor will not only have to pay for the equity but also fund the project's co= mpletion. Speaking to ET, finance secretary Ajit Kumar said: "FIs have been= told to work out details about the prices that each of the interested buye= r can offer for the Dabhol project. Since it is totally buyer driven, FIs w= ill have to take this into account while holding their discussions with the= potential buyers. Enron may demand any price but there have to be takers f= or that too.'' Tata Power, Hindujas and some other leading industrial house= s are interested in buying out Enron. FIs are going to talk individually to= all the interested companies, and the equity will be sold to the highest b= idder, Kumar said.=20 According to FI sources involved with the Dabhol negotiations several angle= s are being looked into as the matter is now complicated with Enron invokin= g legal provisions. "The aim is to work out an out- of-court settlement to = the issue. Valuation is not an issue as the project has a 25-year life cycl= e,'' an official said. FI sources claimed that their role is that of a faci= litator where they will try and bring the buyer and seller at a common poin= t.FIs are also discussing with the Centre if it is possible for them to get= a cover for the second phase of the project. As of now, the first phase of= the project has been given the counter-guarantee while the promoters are p= ushing for a similar cover to ensure payments.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE ECONOMIC TIMES, Tuesday, August 28, 2001 Dabhol dispute unfortunate: Govt THE GOVERNMENT on Monday described the dispute over the Enron-promoted Dabh= ol Power Project as an `unfortunate' experience in foreign investment in th= e country's infrastructure sector. ``Enron is a very unfortunate episode in= our experience with regard to inviting foreign investment in the crucial i= nfrastructure sector and I wish it had never happened,'' minister of state = for external affairs, Omar Abdullah said here. Nevertheless, the country's = judiciary has decided a large number of cases in Enron's favour thereby pro= ving its fair and independent nature, he added. Speaking after launching th= e Confederation of Indian Industries International, the international arm o= f the chamber, he said Indian industry has had enough protection and should= not ask for more. ``Unless we start looking outwardly and start tapping ne= w markets abroad, our economy may not be able to achieve and grow to its po= tential,'' Abdullah said.Indian missions abroad have to realise that their = role is changing, he said it is now clear that economic diplomacy is integr= al to foreign policy and a key determinant of a country's political and str= ategic influence. He said the ministry of external affairs had also started= working on these lines and would make every possible effort to provide nec= essary support to the country's business chambers and industry to position = itself as a global player in the emerging global scenario.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE FINANCIAL EXPRESS, Tuesday, August 28, 2001 Omar terms Dabhol 'unfortunate experience' THE Centre has called the Enron-promoted Dabhol power project controversy a= s an 'unfortunate' experience. "Enron is a very unfortunate episode in our = experience with regard to inviting foreign investment in the crucial infras= tructure sector and I wish it had never happened," minister of state for ex= ternal affairs Omar Abdullah said here on Monday. Nevertheless, the country= 's judiciary has decided a large number of cases in Enron's favour, thereby= , proving its fair and independent nature, he said, while launching Confede= ration of Indian Industry's (CII) international arm, 'CII International (CI= II)'. Stating that there is no alternative to globalisation, Mr Abdullah sa= id, "Indian industry has had enough protection and should not ask for more.= " "Unless we start looking outwardly and start tapping new markets abroad, = our economy may not be able to achieve and grow to its potential," he added= . The new outfit, CIII, created to facilitate the process of internationali= sation of domestic companies, will have a budget of Rs 50 crore, which is a= lmost 50 per cent of the Confederation's total budget, CII president Sanjiv= Goenka said.=20 Institutionalisation of CIII is part of the value addition exercise of the = Confederation to accelerate the process of globalisation, he said, adding t= hat CII will leverage its 191 partners in 92 countries to the process. CIII= will be headed by Arun Bharat Ram. Piyush Bahal has been appointed head of= the CIII secretariat. Speaking on the occasion, Arun Bharat Ram said, "CII= I will take proactive initiatives to enhance the country's share in interna= tional trade." He said that CII already has a dedicated WTO cell to facilit= ate the process of internationalisation of domestic companies. Write to the= Editor=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE TIMES OF INDIA, Tuesday, August 28, 2001 Power Play (Editorial) With emotions running high over the Dabhol issue, Enron chairman Kenneth La= y understandably showed great alacrity in denying reports that he has threa= tened India with sanctions. In a letter to prime minister A B Vajpayee, Mr = Lay clarified that Enron has not asked the US government to take any such a= ction, and "is far from suggesting that we have decided to pursue these mec= hanisms". Fair enough. But are the remarks as innocuous as Enron is making = them out to be? Consider the facts. In the course of the controversial inte= rview, Mr Lay said that if Enron was "squeezed'' to accept less than the co= st incurred by it on building the power plant, that would amount to "exprop= riation" by the Indian government. He added, for good measure, that US laws= prevent Washington from assisting countries which expropriate the property= of American companies. Significantly, an Enron team is slated to negotiate= with Indian lenders this week. One of the proposals doing the rounds is th= at the financial institutions (FIs) buy out Enron's stake in Dabhol Power C= ompany (DPC) and `warehouse' the shares till they can find another buyer. T= he FIs, on their part, have indicated their willingness to slash interest r= ates on the loans to DPC in a bid to make the project viable. But they're n= ot willing to be the only ones to make a sacrifice. So, they're expected to= ask Enron to accept a discount of 25 to 35 per cent on its asking price. T= he bargaining is likely to be tough, and savvy negotiators routinely try to= `psyche' the opposition beforehand. Mr Lay is known to be close to the Bus= h administration. In the light of all this, is the timing of his remarks pu= re coincidence?=20 Mr Lay, of course, has his own compulsions. While the Dabhol imbroglio has = undoubtedly hurt India, Enron's armour is not without some chinks which In= dian negotiators would do well to note. The company faces accusations, whic= h it denies, that it manipulated power prices in California. Its share pric= e has fallen more than 55 per cent since the start of the year, and chief e= xecutive officer Jeffrey Skilling recently quit abruptly, forcing Mr Lay to= take over the CEO's job as well. Unfortunately, Indian negotiators are unl= ikely to use what should be their trump card the Godbole Committee's obser= vation that the Dabhol deal was a failure of governance at every step of th= e decision-making process. Because doing so could embarrass too many promin= ent people on both ends of the political spectrum. Even so, the Indian side= should hang tough. There have been suggestions that the LNG plant be spun = off as a separate power centre, Enron let out its harbour facilities to oth= er LNG importers, and the foreign currency loans be converted into rupee lo= ans. These could form the basis of a fair deal that would allow both India = and Enron to move on from the mess they have landed in. Hopefully, the Dabh= ol debacle will also send out warning signals to both Indian politicians an= d multinationals about the perils of non-transparent, negotiated deals, as = opposed to a genuinely free market. If it does, and if India gets its act t= ogether on power sector reforms, we may yet see some light at the end of th= e long, long tunnel. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE TIMES OF INDIA, Tuesday, August 28, 2001 Enron denies seeking sanctions over Dabhol, Sanjay Dutta=20 US energy trading major Enron Corp has denied approaching Washington seekin= g sanctions against India over the dispute with the Maharashtra government = over the $2.9 billion Dabhol power project, even as domestic financial inst= itutions hinted at increasing their exposure in the project by about $483 m= illion (Rs 2,270 crore) for its completion. In a letter to Prime Minister A= tal Bihari Vajpayee on Saturday, a copy of which was available with The Tim= es of India, Enron CEO Kenneth said: "A recent story in the Financial Times= , which mischaracterised discussions with me, appears to have caused signif= icant, unintended concern. Counter to the impression given in the story, I = have not asked anyone in the US government to consider imposing sanctions."= =20 Lay said in his letter that Enron's approach was to settle the issue amicab= ly by selling its stake. "Furthermore, I did not say that the Dabhol power = plant had been expropriated. Upon questioning from the publicator (publishe= r) I did factually explained the several possible options available, includ= ing how one might get to expropriation and about the US laws in place to pr= otect its businesses. However, that is far from suggesting that we have dec= ided to pursue these mechanisms," Lay said. "Our preferred approach approac= h continues to be to resolve this issue amicably by selling our stake to In= dian governmental and financial institutions," Lay said.=20 However, Lay tempered his conciliatory stand by adding, "Without agreement = on that, we have little choice but to follow the termination procedures joi= ntly agreed under the power purchase agreement." Lay also sent copies of th= e letter to finance minister Yashwant Sinha and power minister Suresh Prabh= u. PTI ADDS: The IDBI-led FIs' consortium may increase their exposure to en= able the project to be completed and negotiate Daphol Power Company's equit= y at a 25 per cent discount to its face value. The FIs are exploring a poss= ibility of taking out offshore equity by investment institutions and utilit= ies after 12-18 months from Phase-II completion, the report said. If this proposal was accepted by the joint committee of the FIs, then IDBI= 's revised exposure would be at Rs 2,742 crore from existing Rs 2,121 crore= , ICICI Rs 1,904 crore from Rs 1,473 crore, SBI Rs 2,261 crore from Rs 1,74= 9 crore, IFCI Rs 587 crore from Rs 454 crore and Canara Bank Rs 526 crore f= rom Rs 407 crore. "Even in the best case, the exposure requirements from do= mestic institutions exceed the prudential exposure norms," the report quote= d FI sources as saying. Subsequent participation by all other FIs and banks= like IDFC, PFC, PNB, Union Bank, Bank of India among others would be accru= ed through syndication. FIs may also seek a guarantee from the Centre as a = backup for their exposure, the report quoted the sources as saying. Last we= ek, the FIs had made a presentation to the finance ministry on a possible b= ailout package for Dabhol. The proposals envisage concessions from stakehol= ders, around 22.38 per cent concessional duty on the energy major's liquefi= ed natural gas plant, a mega power project status and offset of custom duti= es on LNG supply.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE TIMES OF INDIA, Tuesday, August 28, 2001 'Enron has not discussed Dabhol with Bush', Vidyadhar Date=20 Enron has denied that it had approached the U.S. government in an effort to= obtain sanctions against India in its dispute over the Dabhol power projec= t. The denial came in the wake of a report in the Financial Times of Thursd= ay which carried an interview with Enron chairperson Kenneth Lay. The repor= t quoted Mr Lay as saying there are U.S. laws that could prevent the U.S. g= overnment from providing any aid or assistance to India if it expropriated = properties of U.S. companies. An Enron spokesperson said Mr Lay had not dis= cussed the Dabhol dispute with President George Bush.=20 Meanwhile, the legal tussle between energy activists, the Maharashtra gover= nment and Enron continues in India. The state government is preparing a fre= sh affidavit with strong arguments against Enron in the case filed in the s= upreme court by the Centre for Indian Trade Unions (CITU), which is the lab= our wing of the Communist Party of India (Marxist), and activist Abhay Meht= a against the Dabhol project. The affidavit will make a strong case against= Enron unlike the previous statement filed by the earlier Shiv Sena-BJP dom= inated state administration which was seen to be favourable to the controve= rsial multinational.=20 The case has been pending in the supreme court for the past four years and = since then major changes have taken place on the Enron front with more and = more evidence emerging against the project. The government will rely substa= ntially on the M.D. Godbole committee report which found a number of infirm= ities in the project and expressed serious concern over the irregularities.= In the petition, CITU and Abhay Mehta, author of the book Power Play, whic= h gives a detailed account of the the Enron drama, have challenged the clea= rance given to the project by the Central Electricity Authority. They argue= d that since the project had been renegotiated, it required a fresh review = by the CEA. They described as false the claim of the previous government th= at by holding renegotiations it had secured a good deal with lower tariff.= =20 Anti-Enron activists feel that their stand has been vindicated by the recen= t setbacks received by the company. Regarding the explosion in Enron's Tees= ide plant in England which left three workers dead, Mr Pradyumna Kaul, ener= gy activist, said Enron should have prepared a disaster management plan for= the Dabhol plant.Enron suffered a serious setback last week with the resig= nation of chief executive Jeffrey Skilling, the drastic fall in stocks and = the explosion in the Teeside plant. Mr Kenneth Lay, the company's chairpers= on, is now trying to limit the damage by travelling in the U.S., explaining= the events to company divisions and trying to improve sentiment on Wall St= reet. While Enron wants to exit from its operations in India, it is also re= ported to be trying to wind up the wind turbine manufacturing business Acti= vists are also encouraged by protests against privatisation of electricity = being voiced in other parts of the world. Anti-privatisation activists inva= ded the legislature building in the Brazilian state of Parana last week, pr= otesting against the move to privatise the state's electric generation, tra= nsmission and distribution utility.=20