Subject: Re: India - Progress Report Four
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Fri, 22 Jun 2001 15:15:00 -0700 (PDT)

Rick:

Ginger is kind enough to find us a slot this Monday (tentatively in the morning, but could slip to the afternoon...either is fine with me).  May I take the liberty to suggest the following agenda items:

Briefing on India Regulatory Needs (scope, time, and HR needed).
The current visit of Wade Cline to Houston this coming week.
KLey/JSkilling visit to India in the week of July 8th.

I also hope that there will be time to brief you of GA accomplishments and make the output available for its possible use in the PRC process.

Best regards

AI

----- Forwarded by Amr Ibrahim/ENRON_DEVELOPMENT on 06/22/2001 12:09 PM -----

	Amr Ibrahim 06/22/2001 07:28 AM 	  To: Richard Shapiro/NA/Enron@ENRON  cc: Ginger Dernehl/NA/Enron@Enron  Subject: Re: India - Progress Report Three 	

Rick:

It is Friday 22nd, and I am in Houston.  Of course, I am available on Monday, practically any time is fine.   I shall arrange with Ginge and advise shortly. 

Brgrds

AI

	Richard Shapiro@ENRON 06/21/2001 10:28 PM 	  To: Amr Ibrahim/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT  cc:   Subject: Re: India - Progress Report Three 	

Call me next Monday, please-I  am seriously considering visit to coincide with Lay's visit- Thanks for the updates.

From:	Amr Ibrahim@ENRON_DEVELOPMENT on 06/18/2001 12:31 AM
To:	Richard Shapiro/NA/Enron@Enron
cc:	 

Subject:	India - Progress Report Three

Rick:

I hope that all is well. Believe me, I am not trying to interfere with your vacation, but here is a quick update of what I have learnt over the weekend.

Ken Ley had a meeting with the Indian Finance Minister in New York over this weekend.  No specific news of the outcome, but they believe here that our message was "we want out, facilitate it, or we shall go out very noisily".  
Ken Ley, and possibly Jeff, are expected here in India in the week of July 8th.  No confirmation as of yet.  Perhaps you would like to consider that you and I are to be here too.  
I expect to have a meeting with Wade either tomorrow (Tuesday), or after to discuss the suggested plan (outlined below, and based on if renegotiation, then semi permanent support, if exiting, then a week every 4 to 6 weeks).  

Of course, I look forward for your advise, comments and suggestions.

Brgrds

AI

----- Forwarded by Amr Ibrahim/ENRON_DEVELOPMENT on 06/18/2001 12:09 AM -----

	Amr Ibrahim 06/15/2001 06:20 AM 	   To: Richard Shapiro/NA/Enron@Enron  cc:   Subject: India - Progress Report Two	

Rick:
I hope that all is well.  It was very nice to talk to you this morning.

The purpose of this note is to keep you abreast of progress in determining the GA  needs for India, and seek your opinion for the best reply for Wade.  I look forward for your comments and advise.

Best regards

AI

Here are the salient features:
Meeting with Wade:
The meeting with Wade indicated that he is open to suggestions to what needs to be done on the regulatory front.  He indicated that if GA sees, and agrees, he would be happy to finance-on a semi full time basis--such support from Houston.  His major concern is to satisfy himself that: a) all what needs to be done on the GA front is being done, b) manage and maintain an effective team (i.e., those currently employed in Bombay and Delhi Offices) just in case of need.  He mentioned that  he is not going to be "penny wise and pound foolish" given the $850 million at stake.  I informed him that Houston shall advise on the best approach as soon as taking stock is complete, and generally speaking, shall also deliver on what is needed. 
GA Needs in India:
The regulatory/government affairs needs in India are in the following five areas: 
a) 	Third party Sales (basically for phase II output), 
b) 	Dealing with the Regulatory Commission, 
c) 	Dealing with MSEB (the customer), 
e) 	Government of India, and 
f) 	EBS.  
The volume and intensity of work, however, shall differ with the following scenarios, namely:  a) Enron/DPC intends to exit through arbitration, b) Enron/DPC intends to renegotiate the contract, and c) Undetermined as of yet.  Here is an assessment of this work load under the two former scenarios:

								Arbitration		Renegotiation
Third party Sales (basically for phase II output), 		low/medium		high
Dealing with the Regulatory Commission, 			medium		high
Dealing with MSEB (the customer), 			medium		high
Government of India, and 					high			high
EBS.  							medium		medium

It is surprising to mention that most colleagues here say that Enron/DPC seems to be taking the arbitration route, although that renegotiation (in the sense of renegotiate, stabilize, then take hit on equity and exit), is the best way.  It is more surprising, however, that no one can speak with any degree of certainty on where the ship is going.  In this context, a risk-averse person shall take the "undetermined scenario" as equal to "renegotiation", while a risk-taker shall take the "undetermined"" as equal to arbitration.  

Personal:
It is clear that the current personal here shall need support from Houston in the "renegotiation" scenario on a semi full time basis.  Short of that,  a visit every 6 weeks may  be adequate as the current team here will be working under legal/commercial.  

Suggested Approach:
Continue understanding the details of the outstanding regulatory tasks for the coming 3 to 4 days.  If the above opinion is still the same, then the suggested communication to Wade (preferably from you) is "if there is renegotiation, then GA shall send the required person/persons on a semi-full time basis, if arbitration, then GA shall be available on as needed basis".  

Caveat:
It is not clear what does RMcDonald wants to see on the ground to tilt the suggested approach above one way or another. 

----- Forwarded by Amr Ibrahim/ENRON_DEVELOPMENT on 06/15/2001 05:57 AM -----

	Amr Ibrahim 06/12/2001 06:54 AM 	   To: Richard Shapiro/NA/Enron@Enron  cc: James D Steffes/NA/Enron@Enron  Subject: India - Progress Report One	

Rick: 
This is a brief on the situation on the ground here based on observations and short talks with the various colleagues in India Team.  I do have a meeting with Wade tomorrow (June 13th) to understand his requests of support from GA.  While I do not expect much,  I shall communicate to Wade the standing policy of GA, namely, "GA shall provide the required support".  Notwithstanding this mandate, I shall communicate it in a manner to give Houston the final say.   

In the context of regulatory support, there two important areas for GA contribution; they are: a) Dealing with the regulatory commission (MERC), and b) third party sales.  It is likely that India shall need a week per month, most conducted from Houston but may include a visit to Bombay.  
The feeling here is that the company wants to terminate the PPA, and exit India (but see point 5 below).  It is the understanding that there are teams in London that are going through the reevaluation of assets in anticipation to transfer them to MSEB as per the contract (MSEB has to agree on the valuation which shall be a lengthy and an adversarial process).  It is noteworthy that the transfer of these assets will not take place on market basis, but rather on accounting basis.  
As most chips are on terminating the contracts and exiting as the likely route (around 60%), renegotiation is not discussed much (hastily added however, renegotiation is the tacit direction of the lenders as communicated in Singapore the other day in the lenders' meeting; they also want ENRON to complete phase II which we are refusing).  
If renegotiation is to take place, its crux will be the reduction in energy and capacity costs to both phases and finding off-taker to Phase II (1400 MW kit and caboodle).  NTPC, or PTC are the likely parties to assume such responsibility.  Of course, we are trying to avoid any commercial risks associated with marketing this power.  Whether we accept it or not, every issue related to dispatch and transmission must be minutely determined and solved.  
The decision making process here is entirely dependent on Houston highest level; that is directly from RMcDonald, and JS.  The fact that both of them did not visit India and see for themselves how things are has been mentioned as a minus point.  Perhaps this point should be communicated to them.

As mentioned above, GA contribution could be in two areas, namely dealing the regulatory commission (MERC), and third party sales.  Starting with the later, third party sales, it is perhaps the most important point in the renegotiation as it shall increase the commercial value of our commitment (incidentally, Enron's commitment in the project is between $0.65 and $0.825 billion--with B--depending on what to include and exclude).  Ironing the issues for third party sales is clearly more valuable in the case of renegotiation, but can also add value when assets are reevaluated and there is a disagreement and some sort of market parameters are added.  As for dealing with MERC,  it an ongoing basis particularly that MERC is seeking to expand its jurisdiction in favor MSEB at every through of the dice.  

I shall keep you posted with progress, meanwhile, please let me know if you have any questions and/or advise.

Best regards

AI

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