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The Wall Street Journal, 04/23/01 PG&E's Glynn Commits Chain of Errors Before Unit's Cash Crisis Bloomberg, 04/23/01 Massive power plant proposed Associated Press Newswires, 04/23/01 UK: UPDATE 1-Saudi Naimi to meet US Energy Secretary this week. Reuters English News Service, 04/23/01 INDIA: UPDATE 1-Enron's India unit, lenders to meet on payment row. Reuters English News Service, 04/23/01 INDIA: Promoters cut Indian power project capacity-paper. Reuters English News Service, 04/23/01 ONGC DISPUTES ENRON'S CLAIM ON MOON PROSPECT PROJECT AT TAPTI Asia Pulse, 04/23/01 Mangalore missive asks Baligar to set records straight The Times of India, 04/23/01 Government to change market rules in order to make electricity sector more competitive Expansion, 04/23/01 DPC seeks OK to exit power project Business Standard, 04/23/01 International World Watch Compiled by David I. Oyama 04/23/2001 The Wall Street Journal A15 (Copyright © 2001, Dow Jones & Company, Inc.) ASIA/PACIFIC Kookmin Bank Formal Merger Expected The formal merger of South Korea's two largest retail banks, Kookmin Bank and Housing & Commercial Bank, will create the country's largest financial institution. But uncertainty over who will become president of the new entity, which also plans to list on the New York Stock Exchange in October, could still disrupt the merger process, officials involved in the deal say. The presidents of the two lenders are expected to sign a binding merger agreement today, creating a bank with combined assets of 161 trillion won ($124 billion). Foreign investors will have a combined 60% stake. Goldman Sachs Group will hold a 9.95% interest, making it the largest shareholder of the merged bank, which will be called Kookmin Bank. The government will hold a 9.36% stake. Japan to Probe Polyester-Fiber Dumping Japan's government said it will begin an investigation into allegations that South Korean and Taiwanese makers were dumping certain types of polyester fiber on the Japanese market, marking the latest effort to protect some embattled Japanese industries. The finance and economy ministries said they received requests this year from five Japanese makers to impose antidumping duties on the Korean and Taiwanese imports, and have found enough evidence to embark on a formal inquiry. Dabhol Holders May Review India Project Shareholders of Dabhol Power, a unit of Enron of the U.S., will meet Wednesday in London to possibly discuss the future of Dabhol's 2,184-megawatt power project in India's Maharashtra state, an Enron India spokesman said Saturday. Enron has a 65% stake in the $3 billion project; the Maharashtra State Electricity Board owns 15%, and General Electric and Bechtel of the U.S. each hold a 10% stake in Dabhol. BRIEFLY: -- Citing market weakness, Taiwan's Chunghwa Telecom again postponed a planned U.S. share offering, the latest setback in efforts to privatize the company. The decision likely means Chunghwa will have to reapply to Taiwan's security regulator for the U.S. share offering. -- Pakistan plans to sell a further 26% stake in Pakistan Telecommunications to a private investor; bids will be due by June 30. The government will keep a 62% stake. -- Taiwan's central bank cut the discount and secured-loans rates by 0.125 percentage point to 4.0% and 4.375%, respectively, its fifth rate reduction in as many months. -- Kawasaki Steel said Friday it will likely join in talks on a business link between NKK and the steel unit of Germany's ThyssenKrupp. NKK and Kawasaki, Japan's No. 2 and No. 3 steelmakers, last week said they plan to merge operations beginning in October 2002. -- Time Magazine apologized to its Muslim readers after demonstrators in India's Kashmir region last week protested an image of the prophet Muhammad in its April 16 issue and Malaysia pulled the issue from newsstands. The editor of Time's Asia edition said the image was an "unintentional affront to the Islamic faith," which considers such images blasphemy. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. PG&E's Glynn Commits Chain of Errors Before Unit's Cash Crisis 2001-04-23 03:07 (New York) PG&E's Glynn Commits Chain of Errors Before Unit's Cash Crisis (Published in May issue of Bloomberg Markets.) San Francisco, April 23 (Bloomberg) -- When Robert Glynn addressed PG&E Corp.'s shareholders for the first time as chief executive, he told them he saw only one way for the price of electricity to go in California: lower. ``There is no product bought on a daily basis that has such a predictable downward price trajectory,'' he said at the 1998 annual meeting, held at San Francisco's Masonic Auditorium. Retail prices would drop 20 percent by 2001, he predicted. How wrong Glynn turned out to be. Since June 2000, wholesale prices in California have jumped sixfold. Utilities such as PG&E were barred from passing the increased costs on to customers when the state's electricity industry was deregulated in 1996. Glynn's misreading of the market was just one step in a chain of events that led him, in April, to steer the company's Pacific Gas & Electric Co. unit into Chapter 11 -- the biggest bankruptcy filing by a utility in U.S. history. Saying that electricity prices would fall, Glynn, 58, embraced deregulation -- the very same law that business leaders, politicians, and editorialists have recently condemned. With the help of proceeds from the asset sales required under deregulation, Glynn, who became CEO of PG&E in June 1997, pushed the San Francisco-based company into new markets. PG&E developed a nationwide energy sales and trading business and, through $3.5 billion in acquisitions, became a power producer in New England and a natural gas provider in Texas. PG&E Goes Up Against Enron As PG&E expanded outside California, it butted heads with the likes of Enron Corp. -- and often came out on the losing end. Last year, PG&E sold its Texas natural gas business for $840 million, less than half the price it had paid. The company also sold a unit that managed energy use for corporate customers after racking up more than $120 million in losses. Some analysts and investors are fed up with Glynn's management. ``He's put the company in some difficult situations,'' said Jeffrey Gildersleeve, an analyst at Argus Research who has a ``hold'' rating on the company's stock. ``There has been a lot to swallow.'' PG&E's stock, which has traded as high as $35.06 during Glynn's tenure, dropped to $6.50 shortly after the bankruptcy filing. It closed last Friday at $8.90, down 56 percent since the start of the year. Bond prices have also declined. Pacific Gas & Electric's 7.375 percent bonds due in 2005 have fallen to 65 cents on the dollar from about 90 cents last November. For 2000, the company had a net loss of $3.36 billion after taking a $4.11-billion charge for power-purchase costs. Revenue rose 26 percent to $26.2 billion. Early Proponent of Deregulation Glynn was an early proponent of deregulation. He told legislators before the bill passed in 1996 that it would allow PG&E to raise cash to pay off debt as well as to expand outside the state. ``Glynn, more than anyone else on earth, invented the idea that it was a good risk for utility shareholders to take,'' said California Senator Steve Peace, a Democrat who co-wrote the law. A native of Orange, New Jersey, Glynn joined Pacific Gas & Electric in 1984 after being with Long Island Lighting Co. and Woodward Clyde Consultants, an engineering company now owned by URS Corp. He became the utility's president in June 1995 and was named PG&E's president when the holding company was formed in January 1997. He now serves as chairman, CEO, and president of PG&E, as well as chairman of the utility unit. Under deregulation, PG&E had to sell its 89 California power plants, including the Diablo Canyon nuclear plant, and buy most of its electricity though a state-run market. Special Sale of Bonds In return, the state allowed Pacific Gas & Electric to sell $2.9 billion of bonds in November 1997 that were backed by a special charge on utility bills. The proceeds covered the costs of building the plants and offset a required 10 percent rate cut. From 1997 to 1999, PG&E raised an additional $1.5 billion through plant sales to Duke Energy Corp., Southern Co., and Calpine Corp. It also built up a business in power generation, energy trading, and natural gas transmission outside California. Its National Energy Group unit was North America's fourth-biggest marketer of power last year. In 1997, PG&E spent $1.55 billion to purchase 18 power plants in Massachusetts, New Hampshire, Rhode Island, and Vermont from New England Electric System. Moving Into Texas That same year, the company moved into Texas by buying Teco Pipeline Co. for $380 million and then bought San Antonio-based Valero Energy Corp.'s natural gas pipelines and processing facilities for $1.5 billion. The company's PG&E Energy Services arm, called Vantus Energy Corp. when it was started in 1995, was growing as well. The business won contracts in 1997 to supply 800 McDonald's Corp. restaurants in California with discounted power and to manage energy billing for 35 Neiman Marcus Group Inc. stores throughout the U.S. Gregory Phelps, manager of John Hancock's Patriot Group of Funds, says PG&E expanded too fast and neglected its main business: selling natural gas and electricity in California. ``They were out bidding on just about every generation asset that came on the market,'' said Phelps, whose fund sold its PG&E stake in the mid-1990s. ``They took their eyes off their own backyard.'' Losses Mount As losses mounted across its businesses, PG&E began retrenching. In 1998, the company pulled out of Australia, which it had entered two years earlier by acquiring a natural gas pipeline and other assets from the Queensland state government for $128 million. PG&E sold that business to Duke Energy and took a $23-million charge on the sale. In January 2000, the company agreed to sell its Texas natural gas business to El Paso Energy Corp. The sale, completed in December, produced an $890-million charge. PG&E got out of energy services last June, when Enron bought the unit's contracts for $85 million and Chevron Corp. acquired its energy-management business for $18 million. Now Glynn is turning his focus from building a business to protecting it. He rejected state officials' demands that he sell PG&E's power transmission lines in return for help in paying off more than $9 billion in debt from power buying. It's a risky strategy. Proceedings under U.S. bankruptcy judge Dennis Montali may take years to play out. Creditors will be eager to get their hands on the 30 power plants and other assets owned by National Energy, which produced 17 percent of PG&E's operating profit during the first nine months of 2000. Insulated From Bankruptcy Glynn has said the unit is insulated from the bankruptcy. Others disagree, including Kenneth Klee, an acting law professor at the University of California, Los Angeles, who co-wrote the 1978 U.S. Bankruptcy Code. Klee says creditors may be able to tap the assets if they can prove that Pacific Gas & Electric fraudulently transferred money earmarked for the utility to its parent. ``This might be the most fruitful course of action,'' he said. PG&E's investors will have to hope Glynn is better at interpreting the law than he is at predicting electricity prices. --Peter Robison in Seattle (206) 224-3558 or robison@bloomberg.net with reporting by Stacie Babula in Princeton, Liz Goldenberg in New York, Jim Polson in Princeton, Jeff St. Onge and David Ward in San Francisco, and Daniel Taub in Los Angeles/dw Massive power plant proposed 04/23/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. LAS ANIMAS, Colo. (AP) - Tri-State Generation & Transmission has proposed a 1,200-megawatt coal-fired power plant, at a cost estimated at $1.3 billion, for Bent County. The proposed plant would be more than twice as big as any other power plant planned for Colorado, and could assure Bent County's economic base for years to come. It also could provide an insurance policy for Colorado's strained power grid. It is the right time for a new coal plant because natural gas has become an expensive and volatile way to make elctricity, while new technology has cleaned up the coal-burning process, Tri-State said. "We'd incorporate the most stringent environmental controls that exist. If you're burning high quality coal like either of our sources would provide, and using all the best available technology, you're removing nearly everything before it hits the stacks," said Tri-State spokesman Jim VanSomeren. The utility estimates that while mid-April prices for natural gas-generated electricity were 5 cents per kilowatt-hour, coal-produced power could be as low as 1.5 cents. The company sells power to city-owned utilities and rural electric cooperatives in four states and plans to go ahead with the Las Animas plant if it lands the state permits and can sell shares of the power to Xcel and other utilities. Environmental critics of coal say they probably can't stop the plant from opening by 2007, but global warming and the heated debate over Western power give them a better forum to object than when the last generation of coal plants came online. "The real argument to stopping a plant like that is that there are cleaner and cheaper ways to provide electricity in the region," said John Nielsen, co-director of energy issues at the Land and Water Fund in Boulder. Nielsen pointed out the irony of the new coal plant being proposed for a site just 30 miles west of a 120-megawatt, pollution-free wind power project to be finished by Enron later this year. "You can make the region a center for clean power, or the center for a new, large coal plant," Nielsen said. "Both will bring jobs. One will bring environmental impacts and one won't." Kim McDonnell of the Bent County Development Foundation worked with Tri-State and local officials to ensure land, water, rail and other building blocks are ready. Estimates are that the project could be the source of up to 1,000 workers during construction, and 350 for operations later on. The biggest current employer in Bent County, the Fort Lyon VA hospital that is converting to a prison, has 175 employees. Tri-State general manager Frank Knutson acknowledged that when the plant comes online, there may be a window of a few years when Colorado wouldn't need all the electricity and the company would seek buyers elsewhere to recoup its costs. But the economics and planning of the Las Animas site will be based on Colorado demand, he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: UPDATE 1-Saudi Naimi to meet US Energy Secretary this week. 04/23/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, April 23 (Reuters) - Saudi Oil Minister Ali al-Naimi will meet U.S. Energy Secretary Spencer Abraham in Washington later this week, the first meeting between the two officials, diplomats said on Monday. They said the meeting, due to take place on Thursday or Friday, would allow Naimi to meet face-to-face with his U.S. counterpart, who assumed office as part of the George W. Bush administration in January. The two officials are likely to discuss oil prices in the wake of OPEC's decision to curb output twice this year by 2.5 million barrels per day (bpd), or about nine percent. Oil prices have found support from tight U.S. gasoline supplies which threaten a repeat of last summer's price spike at the pumps. Saudi Arabia is the leading supplier to the United States, the world's biggest oil consumer. Abraham has taken a low-key approach towards the Organisation of the Petroleum Exporting Countries - a marked departure from former energy secretary Bill Richardson who lobbied OPEC ministers during their meetings. But Washington has made clear it does not want to see sky-high oil prices further eroding U.S. economic growth. OPEC members, who last year enjoyed the biggest oil boom in two decades, have said they would cut output again if prices fall below a $22 price floor for their basket of seven crudes. The basket is currently around OPEC's preferred level of $25 a barrel. OPEC power Saudi Arabia, the world's biggest oil exporter and producer, has said the oil cartel would move swiftly to raise output again if prices pushed above the $28 upper limit of the group's target range. SAUDI INVESTMENT The oil officials' meeting comes as Riyadh prepares to award multi-billion dollar contracts for Saudi gas developments. U.S. oil company ExxonMobil is a leading contender to win an operatorship for at least one of the three projects on offer, industry sources have said. U.S. oil companies Conoco , Chevron , Phillips , Marathon and Enron/Oxy - along with several European rivals - are also expected to play a role in the investment. Naimi is scheduled to speak at an energy conference in Paris on Wednesday and travel from there to Washington. He is due in Houston on May 3 to attend a Saudi Aramco board meeting, industry sources said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: UPDATE 1-Enron's India unit, lenders to meet on payment row. 04/23/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, April 23 (Reuters) - The Indian unit of U.S. energy giant Enron Corp and its lenders will meet in London on Monday for crucial talks on an ongoing payment row with Maharashtra state which is preparing to lobby the federal government for support. The meeting will be attended by both foreign and local lenders of the Dabhol Power Company (DPC), which is facing a cash crunch as the Maharashtra State Electricity Board (MSEB) has defaulted on payments worth 2.26 billion rupees ($48.31 million). Indian media had speculated over the last few days that DPC - 65 percent owned by Enron - would seek lenders' permission in Monday's meeting to wind up operations in India ahead of its own board meeting later this week. "The meeting is crucial as the DPC board is meeting on April 25 to consider a termination notice to the MSEB... it cannot do this till it gets lenders' permission," the Business Standard newspaper said on Monday. DPC's board is due to meet in London on Wednesday. The DPC spokesman in Bombay declined to comment on the board meeting but said the purpose of Monday's meeting was to update the lenders on the payment situation. DPC has already issued a notice saying it was prepared to fight the non-payment issue legally and has demanded that the federal government made good the defaults as promised in the original agreement of the mid-1990s. Enron is the largest single foreign investor in India. It is setting up a $2.9-billion, 2,184-MW power project in the western state of Maharashtra through DPC. The project's first phase of 740 MW is in operation while the second phase of 1,444 MW is expected to be commissioned later this year. The dispute comes as India is facing a severe shortage of power and cannot afford to put off foreign investors. The chief minister of Maharashtra state is preparing to lobby India's coalition government for support on his government's stand in the controversy. Vilasrao Deshmukh left for New Delhi on Monday afternoon to meet Finance Minister Yashwant Sinha and Power Minister Suresh Prabhu. Deshmukh's government, under intense pressure from a rag-tag bunch of allies to scrap Enron's project, wants the federal government to take over purchases of electricity from the power plant and relieve the state utility of the payment problem. (US$ = 46.78 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Promoters cut Indian power project capacity-paper. 04/23/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, April 23 (Reuters) - The developers of a 1,000 megawatt coal-fired power project in southern India have decided to halve the project capacity, partly to "avoid another Dabhol-like situation", an Indian financial daily reported on Monday. Dabhol Power Co, majority owned by U.S. energy giant Enron Corp , operates a controversy-ridden 2,184 MW (megawatt) power plant in the western Indian state of Maharashtra. The state utility board has defaulted on paying for power provided by Dabhol, and Enron now reportedly moving toward bailing out of the Maharashtra power project. The Business Standard newspaper said, citing unnamed sources, that the promoters of the Mangalore Power Company (MPC) had decided to scale down the project by half because of a lack of demand and the weak financial state of the state's electricity board. China Light & Power and the Tatas, one of India's leading conglomerates, are the main promoters of the Mangalore power project. "The initial assumptions for growth in demand for power in Karnataka were highly optimistic," the paper quoted unnamed sources as saying. "...Karnataka will be able to absorb only an additional 500 MW of power immediately." "Consequently the project is likely to be implemented in only two stages. However, the decision on this has not been taken," sources were quoted as saying. The promoters now propose to set up the second phase only after three to four years when demand for power improves, the paper said. MPC, to be built at an estimated cost of over 50 billion rupees ($1.069 billion) with a debt equity ratio of 70:30, has had its share of controversies. In 1999 the original promoter, the U.S.-based power major Cogentrix, walked out of the project citing delays in government clearances. Hong Kong-based China Light and Power, then a minority partner in the project, took over and later roped in the Tatas. The project, originally cleared as a fast-track power project, was to receive a counter-guarantee from the federal government. The guarantee hasn't materialised as the government is hesitant to do so because of the state of the finances of the state electricity board, the paper indicated. (US$1 = 46.775 rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. ONGC DISPUTES ENRON'S CLAIM ON MOON PROSPECT PROJECT AT TAPTI 04/23/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, April 23 Asia Pulse - The state-owned Oil and Natural Gas Corporation (ONGC) has virtually dismissed the US$15 million Moon Prospect gas well project at Tapti fields saying there was no substantial recovery contrary to claims of a big find by the joint venture parnter, Enron. "Enron, which is the operator of the field, has not shared results of the ambitious Moon Prospect gas well project with JV partners - ONGC and Reliance. The project seemed to have turned into a hollow gas well," senior ONGC officials said. Significantly, the setback on Moon Prospect comes at a time when Enron has put its 30 per cent stake in the JV on the bloc. ONGC has 40 per cent stake in the US$900 million venture while Reliance has 30 per cent stake. Tapti, along with Panna-Mukta oil and gas fields, was awarded to the consortium of ONGC-Enron-Reliance in 1992 for exploration. Enron has claimed 1.5 trillion cubic feet of gas reserves in place, of which 25-30 per cent are recoverable reserves, sources said, adding "We, however, feel there aren't substantial reserves in place for commercial exploitation." After over three months of drilling and spending US$15 million, the well reached the final depth but not substantial hydrocarbon reserves have been struck, they said. "Though sophisticated and expensive techniques has been used for drilling and logging, so far the well has not brought about any reliable information about the possibliy of hydrocarbons," sources added. (PTI) 23-04 1817 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Mangalore missive asks Baligar to set records straight Stanley G. Pinto 04/23/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MANGALORE: Mangalore Gramantara Parisarasaktha Okkoota (MGPO) president Upendra Hosbet has sent a letter to Karnataka Power Transmission Corporation Chairman V.P. Baligar seeking clarifications on the power situation in the state, with specific reference to shortages, production, demand, transmission and distribution (T&D) losses and pilferage. According to him, energy department officials have been consistently issuing contradictory statements which has left the public bewildered about the actual situation. Firstly, Hosbet quotes Baligar's recent press statement that KPTC ``may not require power from Orissa,'' if either the RTPS fifth unit resumes functioning or the Tannir Bhavi barge-mounted power plant is commissioned by April 30. ``Does this mean that before the RTPS fifth unit crashed, there was no power shortage? Also, if there is power from this RTPS unit, is the Tannir Bhavi project not required?'' Hosbet asked and demanded to know the rationale behind the setting up of the 220-MW Tannir Bhavi plant, from which the KPTC cannot refuse to buy power as per a recent High Court order. Hosbet also wanted to know the ``real cost'' of power purchased from Tannir Bhavi. ``Baligar has said that the cost per unit of power is Rs 4.50, but energy secretary K.P. Pandey said it is Rs 5. Meanwhile, a KPTC officer here said during the public hearings on tariff hike by the Karnataka Electricity Regulatory Commission that it should be nearly Rs 6 as the price depends on the naphtha and dollar rates!'' he said. Hosbet asked Baligar: ``If Enron's offer of Rs 4.60 per unit is costly as per your statement, how is the Tannir Bhavi rate cheap, considering the additional cost of Escrow cover?'' Hosbet pointed that the Tannir Bhavi project was cleared by the government on the grounds that though the power produced was costly, it would be available in a very short time (reportedly six months). ``Though the power purchase agreement (PPA) was signed in October 1997, the plant has still not generated a unit till now. Any small power plant could have been set up in Bangalore within this time at a lower cost and with minimum T&D losses,'' he observed. On the issue of actual power requirement and production in the state, Hosbet said former energy secretary P.S.S. Thomas had declared in July 2000 that the state produces 85 million units (MU) per day, against the requirement of 55 MU. ``He said the state has been producing 12 to 15 per cent more than requirement since 1999. Was this not the reason behind the KPTC offering power at reduced rate of Rs 3.25 per unit to the industrial users since January 1999?'' he asked. But in April 2001, Baligar said the state produces only 57.244 MU against a requirement of 95 MU. Hosbet said this means between July 2000 and April 2001, production had gone down by 30 MU and demand had gone up by 40 MU -- despite some new power plants starting production and power requirement coming down due to industrial slowdown. ``All these statements are contradictory in nature. Seasonal variations may cause drop in production, but this drastic drop needs some explanation,'' he contended. Can Baligar answer these questions? Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Government to change market rules in order to make electricity sector more competitive (El Gobierno cambiara las reglas del mercado electrico para hacerlo mas compeitivo) 04/23/2001 Expansion Copyright(C) 2001 Abstracted from Expansion in Spanish, Source: World Reporter (TM) The Spanish government wants to carry out an "extensive revision" of the operation of the country's electricity market by drawing up rules which will increase competition and enable new operators to enter the market, ending the dominance of Endesa, Iberdrola, Union Fenosa and Hidrocantabrico, the Spanish electricity companies. The Spanish energy commission (CNE) supports this initiative. Last week, the government approved several changes to the operation of the electricity production market (known as the pool). These will adapt the liberalisation system which was approved last June, which aims to increase the transparency of electricity buying and selling operations. The government has asked Omel, the company which operates the pool, to present a proposal for the reform of the market. Changes to have been minimal since the market was liberalised in 1998. Endesa and Iberdrola still dominate, with an 80 per cent share. According to the restrictive practices court, the market is not very transparent or competitive, while CNE has recommended that the rules be changed in order to create a more transparent and efficient market. Companies such as Gas Natural, EDF, Electrabel, Enron and Sempre, want to be part of the pool by buying and selling electricity, but complain that Endesa and Iberdrola's dominance enables them to charge whatever price they want. The pool has, however, been at its cheapest in recent months, owing to increased hydraulic production. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. DPC seeks OK to exit power project Tamal Bandyopadhyay & S Ravindran Mumbai 04/23/2001 Business Standard 1 Copyright © Business Standard The Enron-promoted Dabhol Power Company (DPC) is seeking the approval of its 25 lenders to pull the plug on the $3 billion power project in Maharashtra tomorrow (April 23). The meeting has been convened in London at the initiative of the company. The meeting is crucial as the DPC board is meeting on April 25 in London to discuss the issue of serving a termination notice to the Maharshtra State Electricity Board (MSEB). DPC cannot go ahead with this unless it gets the go ahead from the lenders. While bankers said the lenders' meeting is about the second phase of the project, which is still under construction, state government officials clarified that since there is only one PPA covering both phases of the project, the lenders' decision will be applicable to the existing Phase I also. The second phase of the project involves 1,444 MW generation capacity, whereas Phase I of 740 MW is already operational. "According to the loan agreement, even if only four per cent of the lenders agree to terminate the contract then DPC can do so," highly placed sources in the lenders' consortium said from London. This in effect means that only one lender has to agree for DPC to serve a preliminary termination notice. Following the notice, there is a cooling off period of six months for both parties (the MSEB and DPC) to find a mutually acceptable solution, which may take the form of a re-negotiated PPA, sources added. Sources also said that there are two separate meetings scheduled with lenders. The Monday meeting will be attended by all the lenders including multilateral funding agencies like Japanese Exim Bank and OPIC. The second round of meetings schedule for Tuesday will be only with the global loan arrangers ANZ Investment Bank, CSFB, ABN -AMRO, Citibank and the SBI. Two representatives each from the Indian lenders, IDBI, ICICI and SBI have already left for London. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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