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Enron Mail |
Scottish Power reportedly considering 3 bln usd bid for Enron's Portland
AFX News, 04/29/01 UK PRESS:Scottish Power Mulls Bid for Enron's Portland Dow Jones, 04/29/01 Scottish Power Mulls Bid for Portland General, Observer Says Bloomberg, 04/29/01 India's MSEB Hopeful Of New Power Pact With Enron Unit Dow Jones, 04/29/01 India: Enron pull-out could put Indian lenders in a spot Business Line (The Hindu), 04/29/01 Enron not interested in completion of Dabhol project Press Trust of India Limited, 04/29/01 African-American museum gathers support, money, ideas Houston Chronicle, 04/29/01 After several tries, black museum approaches reality in Houston Associated Press, 04/29/01 COMMUNITY HELPERS SOUTH SCHOOL GIVES $2,500 Portland Oregonian, 04/29/2001 World Bank to vote on $450 mln India power loan Reuters, 04/28/01 UK: Scottish Power mulls Portland bid - paper Reuters, 04/28/01 India: Save Dabhol project Business Line (The Hindu), 04/28/01 India: Systemic changes needed for SEBs, says Prabhu Business Line (The Hindu), 04/28/01 India: Enron not to affect India ratings: S&P Business Line (The Hindu), 04/28/01 Maharashtra to appoint Godbole to lead renegotiations with DPC Press Trust of India Limited, 04/28/01 Power play over Dabhol Business Standard, 04/28/2001 India waits for a rediscovery Business Standard, 04/28/01 Enron gets set to pull the plug on power project South China Morning Post, 04/28/01 Enron not needed at all, says NGO The Times of India, 04/28/01 State-wide stir against Enron from March 1 The Times of India, 04/28/01 Enron, India in dispute over future of gas-fired power plant Associated Press Newswires, 04/28/01 STARS & DOGS A selection of this week's winners and losers compiled by Andrew Bell The Globe and Mail, 04/28/01 Talk & Speculation San Antonio Express-News , 04/28/01 Enron's stock price gets whipped after broadband unit falls short Associated Press Newswires, 04/28/01 Scottish Power reportedly considering 3 bln usd bid for Enron's Portland 04/29/2001 AFX News © 2001 by AFP-Extel News Ltd LONDON (AFX) - Scottish Power PLC is considering a move to bolster its U.S. West Coast operations by bidding for Enron Corp unit Portland General for around 3 bln usd, reports the Observer, without citing sources. Enron last week broke off talks with U.S. utility Sierra Pacific over a deal said to be worth 3.1 bln. This opened the door to Scottish Power, the report says. An unnamed City source said Portland, which sells power to 725,000 customers in and around the Oregon state capital, would be a perfect fit for the Pacificorp business in the north-west U.S. which Scottish bought in 1999 for 4.7 bln stg. Scottish has consistently said it wants to build up its business in the U.S. PacifiCorp has some 1.5 mln residential, commercial and industrial customers spread in Oregon, California, Washington, Wyoming, Utah and Idaho. "Portland sits in the middle of PacifiCorp territory in Oregon," the source said. "There would be added customers and big synergies in infrastructure, opera tions, and head office functions. It would make sense." Scottish Power unveils results this week. UK PRESS:Scottish Power Mulls Bid for Enron's Portland 04/29/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -(Dow Jones)- Utility giant Scottish Power PLC (SPI) is considering a move to bolster its American West Coast operations by bidding for Enron Corp's (ENE) Portland General in a deal that could total $3 billion, The Observer newspaper reports. -London Bureau; Dow Jones Newswires; 44 (0)20 7842 9279 ScottishPower Mulls Bid for Portland General, Observer Says 2001-04-29 11:30 (New York) Glasgow, Scotland, April 29 (Bloomberg) -- ScottishPower Plc, the U.K.'s No. 2 utility, may bid for Enron Corp.'s Portland General Electric Co. in a transaction worth as much as $3 billion, the Observer newspaper said. ScottishPower spokesman Gordon Laidlaw declined to comment on the newspaper's report. Portland General has 725,000 customers in Oregon. Its operations and infrastructure could fit with PacifiCorp, the biggest utility in the U.S. Northwest, which ScottishPower bought for $10.7 billion in 1999, the paper said. Last week, Enron's planned sale of Portland General to Sierra Pacific Resources was canceled after both companies agreed that the California energy crisis had made regulatory approval too difficult. ScottishPower has asked Oregon regulators to allow it to raise customer prices in the state by 24 percent for three months from May 2 to cover costs it expects to incur in the period. The company is losing about $1 million a day because of a failure at a plant in Utah. (The Observer, 4-29, business p.1) Click {WNUK <GO<} for a list of U.K. newspaper Web sites --Richard Blackden in the London newsroom on +44 (0) 20-7673-2821 or at rblackden@bloomberg.net /ja Story illustration: {SPW LN <Equity< COMP <GO<} for a graph comparing ScottishPower shares with major indexes. SPW LN <Equity< ENE US <Equity< SRP US <Equity< NI SUM NI UTI NI MNA NI CA NI ELC NI NRG NI CMD NI OR NI RULES NI UK NI SCOTS NI USWE -0- (BN ) Apr/29/2001 15:30 GMT India's MSEB Hopeful Of New Power Pact With Enron Unit By Himendra Kumar Of DOW JONES NEWSWIRES 04/29/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- India's Maharashtra State Electricity Board is hopeful of renegotiating its power purchase agreement with the U.S. energy major Enron Corp.'s (ENE) Indian unit Dabhol Power Co., MSEB Chairman Vinay Bansal said late Sunday. The $3 billion, 2,184-megawatt Dabhol project has been mired in financial disputes after MSEB, its main customer, failed to pay several of its bills. The project has the largest single foreign investment in India. The Dabhol project has been in trouble since December when the government of Maharashtra state, where the Dabhol project is located, said the company charged exorbitant prices for electricity, and thus demanded a new price agreement. Meanwhile, the board of Dabhol Power at its meeting in London April 25, had authorized DPC's managing director to proceed with a preliminary move toward terminating its troubled joint venture power project in western India. "We are at a point of renegotiating the power purchase agreement with Dabhol Power Co. A committee has been constituted with the government of India participation. I am hopeful of a positive outcome," Bansal told Dow Jones Newswires in a telephone interview. He said he hadn't heard anything from DPC's management on the preliminary termination notice. "It's true that the DPC board has authorized the company's managing director to issue a preliminary termination notice. I am not sure why, when or whether he will use it," Bansal said. The preliminary termination notice is the first of three steps that end in the abandonment of the project, agreed to by investors when the joint venture was formed. Bansal said that if the preliminary notice of termination is issued by the DPC's managing director, there will be a six-month suspension period in which the two sides will be "negotiating to remedy the defect." "If the dispute cannot be resolved even after the negotiations, the final termination takes place. Thereafter, MSEB or a third party may buy the Dabhol unit. The compensation price will be decided by the arbitrator whose decision will be based on which of the two parties has defaulted," Bansal said. Enron India spokesman Jimmy Mogal refused to comment on the DPC board's decision when reached by Dow Jones Newswires, saying it was an internal company matter. Indian lenders, present at a meeting with foreign financial institutions in London on April 23 have said they favor re-negotiation of the DPC-MSEB power purchase agreement. Under a 1996 counter-guarantee agreement, the federal government is obliged to pay Enron when MSEB defaults. Enron invoked that guarantee in February - marking the first time in Indian history that a company has invoked such a federal guarantee - when the state utility said it couldn't afford to pay Dabhol. But before the federal government stepped in, the state government paid $17 million in outstanding bills. Since then, the state power utility has confirmed that all pending bills have been paid. However, a dispute over payment of $48 million for December and January bills is pending. For its part, MSEB says it wants the power bills to be offset against a 4 billion rupee ($1=INR46.8575) fine it levied on Dabhol for what it said was the non-supply of power for intermittent periods between October 2000 and the end of January. Several political parties had earlier demanded the project be scrapped, since the costs had increased to INR7 from INR1.8 per unit agreed to six years ago for electricity generated by the 740-megawatt naphtha plant. Enron has maintained that work will be completed by year's end on the 1,444 megawatt liquified natural gas plant. Houston, Texas-based Enron has a 65% stake in Dabhol Power, and is the project's largest shareholder. Other shareholders include the MSEB with 15% and General Electric Co. (GE) and Bechtel Enterprises (X.BTL) with 10% each. -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9427; himendra.kumar@dowjones.com India: Enron pull-out could put Indian lenders in a spot 04/29/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, April 28. DABHOL Power Company's (DPC) overseas lenders have a guarantee cover of about Rs 6,000 crore from the IDBI-led consortium of Indian lenders. If the Enron-sponsored project is terminated, the Indian lenders will have to incur the additional burden over and above the funds they have already sunk in. This is in addition to the Union Government's guarantee of about Rs 2,500 crore to overseas lenders. Sources said according to the agreements between the overseas lenders, the Indian financiers and the Government, the "total pay-out in the event of termination would not be less than the entire foreign debt". Of the total debt of close to $2.2 billion, about 70 per cent has been already disbursed by lenders of which 40 per cent has been lent by overseas entities. If the "blame" of termination finally comes to rest on any Indian entity, the penalty payable to Enron would amount to about Rs 30,000 crore. Irrespective of the payments to be made to Enron - promised returns on premature termination - the foreign lenders are secured by the word of domestic financial institutions and not just the Central and State Governments. Sources said this is one of the major reasons Indian lenders are opposed to premature termination of the project, apart from their loans being "unsecured". At the DPC board meeting in London, IDBI had voted against the resolution to initiate termination. The sources said Enron wants to "see some concrete and positive signals" from the Government within about three weeks that it is "serious" about the project. A positive signal, according to them, would mean a commitment that phase II would continue on schedule and the power produced would be lifted completely. It also wants the "first phase to be up and running at full steam without hindrance". However, even if foreign creditors have to be paid off, it is unlikely to be in a single settlement. Domestic lenders may have to negotiate some kind of an arrangement to repay the foreign debt in tranches. Another possibility, albeit a remote one, is that the new entity that takes over the project will also take over the foreign debt. Meanwhile, the expert panel to be formed for renegotiation of the power purchase agreement will include all members of the Godbole Committee, a State Government official said. It will also include one member each from the Union Finance Ministry, the Central Electricity Authority, the State Finance Ministry and the Chairman of the Maharashtra State Electricity Board. He also said the State Government will appoint the arbitrator before May 9. - Archana Chaudhary - Dinesh Narayanan Enron not interested in completion of Dabhol project 04/29/2001 Press Trust of India Limited © 2001 PTI Ltd. Mumbai, Apr 29 (PTI) The US energy major Enron-promoted Dabhol Power Company (DPC) has said it is "not interested" in completing the USD three billion power project in western Indian state of Maharashtra, following non-payment of dues by the state electricity board (MSEB) and federal government's refusal to honour the Rs 1.02 billion counter-guarantee. In DPC's board meeting held in London on April 25, Enron India Managing Director K Wade Cline and DPC President Neil McGregor made it clear they were "not very keen for completion of the project as the management felt that both the state government and the Centre (Indian Government) were undermining the gravity of the situation", a senior state government official who attended the meeting told PTI here Sunday. Cline told the DPC directors that since the state government had "not shown" any serious interest in dissolving the imbroglio, DPC and its international lenders were "not in favour of continuing the project". When contacted DPC spokesperson refused to comment. The fate of DPC's 2,184 MW project, which is 92 per cent complete, hangs in balance, since the Indian financial institutions (FIs) led by IDBI have stopped funding the debt portion of the project, with around 70 per cent of the USD 1.8 billion worth total disbursement already pumped in. "Naturally, we have stopped disbursement as we think that it is indeed a loss-making proposition, as of now. If MSEB begins paying, we would go ahead with our funding as well", an IDBI official said. According to the IDBI official, this very stand adopted by Indian lenders has upset the DPC management and Enron top bosses in Houston as well. In the meeting, Cline had informed that DPC's foreign lenders had put up a condition before the company, that they would cough up the required USD 250 million, "only if Indian FIs fulfill their debt component", the official added. Other than the issuance of termination notice to MSEB, another issue that rocked the heated meeting was Godbole review committee's strong stand on separating the USD 800 million Liquified Natural Gas terminal from Dabhol project. "On what basis has Godbole committee asked for renegotiation of the LNG facility? ...do they have any international expertise in purchase of this particular fuel?", Cline had questioned the MSEB representatives in London. He asked whether the high-powered panel had "ever consulted any expert before commenting on "take or pay" clause of the LNG contract which is mandatory feature worldwide". In its recommendations made public two weeks ago, the Godbole panel had recommended renegotiation of the five million tonnes LNG terminal facility and DPC's shipping agreements with Oman LNG and ADGAS. "The ministry for Petroleum and Natural Gas should examine the feasibility of integrating Dabhol facility within the broad plans of LNG imports into India and also necessary pipeline investments in this regard", the panel recommended. While the 740 MW Phase-I is already operational, the 1,444 MW Phase-II is scheduled for commissioning in January 2002. (THROUGH ASIA PULSE) 29-04 2001 A African-American museum gathers support, money, ideas SALATHEIA BRYANT Staff 04/29/2001 Houston Chronicle 4 STAR 44 (Copyright 2001) It's an idea that organizers say goes back more than 10 years. But after a few false starts, plans for a state-of-the-art African- American museum in Houston appear closer to becoming a reality. Since kicking off its planning efforts last year, the museum's board has raised about $400,000 from such corporate sponsors as Enron, Compaq Computer Corp. and Chase Bank. Organizers are now looking for land in the Museum District, meeting with community advisers and turning to local schoolchildren for name suggestions. Planners expect to break ground on the museum within 12 to 18 months. "So far the people are very enthusiastic," said board chairman Gerald Smith. "This is one of the few larger cities that does not have this type of representation. What we want to do in Houston is different than what has been done in other cities." Smith said the idea for an African-American museum goes back about 15 years, but died for a lack of broad support. It was later revived under the administration of Mayor Lee Brown. Fund-raising for the museum is expected to start in earnest once the land is bought. Plans call for the museum to highlight 400 years of African-American contributions in history, art, literature, science and other areas. Organizers say the museum will feature technology, exhibits and educational programming. "We're talking the whole concept of African-American experience," Smith said. "It's a blending of all those things." Irene Johnson, the project's planning director, said organizers want to encourage community involvement. One way to accomplish that, she said, is by sponsoring the naming contest. Interested students can submit proposed names for a chance at winning several prizes. The winning entry will win a Compaq laptop computer, a printer and other prizes. A winner will be chosen by the end of May. "We want the contest to inspire and garner support for the project. The school children will be our future museum goers, so it's important to capture their ideas," Johnson said. Marti Mayo, the director of the Contemporary Arts Museum and president of the Houston Museum District Association, said there is widespread support and interest in adding the new museum to the 11 institutions already in the district. "(African-American museums) exist in Los Angeles, New York and Chicago," Mayo said. "It's late in coming, but at the same time we'll take it whenever it comes. "All of us are excited and pleased to potentially welcome this institution to the district. We all feel there is a great need for this institution," he said. "None of us feel like we've been able to focus enough on African-American arts. Everybody would welcome another player." After several tries, black museum approaches reality in Houston 04/29/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - Proponents of a museum spotlighting black culture and history say they expect to break ground within 12 to 18 months on a state-of-the-art facility in Houston. Organizers are now looking for land in the Museum District just southwest of downtown, meeting with community advisers and turning to local schoolchildren for name suggestions. It's an idea that organizers say goes back more than 10 years. Since kicking off its planning efforts last year, the museum's board has raised about $400,000 from such sponsors as Enron Corp., Compaq Computer Corp. and Chase Bank. "So far the people are very enthusiastic," board chairman Gerald Smith said. "This is one of the few larger cities that does not have this type of representation. What we want to do in Houston is different than what has been done in other cities." The idea for an African-American museum goes back about 15 years, but died for a lack of broad support, Smith said. It was later revived under the administration of Mayor Lee Brown. Fund-raising for the museum is expected to start in earnest once the land is bought. Plans call for the museum to highlight 400 years of black contributions in history, art, literature, science and other areas. Organizers say the museum will feature technology, exhibits and educational programming. "We're talking the whole concept of African-American experience," Smith said. "It's a blending of all those things." To encourage community involvement, organizers want to let students propose a name for the museum. The winning entry will win a Compaq laptop computer, a printer and other prizes. A winner will be chosen by the end of May. "We want the contest to inspire and garner support for the project. The schoolchildren will be our future museum goers, so it's important to capture their ideas," project planning director Irene Johnson said. Marti Mayo, the director of the Contemporary Arts Museum and president of the Houston Museum District Association, said there is widespread support and interest in adding the new museum to the 11 institutions already in the district. "All of us are excited and pleased to potentially welcome this institution to the district. We all feel there is a great need for this institution," Mayo said. "None of us feel like we've been able to focus enough on African-American arts. Everybody would welcome another player." LOCAL STORIES COMMUNITY HELPERS SOUTH SCHOOL GIVES $2,500 Gregg R.S. Blesch - The Oregonian 04/29/2001 Portland Oregonian SUNRISE C05 (Copyright © The Oregonian 2001) The South Salem High School Shine program, with the help of PGE- Enron's Community 101 program, gave a $2,500 grant to the Easter Seals Children's Guild, a therapy center in Salem for children with disabilities. The students who participated in Shine (Saxons Helping Inspire Neighborhood Excellence) are members of Jon Abel's class in business leadership. They received $7,500 from PGE-Enron, then, acting as a foundation to disburse the money, screened applications, listened to presentations and visited possible recipients. "Now it's not just someone requesting money," said Abel of the students' experiences visiting the organizations. "They suddenly become aware that the world doesn't revolve around them." The Easter Seals Children's Guild will put the grant toward a new park with a range of surfaces -- such as brick, concrete and gravel - - for physical and occupational therapy. The Children's Guild also received a $15,000 grant from the Ready to Learn fund of the Oregon Community Foundation. The grant will pay for services that prepare preschool children with disabilities for classes in public schools. Other donations * Parrot Creek Child & Family Services will receive $200,000 during the next three years from the Meyer Memorial Trust for a new development and marketing program. The grant will pay the salary and costs of a development director and a half-time support position. It also received $25,000 from the Collins Foundation to cover moving and set-up costs of consolidating its Clackamas County satellite offices into one building in Oregon City. The organization, which has been in Oregon City for 32 years, provides services for at-risk youth, including residential treatment, mentoring, parent counseling and Healthy Start. * The Library Foundation received $5,000 in grants from Tektronix and Northwest Natural for its summer Web Camp, which will give more than 100 middle school students experience designing Web pages and teach them about high-tech careers. Three one-week sessions will be offered for free during the summer. * Southwest Washington Medical Center received $10,000 from Bank of America for the Stepping Stones bereavement camp. The three-night summer camp provides counselors -- professionals and trained volunteers -- who organize activities to help families with grief. The medical center also received $1,400 from Columbia Credit Union for the year-round Stepping Stones program, which provides support for children who have lost loved ones. -- Gregg R.S. Blesch If you know of a grant or donation to a nonprofit group or project to consider noting in Community Helpers, please e-mail the item to helpers@news.oregonian.com or fax it to 503-227-5306, or send it to Community Helpers, The Oregonian, 1320 S. W. Broadway, Portland, Ore. 97201. World Bank to vote on $450 mln India power loan Reuters, 04-28-01 04:56:44 PM By Nick Edwards WASHINGTON, April 28 (Reuters) - The World Bank said on Saturday its board would vote next week on lending India's Power Grid Corp. $450 million as part of a $1.3 billion package to finance reform and development in the country's power sector. "The total amount of money, with everything included, is about $1.3 billion," a bank spokeswoman told Reuters. The multilateral lender's board meets on Thursday to vote on its contribution to the package that has three central elements -- two related to efficiency and distribution and a third to Power Grid's diversification into telecommunications. "Part of the World Bank loan, if approved, will go to support the first phase of laying fiber-optic cables across the (Power Grid) network," the spokeswoman said. India threw open its long-distance telecommunications sector last August, and Power Grid, which has a network of 24,850 miles (40,000 km) of transmission lines, plans to provide end-to-end bandwidth services. The loan package is unusual in that it would be granted directly to the state-owned power distribution utility, rather than to the sovereign government of India. The government is, however, guarantor to the program. The bank spokeswoman declined to speculate on whether the board's decision would be influenced by the crisis brewing in India's power sector with U.S. energy company Enron Corp. (ENE.N). "The bank is engaged at the national level and the state level in power reforms, broadly," the spokeswoman said, declining to comment specifically on Enron and the questions that its potential pullout from India raised about reform in the mainly state-run power sector. Houston-based Enron took a major step on Wednesday toward bailing out of an almost complete $2.9 billion power project on the west coast of India in a bitter dispute over pricing and unpaid bills. The dispute threatens to undermine already weak foreign private investor confidence in direct investments in India, which totaled just $2.6 billion last year -- a fraction of China's $40.8 billion. The World Bank would make any loan to Power Grid on its usual repayment terms of 20 years with five years grace with an interest rate at an unspecified margin above the London Interbank Offered Rate (LIBOR). The spokeswoman said other lenders in the program included Germany's Kreditanstalt fuer Wiederaufbau (KfW) with up to $150 million and domestic Indian institutions. If passed by the bank's Washington-based board next week, the World Bank loan agreement would then be signed in India by representatives from the bank in Delhi, Power Grid and government officials. The funds would then be available for draw down within 60 days. UK: Scottish Power mulls Portland bid - paper 04/28/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, April 28 (Reuters) - Scottish Power is considering a move to bolster its operations on the west coast of the U.S. via a bid for Oregon-based Portland General in a deal worth up to $3 billion, according to a report in Sunday's Observer newspaper. Portland's owner, Enron, last week broke off talks with the U.S. utility Sierra Pacific on a $3.1 billion sale, opening the door to Scottish Power, it said. The article said Portland, which sells power to 725,000 customers around the state capital of Oregon, would be a perfect fit for the Scottish Power's Pacificorp unit in the U.S. northwest, which it bought in 1999. The paper said Scottish Power's intentions would come under scrutiny when the company reports results next week. Scottish Power could not be immediately reached for comment. India: Save Dabhol project 04/28/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire THE DECISION OF the Dabhol Power Company board - at its meeting in London on Wednesday - "to authorise the Managing Director to issue a notice of termination on the contract to sell 740 MW of power in India" is important for the message it sends to New Delhi, the Maharashtra Government and the Maharashtra State Electricity Board: Closing down the project would be a real option at the right time. In the normal course - especially in view of all that has happened over the past few months (including DPC invoking the political force majeure clause in the power purchase agreement) - it would have been no surprise had a final decision on termination been taken at the board meeting itself. That this has not happened means the project can still be salvaged and this should now become the focus of all the parties. But this will not be easy not merely because of the defects in the PPA (from the Indian standpoint, that is) but also because of the bad blood unnecessarily created between the two sides. To take but one example: The MSEB went ahead to clear its March bill to DPC 'under protest' despite an earlier communication (after the payment of the February bill) from the Enron India Managing Director, Mr K. Wade Cline, that the company "would not and will not recognise any payments made as being 'under protest'." The MSEB's reported response was that it was not taking any notice of this stand because Mr Wade Cline's "letter had no legal standing," adding, "we will continue to pay our bills 'under protest'. Let them dispute it." This is no way to engage in a dispute as it detracts from the main effort to arrive at a mutually acceptable solution and instead focusses on ephemeral and secondary issues that have little bearing with the core problem. Now that the focus will once again shift to India from London, hopefully both sides will try their best to arrive at a settlement, which actually means they will have to climb down from their positions. One, the MSEB cannot be expected to continue paying through its nose for power which it does not even consume, not merely because this is unfair and unjust but also because the Board simply does not have the funds. Further, if it does not make any sense for the MSEB to be part of such an arrangement (even if it is of its own making), it makes even less sense for the Maharashtra Government and the Centre to be penalised for a widely-acknowledged infirmity in the PPA. As for DPC, being the hardnosed investor it is, it cannot but be aware of the financial untenability of certain aspects of the PPA. In such a situation, provided the principal promoters like Enron Corporation want to continue operating in India (of which one is not very certain), the sensible - perhaps even 'ethical' - course would be to agree to an amended PPA which would at least be equitable to the two sides. The central point in the issue is that the 2,184 MW power project (to be completed by the year-end) is an asset to the nation's infrastructure, implying at once that letting it go to seed is no option at all. At the same time, the DPC promoters must be allowed to make their money - not on the scale allowed by the existing, one-sided and patently unfair PPA but at a level which will make the PPA seem a fair document in keeping with the norms applied to such projects. This means the PPA will have to be renegotiated - a path already accepted by the Indian side but on which DPC is yet to make its stand clear. Admittedly, top DPC officials have let it be known that they are willing to talk (preferably with the Centre). So all may not be lost vis-a-vis the Dabhol power plant. India: Systemic changes needed for SEBs, says Prabhu 04/28/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire NEW DELHI, April 27, THE Union Power Minister, Mr Suresh Prabhu, has informed the Lok Sabha that "systemic changes" need to be introduced and institutionalised if the chronically sick State electricity boards (SEBs) were to be restructured on an enduring basis. Responding to the concern expressed by the senior Congress leader, Mr Madhavrao Scindia, during question hour, Mr Prabhu said that the outstanding dues of the SEBs were a staggering Rs 30,000 crore. The Government has constituted an expert group to recommend measures for one-time settlement of outstanding dues of the SEBs towards Central public sector understandings as also the dues from the Central public sector units to State power utilities. The expert group headed by the Planning Commission member, Dr Montek Singh Ahluwalia, would submit its report before the end of this month. It would suggest a strategy for capital restructuring of SEBs including the provision of structural adjustment loans so as to enable them to tide over the present financial crisis, make them operationally viable and improve their credit rating. He agreed with Mr Scindia that the one-time solution for outstanding dues should be an all-time solution and there should not be any recurrence of this problem in future. Tracing the genesis of the problems of the SEBs to the difference in the cost of energy generation and the cost of tariff which entails a loss of Re 1 per unit, Mr Prabhu said this year the power stations would be generating 525 billion units. That is why restructuring of the SEBs on a permanent basis was a must. The Minister said that the Government was working on a package. Accordingly, all the consumers should be metered and all the distribution centres would be treated as profit centres and all the SEBs would have to give a projection of their performance before the year begins. When Mr Scindia drew the Minister's attention to a point on the liabilities of the Enron company which he described as damaging the interest of the country, the State Government and the power company resulting in "massive confusion," Mr Prabhu clarified that the agreement was between the State Government of Maharashtra and the Enron company and the Centre's role is 'limited' in giving counter-guarantee to the guarantee provided by the State Government. He said a Standing Committee has been constituted under the Ministries of Finance, Power and Law and the Petroleum and Natural Gas would also be roped in to resolve the tangle. Sops for shipping urged: When Mr Rajaiah Malayala, and Mr P.C. Thomas, demanded sops for the indigenous shipping industry which has been facing rough weather, the Minister of Shipping, Mr Arun Jaitley, said that the Finance Minister has responded to the concern of the shipping industry while moving the Finance Bill on Wednesday. As the domestic shipping industry has to improve its competitiveness globally, efforts would continue to be made with the Department of Revenue to ensure that the domestic shipping industry does not get bogged down by harsh tax regime. He conceded that in most countries the shipping industry was operating on a zero-tax regime. Fast-track courts: In response to a question by Mr Chandra Bhusan Singh, Mr Jaitley, who is also the Minister of Law, Justice and Company Affairs, said that to clear the huge pendency of cases in the various courts in the country, it is proposed to set up 1,734 courts on a fast-track basis. - Our Bureau India: Enron not to affect India ratings: S&P 04/28/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, April 27. INDIA'S sovereign rating would remain unaffected by aggravation of the Enron dispute, according to international rating agency Standard & Poor's. "The ratings are unaffected because the issues with Dabhol Power Company (DPC) are not about a default on debt. This is a technical distinction but an important one. The Government incurs many types of liabilities, but we do not consider all of them to be 'debt' for our purpose," Mr Joydeep Mukherji, Head of Sovereign Ratings, S&P told Business Line in a mailed reply. "A counter-guarantee backing the Maharashtra guarantee on the State Electricity Board's obligation to pay Dabhol is not 'debt' as far as our ratings go," he said. With the Enron-sponsored DPC teetering on the brink, many quarters feared that it would "seriously impair foreign investor sentiment" and international rating agencies would downgrade the country. Mr Mukherji agrees that the issue would hit sentiment. "Our rating is a judgement on the ability to pay 'debt' fully and on time. It is not an indication of profitability or a view about investment prospects. The Enron episode will certainly hurt foreign investor sentiment but that is separate from a debt rating," he said. Enron is about the only foreign investor left in the country's power sector. Many players such as Cogentrix and Powergen have already exited their respective ventures. With that backdrop, Mr Mukherji said, "At a broader level, not about the rating itself, the episode is very bad for India. Regardless of the merits of the Dabhol case, it sends a clear and negative signal to potential foreign investors, going beyond the energy sector. India has lots of consumers, farmers, and industries willing to pay lots of money for reliable, guaranteed power supply. "Many Indian and foreign groups are eager to set up plats to provide that power and make a profit. It should have been a win-win situation for all sides. Instead, the only result after a decade of reform is that load-shedding is as bad as ever and most private investors in power have packed up and left in bitterness." However, a view, that projects such as Dabhol power are not viable in a country with low resources and paying capacity, is gaining currency. Some analysts ask when utilities in California, where delinquency levels are close to zero, could not afford the power sold by independent producers such as Enron, what chances of survival does MSEB have. - Dinesh Narayanan Maharashtra to appoint Godbole to lead renegotiations with DPC 04/28/2001 Press Trust of India Limited © 2001 PTI Ltd. Mumbai, Apr 28 (PTI) The government of the western Indian state of Maharashtra has decided to appoint former bureaucrat Madhav Godbole, who had recently reviewed Dabhol Power Company's (DPC) Power Purchase Agreement (PPA) with Maharashtra State Electricity Board (MSEB), to lead the expert team for renegotiating the PPA following the US energy major's threat to terminate the agreement. An official order would be issued on Monday and the experts' committee would have to consider the recommendations and terms of reference put forth by the Godbole Review Committee, state government sources said here Saturday. Sources said no time-frame had been set, but "it will all depend on the other side (DPC) also participating in resolving the imbroglio". "Godbole has been chosen to head the renegotiation team as he knows each and every minute detail of the 2,184 mw project", they said, adding at least two of the five members of the Godbole panel--Deepak Parekh and E A S Sharma--would be nominated on the renegotiations committee. Sources said MSEB chairman Vinay Bansal and the country's National Thermal Power Corporation's representative would also be included in the panel. On Friday, state Chief Minister Vilasrao Deshmukh had categorically stated that he was hopeful of renegotiating the PPA even though Enron was contemplating serving of notice terminating power supply to the state. He maintained that termination of PPA between DPC and MSEB would be harmful to both and that Enron should not take any "harsh decision" in the matter. (THROUGH ASIA PULSE) 28-04 2001 The BS Weekend Power play over Dabhol Pradeep Raje and S Ravindran 04/28/2001 Business Standard 3 Copyright © Business Standard As Vinay Bansal, chairman of the Maharashtra State Electricity Board (MSEB) walked into a board meeting of the Enron-promoted Dabhol Power Company (DPC) in London on Wednesday, April 25, he had reason to be happy. The other person who had reason to smile was the Maharashtra energy secretary V M Lal. Bansal and Lal are on the DPC board by virtue of MSEB holding a 15 per cent stake in it. Why should they be smiling when the chief item on the agenda was to authorise Enron managing director Wade Cline to serve a preliminary notice terminating the contract for the Dabhol power project a contract signed in 1992 and renegotiated in 1995? Well, for the simple reason that, two days earlier, the clique of 25 lenders to the project had advised Enron not to terminate the contract. Fortified with the knowledge that Enron couldn't possibly go against the advice of the lenders, the Bansal-Lal duo assumed the board agenda was almost infructuous. Indeed, the lenders had made a strong case against the termination of the contract, noting that since 92 per cent of the construction was already over, no purpose would be served by precipitating matters. Even the foreign lenders, whose loans are covered by the central government counter-guarantee, were persuaded by the Indian lenders Industrial Development Bank of India (IDBI), ICICI and the State Bank of India that the bankers' primary business was to invest money in a project that would return revenue streams over a period of time, and not simply to recover their principal invested. Preliminary reports of the lenders' meeting suggest the foreign lenders who were initially planning to pack their bags and escape the uncertainties of the project, saw merit in the argument that they might lose a significant chunk of their India exposure at one go. Fresh investment avenues are not coming up, and the foreign lenders didn't want to be left out of the India pie. After all, in the business of global banking, it is only association with existing projects that begets fresh opportunities. But despite the lenders' posturing and well-intentioned advice for the Enron representatives on the DPC board, the latter wasn't one to give up so easily, especially after venturing this far just to show its displeasure with the way matters were progressing. DPC has, all along, argued that it has a watertight contract and that MSEB should honour its obligations under the contract. It was only after the state government refused to honour its guarantee, and even the central government seemed to side with the Maharashtra government rather than honour its own counter-guarantee, that DPC decided to pull the trumps in its contract. It had to make a point: if MSEB and the local governments weren't willing to pay up what was due, they would have to pay up all the penalty clauses for termination of the contract. So despite the lenders' advice, the board chose to let the sword hang tantalisingly closer to MSEB's head. It authorised Enron (India) managing director Wade Cline to serve the notice as and when he deemed fit. If the Indian side was talking tough all this while to force DPC to accept its stand on renegotiating a lower tariff, the latter had dangled the threat of phenomenal penalties if the government strayed off the course charted in the power purchase agreement. As the resolution was carried through, the MSEB chairman and energy secretary realised their bluff was called. The smiles vanished. But they still put up a brave front. Speaking from London, MSEB officials denied that they had been checkmated: "This does not mean that they will issue the notice immediately. Cline has only been authorised to do so," they said. But they did admit that the situation had not been defused in spite of the fact that the government had made some conciliatory moves. Just before the DPC board meet, the Union government had announced on April 23 that a committee, comprising representatives of the state government, MSEB and nominees from the Centre, would be set up to renegotiate the power purchase agreement with DPC to get lower tariffs. In retrospect, lenders say, Enron seems to have realised that they had no option but to sit with the state government and thrash out fresh tariffs. After all, it couldn't afford to let payments being held up for months on end. Moreover, if MSEB was not drawing enough power from the 740 MW Phase I of the project, claiming financial inability to service the purchases, what is the guarantee that it would draw power when the larger 1,444 MW Phase II comes up? Putting up capacities when the goods don't sell doesn't make sense. So to salvage the investment, Enron realised that it had little option but to renegotiate with the state government. Then it simply became a matter of fortifying positions ahead of the negotiations. In short, it is trying to convey that it will negotiate but it better be a deal that satisfies the Houston (Texas)-based company. The problem as far as the DPC is concerned is the high tariff it charged the MSEB. These have been as high as Rs 8 per unit at times. Critics of the project, consisting of politicians, bureaucrats and NGOs, have said that this is crippling MSEB. The fixed cost alone for the first phase of 740 MW is Rs 95 crore per month. This means that MSEB has to pay DPC Rs 95 crore whether it buys power or not. This fixed charge will rise to Rs 500 crore per month when the second phase is commissioned by December 2001. For the MSEB, which rakes in around Rs 800 crore per month, the prospect of paying out Rs 500 crore to one supplier is a nightmare. What does the immediate future offer? In the next few weeks expect Enron and the negotiating committee to open direct parleys. There will be hard bargaining on both sides. By deciding to to send its nominees into the renegotiating committee, the Government of India has made it clear that it is taking the issue very seriously. Earlier, the government was content to treat it as a fight between the state government, MSEB and DPC. But the fact that unpaid bills were being claimed from its own account, through the counter-guarantee clauses, seems to have forced the Centre to be much more careful in what the two sides agree on. Indeed, the central government has just realised what a mess it had got itself into. It had sided with MSEB when it decided not to honour the counter guarantee invoked by DPC for the December, 2000, bill of Rs 102 crore. But that got the Centre embroiled in an arbitration proceeding over this amount. And, above all, the central government, being the sovereign, cannot be seen as being so petty as to wriggle out of its obligations. One false move and the entire worth of the Centre's word would be laid to waste. Playing on that, Enron is trying to show that any renegotiations on its part are in the nature of mercy concessions: since it has a valid signed contract, no one messes with it. What this means is that there is no way the state government, MSEB and the Government of India can shy away from their obligations of paying the DPC bills. MSEB owes at least Rs 230 crore to DPC for December 2000 and January 2001. Indeed, DPC made it clear to the Godbole committee that nothing was sacred. However, it would negotiate at a common forum which consists of all the three other affected parties MSEB, the Maharashtra government and the Union government. This concern of DPC has already been met. The issue of what is to be renegotiated still remains. The Godbole committee itself had laid out the extent of concessions for each of the parties to the deal, and had warned that unless the entire package is agreed upon, this round of negotiations will end like the previous round held in 1995. The committee said: "The renegotiations will be a complete failure and will only end up complicating matters further." These recommendations are well known and documented now. However, for the record, the Godbole panel has recommended splitting the liquefied natural gas (LNG) project from the power project. DPC has set up a 5 million tonne LNG terminal of which only 2.1 million tonne is for the power plant. However the entire cost of the LNG facility has been loaded on to the power project. If this recommendation is accepted, it will, first, bring down the cost of the power project. Then, it will eliminate the need for MSEB to buy about 1.8 million tonne of LNG whether it wants it or not. This, in turn, will relieve MSEB of an annual burden of $ 403 million. The excess LNG could be marketed to other players which are mushrooming. The Reliance and Essar groups as well as Petronet LNG are keen to set up LNG terminals in western India. It has also said that the equity return for the DPC tariff be defined in rupees than in dollar terms. This will insulate the tariff from exchange rate fluctuations. It further adds that this tariff should be benchmarked to the lowest cost of power supply from other gas-based plants in the world. The committee has recommended that the sale of power be allowed to others apart from MSEB. This is possible only if the tariff is brought down to rates comparable with other producers. Central utilities like the National Thermal Power Corporation (NTPC) and the Power Trading Corporation, besides power companies like BSES and Tata Power, have already made it clear that they are not keen on buying DPC power at the current rates. BSES and Tata Power charge their customers only between Rs 2 to Rs 3.50 per unit. The least cost DPC power works out to Rs 4 per unit. What happens if the renegotiations fail and Enron decides to pull out of the project? Will it mean the end of foreign direct investment in a sector which is starved of funds? "There has been little investment in the power sector over the last decade due to the poor financial health of the state electricity boards. The health of these boards has, in fact, deteriorated over the last decade when reforms have been launched. Unless this basic problem is addressed, there will be little investment coming into this sector," says R V Shahi, CMD of power major BSES. This is a point of view that is echoed in the Godbole committee report which is otherwise quite critical of DPC. The report warns, "The committee would like to state strongly that none of the solutions espoused for independent power projects in general and DPC in particular is tenable without the reform of MSEB, especially its distribution business." The day MSEB reforms and its finances are in order, Bansal and Lal will smile more often. India waits for a rediscovery Paran Balakrishnan 04/28/2001 Business Standard 13 Copyright © Business Standard Has India slipped off the world map once again? Or, is it about to be re-discovered, now that times are turning tough and inventories are piling up in the international marketplace? Six years ago international bankers and corporations couldn't get enough of India. In everyone's mind India was the Promised Land with a gigantic population that was hungering for everything, from electricity to televisions and Black Label whisky. Foreign investors bought the GDRs of companies like Garden Vareli and Arvind Mills that were selling extraordinary growth stories. The world has altered beyond recognition since then. The foreign investors discovered the harsh truth that a gigantic market by itself doesn't always add up to huge sales. Many investors burnt their fingers buying GDR issues in companies that soon became terminally ill. The enthusiasm for India ebbed gradually but it returns from time to time. India became the flavour of the season about one year ago when hi-tech fever was at its frenzied peak. Suddenly, investors decided that India was logging on to the world and would soon be a good bet once again. Businessmen like Azim Premji were written about in magazines around the world and it was hard not to notice India's hi-tech revolution. Plenty has happened since then and it's a safe bet that anyone who invested in the Indian stock market one year ago must have lost money if he didn't get out in double-quick time. What about the giant investments that everyone predicted would flow into India? A few years ago, former finance minister P Chidambaram told an audience in London that foreign investment in India would easily touch $10 billion by 2000. It hasn't even touched half that amount in 2001 and there's certainly no sign that it is about to pick up sharply. The fact is that brokers, analysts and the global corporations are a bit tired of India. This country is a rickety and rumbunctious democracy and it suffers from a degree of unpredictability that foreigners find baffling. The stock market had just begun to pick up when the Tehelka tapes threw it off course once again. The body blow came after bull operator Ketan Parekh was arrested and accused of manipulating the market. Says one London-based broker: "You never know what to expect. It is just one thing after another." On another front the signals are getting mixed by the continuing travails of Enron and the Maharashtra government. As everyone knows the world's power position has changed unimaginably and companies like Enron have discovered that there are electricity shortages in places like California. Suddenly their enthusiasm for the developing world has waned rapidly. Nevertheless, foreign money is still pouring into the stock markets. As the Dow Jones Index and the Nasdaq grind to a halt it is clear that there won't be super profits in these markets for several years to come. Suddenly, with the index at 3,500 Mumbai looks a better bet. The market is almost certainly undervalued and there are definitely bargains to be had. Back in the mid-'80s growth in the United States had slowed to a halt and the giant corporations decided that they had to get to Europe and South East Asia where growth was ticking along at a comfortable pace. Come the '90s and the action has shifted back to America. It is extremely likely that the wheel is about to turn once again and this time countries like China and India could be in sharp focus. Does it matter what foreign businessmen think about India? The answer is definitely yes. Foreign money has changed the balance of power on the Bombay Stock Exchange. And the globe has shrunk with e-mail and swifter jet travel. And with the WTO policing the world, India must learn to play by the rules of the game. It must learn to look like a star of the business world and do business like one. Enron gets set to pull the plug on power project 04/28/2001 South China Morning Post 4 © Copyright 2001 South China Morning Post Publishers. All Rights Reserved. A dispute over unpaid debts owed to a United States power conglomerate is casting a cloud over India's foreign investment hopes After a 10-year battle the country's largest direct foreign investor is ready to retreat, but the Indians could be the long-term losers. Texas-based Enron this week took a big step toward abandoning an almost-complete US$2.9 billion project in India. The board of Dabhol Power, the Indian subsidiary of Enron, met in London on Wednesday and authorised the company's managing director to issue a preliminary notice to terminate the project, which has been billed as the world's largest natural-gas-fired power plant, The Times of India reported. "The board has given powers to the management to issue the pre-termination notice. But the meeting unanimously felt the need of the hour was not to terminate the project but to initiate a re-negotiation process," Vinay Bansal, chairman of the Maharashtra State Electricity Board (MSEB), was quoted as saying by the newspaper. The notice is the first of three steps that could end in the abandonment of the US$3 billion project. A six-month reconciliation period would follow any move by Dabhol to issue the termination notice, Mr Bansal said. In the past six months, the MSEB has defaulted on bills for electricity supplied by Dabhol, which operates another plant 160 kilometres south of Bombay. Late on Thursday, the MSEB said it had paid Dabhol Power 1.34 billion rupees (about HK$222.5 million) for electricity it bought in March. But the payment only partially resolves the total overdue amount of 2.26 billion rupees, which Enron has been unable to collect even after invoking guarantees issued by the government of Maharashtra and the federal government. The state utility also owes Enron payments for power delivered in December and January. Neither government is willing to foot the bill for a project which has proved expensive and hugely unpopular. Yet failing to meet obligations with Enron threatens to reinforce the image of India as a poor investment climate, making it harder for the nation to raise the huge sums needed to improve its infrastructure. Ironically, Enron was once viewed as playing a lead role in sparking infrastructure-investment led growth. A decade ago, the company offered to build a string of power plants after India rolled out the red carpet to multinationals. The country needed to add 8,000 megawatts of generating capacity a year to meet demand that was growing at 8 per cent to 10 per cent annually. However, years of socialism had left the nation with a network of money-losing, state-run utilities incapable of paying the estimated 300 billion rupees per year development cost. The government's reluctance to reform the domestic power sector meant few domestic companies were willing to build plants. Enron, and a swarm of other foreign energy companies, offered to fill the void. Enron quickly struck a deal in the early 1990s to build a plant in Maharashtra, a contract renegotiated after a state election brought to power a new government which claimed the terms were too generous and the result of alleged kickbacks. Through the deal, Enron became the largest foreign investor in the country, accounting for 10 per cent of total direct foreign investment in India since 1992. The massive project proved hugely unpopular. Its power cost more than that from state-owned plants, as a result of the rupee's depreciation against the US dollar and partly due to the rise in the cost of naphtha, the original fuel source. At its peak operating rate, the plant's output cost about 4.75 rupees per kilowatt hour. However, because of the payment dispute with the state power board, it is running at only 25 per cent of capacity and charges 7.1 rupees per kilowatt hour, more than three times the rate of other suppliers. Many Indians believe the Enron contract has bankrupted the state power board, and threatens to wreck the shaky state budget if the contract is not renegotiated. "We don't want Enron. They can go and sell their power elsewhere," state finance minister Jayant Patil said last month. The 740 MW first phase of the project began operating in May, 1999, and later this year the second phase is due to come on line, tripling output to 2,184 MW. That is forcing both sides to toughen their positions, as next year the amount owed by the state will more than quadruple to more than US$1 billion a year under the 20-year contract. The nasty dispute seems certain to cripple efforts to attract other foreign investment. India attracted just US$2.6 billion in direct foreign investment last year. China, with a roughly comparable population and an economy twice the size of India's, attracts 20 times more. Enron not needed at all, says NGO Manjiri Damle 04/28/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) PUNE: Prayas, the consumer watchdog body on electricity, has told the energy review committee headed by Dr Madhav Godbole that the costly Enron power project was not needed to meet the energy requirements of the state and that the very legality and clearances given to the project were questionable. Prayas was invited by the Godbole committee, which is reviewing the controversial project and other private power projects that are coming up in the state, to make a submission on the Enron issue. The non-governmental organisation (NGO) stated that the energy demand of the state was 67,500 million units (MU) in fiscal 1998-99 which was expected to go up to 86,200 MU in fiscal 2003-04. Possible generation from the existing plants would be 87,060 MU and hence there would be no need to add capacity. The state may suffer a peak-hour shortfall of 400 to 1,500 MU which could be mitigated by exploring other options like purchase of captive energy from industrial units, Prayas added. The NGO told the committee that the MSEB's own generation could be maximised through a series of steps. Quality of coal supplied to the MSEB's thermal plants could be improved by blending imported coal, thereby generating an additional 670 MW. Utilisation of Uran's idle capacity could yield another 500 MW. Power could also be procured from Tata, BSES, captive industrial plants and co-generation by sugar factories. On proposed options regarding Enron, Prayas stated that the sale of Enron power outside Maharashtra would not be possible because other states would not afford it. Besides, there would be major legal and contractual problems as well, the NGO has said. About other private power projects like Bhadrawati, Reliance and other liquid fuel-based projects coming up in the state, Prayas advised that the government and the MSEB should ensure cancellation of all power purchase agreements (PPAs). State-wide stir against Enron from March 1 A Staff Reporter 04/28/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) PUNE: Leftist and socialist parties have planned an intense state-wide agitation from March 1 to demand the scrapping of the Enron project. Addressing a press conference here on Tuesday, general secretary of the committee Prof Ajit Abhyankar said over 10,000 demonstrators would group under the banner of the anti-globalisation action committee and stage demonstrations at the Enron site in Dabhol. "We will be ready to face any action from the police," he said, adding that dharnas would also be held in front of all tehsil offices around the state to coincide with the demonstrations at Dabhol. In Pune district, demonstrations have been planned at Khed, Junnar, Haveli, Purandar, Shirur, Maval, Pimpri-Chinchwad and other tehsil offices, Prof. Abhyankar said. Over 3,000 activists are expected to participate in the agitation in the district while a team of 200 Pune activists will leave for Dabhol on Wednesday. Prof. Abhyankar expressed happiness over the fact that not just the leftists parties but also the common people were participating in the anti-Enron drive. "Although some constituents of the Democratic Front government are trying their best to save Enron, a strong section in the government is of the opinion that the Enron agreement is an insult to the state and the Union government," he said. Without taking names, he hinted that the Nationalist Congress Party (NCP) and the Bharatiya Janata Party (BJP) may forge an alliance to keep Enron in the state. Speaking on the economic aspects, Prof Abhyankar said that once the second phase of Enron became operational, the MSEB would have to cough up Rs 7,144 crore annually for buying electricity that the state did not need or could afford. Enron, India in dispute over future of gas-fired power plant By RAMOLA TALWAR BADAM Associated Press Writer 04/28/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. DABHOL, India (AP) - Workers in yellow helmets scramble up steel girders to fit pipes into place for the world's largest natural gas-fired power plant, to be completed off India's western coast this year by American energy giant Enron Corp. But 200 miles away in Bombay, government officials say they cannot afford the electricity that Enron is now providing from a naphtha plant at the site, and they expect the electricity generated by liquefied natural gas will cost even more. "Enron is simply unaffordable," said Padamsinh Patil, energy minister for the state of Maharashtra, which includes Bombay. "The state cannot afford the power, so we take less power, but still have to pay Enron huge amounts." India needs power - during the April-to-October 2000 hot season, the nation had a daily shortfall of nearly 8,000 megawatts of electricity, according to the Center for Monitoring the Indian Economy. Enron's naphtha and gas plants at Dabhol will together be able to generate about 2,200 megawatts, but politicians have trouble with the price. Aging coal- and gas-fired plants that have been depreciated can charge about two rupees (4 cents) per kilowatt hour, while Enron's naphtha plant has been charging 11 to 15 cents. "Everyone wants to use us to blame for the systemic problem that the state electricity boards in this country sell power for less than it costs them to generate or buy power," said K. Wade Cline, president of Enron India. Despite the protests, Cline believes that the $3 billion project - India's biggest-ever foreign investment - will go on line at the end of 2001. An advantage for Enron - and the major complaint against it - is a unique contract th
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