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Enron Mail |
INDIA: Enron, India panel to meet on May 23.
Reuters English News Service, 05/11/01 INDIAN RENEGOTIATION COMMITTEE MEETS WITH DABHOL POWER CO Asia Pulse, 05/11/01 Enron's Dabhol to Meet Indian Panel Again on May 23 (Update1) Bloomberg, 05/11/01 No more track pants its a whole new line The Economic Times, 05/11/01 Enrons Broadband Solutions to seek new IDC partner The Economic Times, 05/11/01 COMPANIES & FINANCE UK: BG benefits from increased energy prices Financial Times; May 11, 2001 India: DPC-MSEB slugfest: Needed, a conciliatory approach Business Line (The Hindu), 05/11/01 Enron to relocate DPC managers abroad The Economic Times, 05/11/01 India: Dabhol: Back to the table Business Line (The Hindu), 05/11/01 DPC mounts pressure on lenders for PPA termination Business Standard, 05/11/01 Military nominees say corporate ties won't influence decisions Associated Press Newswires, 05/10/01 INDIA: Enron, India panel to meet on May 23. 05/11/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, May 11 (Reuters) - The Indian unit of Enron Corp and an Indian government panel will meet again on May 23 to continue talks on the U.S. energy giant's embattled $2.9 billion Dabhol Power Project. "We discussed issues for two hours and have agreed to meet again on May 23 to discuss them further," said Vinay Mohanlal, energy secretary of the government of the western state of Mahrashtra, where Dabhol is located. Dabhol officials on Friday met a special committee appointed by the Indian government to renegotiate the Dabhol project which has been mired in controversy over high costs and payment defaults. Wade Cline, chief executive of Enron India, told newsmen he had no comments to offer. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIAN RENEGOTIATION COMMITTEE MEETS WITH DABHOL POWER CO 05/11/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, May 11 Asia Pulse - The renegotiation committee, headed by former bureaucrat Madhav Godbole, has held a meeting lasting over two hours with Enron-promoted Dabhol Power Company (DPC) officials to renegotiate the Power Purchase Agreement (PPA) and agreed to meet again on May 23. Soon after the meeting, Enron India managing director K Wade Cline told waiting reporters that "discussions with the panel went on fine". Asked if pre-termination notice was being issued, Wade said "no comments". Wade was accomanpanied by DPC president Neil McGregor and vice presidents Sanjeev Khandekar and Mukesh Tyagi. Lal said that DPC lenders were not present at today's meeting but had nominated an observer, A G Karkhanis, a former executive director of Industrial Development Bank of India. Asked if DPC was ready for renogtiations, Lal said "the very fact that we are meeting again means a lot". The federal government's representative A V Gokak could not attend the meeting as he had been given very short notice about his appointment, Lal said. (PTI) 11-05 1956 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron's Dabhol to Meet Indian Panel Again on May 23 (Update1) 2001-05-11 07:23 (New York) Enron's Dabhol to Meet Indian Panel Again on May 23 (Update1) (Adds details starting in the fourth paragraph.) Mumbai, May 11 (Bloomberg) -- Enron Corp.'s Dabhol Power Co. will meet with a negotiating committee from India's Maharashtra state regarding a dispute over 3 billion rupees ($64 million) in unpaid bills on May 23, an official said. ``We met today and have agreed to meet again on May 23,'' said Vinay Mohan Lal, the principal energy secretary from Maharashtra. ``They (Enron officials) have agreed to come.'' The two-hour meeting ended without agreement. Lal denied that Dabhol Power Co., 65 percent owned by Enron, the world's biggest energy trader, threatened to cancel power supply contracts. Dabhol managing director Wade Cline and chief executive Neil Mcgregor, who attended the meeting, wouldn't comment. The fate of Dabhol, the biggest foreign investment in India, holds the key to further overseas investment in India's power industry. Four foreign power companies, including Electricite de France, Europe's largest, have pulled out of Indian power projects worth $3 billion, citing long delays and the slow pace of reforms. Dabhol, which runs a 740 megawatt plant, is owed unpaid bills for December and January by the state's electricity board, its only customer. The board said Dabhol's electricity price is more than double the rate it pays for power from other Indian generators. Because it must pay for power whether it uses it or not, rates have risen as high as nine times the price of power from alternative sources such as Tata Power Co. Defaults The defaults spurred Dabhol to invoke payment guarantees by India's federal and the state government. The company on April 25 authorized its management to cancel contracts to sell power to the board, a move Dabhol is yet to make. India wants to double its power capacity to 200,000 megawatts over the next ten years. It needs $100 billion to do that, and is relying mainly on foreign companies. Construction of Dabhol's power project was delayed for about three years until December 1996 because of legal battles with local governments and environmentalists. The project was canceled after a change of state government, though Enron revived it after agreeing to cut power prices by 22 percent and to sell a 30 percent stake to the state. --Ravil Shirodkar and Sumit Sharma in the Mumbai newsroom (91-22) 233 9029 or rshirodkar@bloomberg.net /mmd/rb No more track pants its a whole new line J Padmapriya 05/11/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) RAILWAYS IS now poised to chug along on a different track. Cashstrapped, it sees huge untapped potential in its plans of building a long-term telecom business. Chances of the railways setting up cyber cafes, bagging a cellular licence or getting into rural telephony are, therefore, not too farfetched. Though a beginning has been made with the railways creating a public sector unit and christening it Railtel, the new business is still to get off the drawing board. The delays notwithstanding, McKinsey & Co have come out with a detailed gameplan for Railtel to cash in on Railways huge right-of-way advantage. Mckinsey has been appointed by the Railways to prepare a financial and technical plan for Railtel. The fate of Railtel is stuck at the Group of Ministers level, who are debating whether to allow the Railways to hold 51 or 26 per cent stake in its subsidiary. The consultants say that a strong strategic partner is critical for Railtels success and delays in getting into the business would lead to Railways losing the early bird advantage. As it is, national highways also offer similar right of way options to private players keen on establishing their own infrastructure. Besides, state highways offer right of way for free. Forecasting a business of over Rs 1,500 crore by 2005, the consultants say Railtel should focus on long-distance bandwidth, corporate and wholesale voice and ISP/data services markets. The first phase would involve laying the optic fibre cable network across 33,000 km, of which only about 15,000 km would be commercially viable. The second course would be to enter the voice and ISP markets by acquiring the national long distance operations and ISP licences as soon as its commercially viable linkage of metros is completed. The consultants have proposed a smart-build strategy for building the OFC backbone. According to this, Railtel would auction the contract to lay fibre along packages of specific routes on an exclusive but time-bound basis to private players in return for dark fibre strands to build a low-cost backbone. Several players like BPL, Tata, Enron and Bharti are believed to be keen on this arrangement, Mckinsey says. Railways USP is its 64,000 km route, 7,000 railway stations of which hundreds are in the commercial business districts. Mckinsey says that the last mile success for Railtel would be to establish customized services for corporate clients in these CBDs. For instance, Railways can establish links at Nariman Point, Worli, Navi Mumbai or Bandra thanks to the presence of railway stations or terminals. Similarly, the commercial districts and software parks in Hyderabad, Bangalore, Pune and Chennai could be targeted for corporate clients with value-added services. Projections of earnings from ISP/data services is at Rs 517 crore over the next five years and revenues from long distance voice services stand at Rs 516 crore over the same period of time, the report says. Thats not all. Railways core position in long distance bandwidth, voice and data services creates a strong platform for step out businesses. Here, the consultants say Railtel could branch out into systems and network services, retail, basic and mobile telephony and retail physical infrastructure services. Quite clearly, Railways have a natural advantage in going ahead full steam in the telecom sector. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enrons Broadband Solutions to seek new IDC partner Sangeeta Kulkarni & Anto T Joseph 05/11/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) MUMBAI BROADBAND Solutions, Enrons 100 per cent subsidiary, is struggling to sell the stake in the companys Mumbai Internet Data Centre. Early this year, BSPL was in dialogue with Asian Frontiers, a company backed by venture capital fund Walden International, for seeking partnership in its Mumbai IDC. However, talks with Asian Frontiers have been called off and BSPL is now on the look out for a new partner for its Mumbai IDC. Asian Frontiers, it is learnt, has plans to set up a data centre of its own. We are on the look-out for a new partner for building our data centre business, as talks with Asian Frontiers have not fructified. If the company fails to identify a new partner for the IDC at this stage, it will continue with its plans for IDCs in Mumbai and other metros, Enron Indias senior vice-president, Hemant Luthra told ET Broadband Solutions has a 80,000 sq ft server farm in Mumbai at its lower Parel facility that offers services such as web-hosting, co-location, mirroring, data management and storage facilities. After folding up its optic fibre cable business, Enron transferred several officials to its IDC in Mumbai. Pugmarks Interweb, a domain-based web hosting services company that Enron allied with, has a partnership with the latter for marketing its services through Enrons IDC. Pugmarks is currently hosting its services from the Exodus data centre in Chicago. According to the non-exclusive memorandum of understanding with Enron India, Pugmarks can market Web development and ecommerce services through the IDC. However, Enron officials have a different story to tell. They state that Pugmarks is the companys channel partner that will help them with customer acquisition. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. COMPANIES & FINANCE UK: BG benefits from increased energy prices Financial Times; May 11, 2001 By MATTHEW JONES BG, the oil and gas exploration and production company, reported a 12 per cent rise in underlying first-quarter profits on the back of continuing high energy prices, production growth and cost reductions. Profit after tax but before exceptionals rose from Pounds 121m to Pounds 136m - at the high end of analysts' expectations - on turnover up from Pounds 555m to Pounds 726m. The outcome was buoyed by gas prices that have more than doubled in the past year. Nevertheless, Frank Chapman, chief executive, said he was "very pleased" with the underlying growth. "Excluding the impact of changes in oil and gas prices, our operating profit would have risen 21 per cent," he said. He said BG was on track to achieve its targets for production growth and capital returns. The company has pledged to deliver a 20 per cent pre-tax return on average capital employed and a 16 per cent rise in average annual production compared with 1999 levels by the end of 2003. Operating profit in the quarter increased 30 per cent from Pounds 178m to Pounds 232m. BG demerged from its regulated pipelines business last October to concentrate on growth overseas. Comparisons with the first quarter of last year were based on pro forma figures for continuing operations. The company took a one-off gain of Pounds 51m following the sale of a 24.5 per cent share of Phoenix Natural Gas, the Northern Ireland distribution company, and post-tax compensation of Pounds 36m following a dispute with a subsidiary of Enron, the US energy trader. This compared with an exceptional gain of Pounds 285m in the first quarter of last year on the sale of a 25 per cent stake in Dynergy, the US energy company. The results were also aided by significant increases in liquefied natural gas and transmission and distribution sales, together with a 4 per cent reduction in lifting costs for oil and gas. Operating profit from LNG rose from Pounds 5m to Pounds 20m while transmission and distribution profits jumped from Pounds 1m to Pounds 8m. Exploration and production operating profits were Pounds 171m (Pounds 152m). Total hydrocarbon production volumes grew by a modest 2 per cent to the equivalent of 27.2m barrels of oil. However, Iain Reid, analyst at UBS Warburg, pointed out that production would accelerate during the rest of the year. The group's 12.5 per cent share of the Elgin field in the UK North Sea and 40 per cent stake in the Rosetta field in Egypt both came onstream during the quarter. "Unlike the oil majors, BG's earnings will remain at or above current levels as the oil price comes down," he said. Capital expenditure grew from Pounds 177m in the first quarter of last year to Pounds 219m, in line with BG's plan to spend Pounds 5bn on development between 1999 and 2003. The shares rose 2p to 271 3/4p. India: DPC-MSEB slugfest: Needed, a conciliatory approach 05/11/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire THE ROW between Dabhol Power Corporation (DPC) and the MSEB/Maharashtra Government/Union Government has reached a flashpoint. At a DPC board meeting in London, the Managing Director and President/CEO were authorised to take a decision to wind up the project at an "appropriate time". Though the DPC team agreed to meet the Godbole Committee on re-negotiating the terms of the Power Purchase Agreement (PPA), things are far from clear. The project's termination will place huge payment liabilities on the MSEB/Maharashtra Government/Centre by way of compensation claims (running into several thousand crore rupees), the aggravation of the power deficit in the State, increased NPAs in financial institutions, adverse impact on companies/units with business links with DPC, loss of employment and attendant social problems. It may be recalled that DPC was the only project, among the eight fast track IPPs that has seen the light of day. If this is also wound up, it will have a debilitating effect on foreign direct investment (FDI) which has already suffered on account of policies and delays in various approvals/clearances. Enron is currently implementing an ambitious project to set up a terminal for handling imported LNG. Apart from replacing naphtha in DPC-I, this will be used as fuel in phase II which is likely to be commissioned next year. The project involves import of 5 million tonnes of LNG, 2 million tonnes of which will be used by DPC I and II and the remainder will be made available to other projects, including the fertiliser sector. Due to a severe shortage of domestic gas and the exorbitant cost of other fuels such as naphtha, imported LNG is a favourite considering its low cost. In the fertiliser sector, the ERC has recommended that all naphtha and fuel-oil-based plants switch to imported LNG to improve cost-competitiveness in the emerging liberalised environment. LNG will also help gas-based units feeling the pinch of short supply domestically. Against this backdrop, if the DPC power project is terminated, a major source of guaranteed offtake of LNG on a long-term basis will disappear from the scene. For, it is not likely that the LNG project will be taken up. This will affect the overall availability of LNG, hurting the fortunes of industries such as fertilisers and power. The genesis of the present crisis lies in the high cost of power supplied by DPC and the MSEB's inability to pay its bills. It is the inevitable outcome of a cost plus system of power tariff - both with respect to the fixed and the variable component - incorporated in the PPA. The MSEB/Maharashtra Government signed the deal with eyes open and the Centre also provided a counter-guarantee! Having consciously become a party to the deal, things need to be taken in stride. It would be imprudent, at this stage, to lay the blame for the consequential problems on DPC/Enron. Unfortunately, our side has adopted a confrontationist attitude, amply reflected in the MSEB's decision to lodge a claim for Rs 401 crore with DPC because the latter could not supply electricity for a couple of hours in January. Considering that the termination of the Dabhol project will be detrimental to Indian interests, a conciliatory atmosphere should replace the present mood of mutual bitterness. The setting up of a committee on re-negotiating terms with DPC is a good thing. But there is also the need to avoid frequent outbursts, charges/accusations and so on. In the circumstances, the vexatious problem of high cost power should be approached in two parts. First, we need to carefully assess the role of the MSEB/Maharashtra. Second, the need for necessary adjustment/changes in various charges to reduce the tariff should be impressed upon DPC. Needless to say, both parties should take that action concurrently in a spirit of mutual accommodation. We need to clearly understand that under the PPA, the fixed charges have to be necessarily paid irrespective of the quantum of power drawn by the MSEB. For DPC Phase-I, these are Rs 1,050 crore per annum or Rs 87.5 crore a month. After the commissioning of Phase-II, the charges will be Rs 3,500 crore per annum or Rs 292 crore a month. Depending on the quantum of the power drawn, the incidence per unit basis will vary. Thus, at 80 per cent generation capacity of DPC-I, or 5,186 million units per annum, the fixed charges will be Rs 2.02 per kWh. For both DPC-I and II, at 80 per cent load, or 15,067 million units per annum, these will work out to Rs 2.32 per kWh. If, on the other hand, the offtake of power is only a third of the generation capacity, or 2,139 million units on an annualised basis, then for DPC-I the fixed charges would be Rs 4.91 per kWh. Under a similar scenario, with the operation of Phase-II, the per unit incidence would be Rs 5.63 per kWh. DPC-I now uses naphtha as fuel. On the basis of its prevailing price, the variable cost component works out to about Rs 2.2 per kWh. Together with fixed charges corresponding to drawal at 80 per cent load, the total cost to the MSEB is Rs 4.2 per kWh. However, if the offtake is restricted to a third, the cost would zoom to Rs 7.1 per kWh. From next year on, the entire project would operate on imported LNG. This being cheaper ($3.75 per million BTU against about $6 per million BTU for naphtha), the variable cost will go down to Rs 1.3 per kWh. Together with fixed charges at 80 per cent, the total cost of power will be Rs 3.62 per kWh. In the event only a third of the capacity is drawn, the cost will zoom to Rs 6.93 per kWh. Clearly, it is possible to contain the cost of power supplied by Dabhol at Rs 3.5-4 per kWh if, the MSEB draws the optimum load. There seems to be no other way of bringing about a meaningful reduction in cost, other than a significant increase in the offtake of electricity by the MSEB from the present low level. The demand-supply scenario for power in Maharashtra justifies the accommodation of entire supplies from DPC at optimum load. For 2001-02, the total requirement is estimated at 70,127 million units. Supply from MSEB's own generating stations and sources other than DPC being about 57,000 million units, there will still be an uncovered gap of 13,127 million units, which is higher than the supply from DPC-I at 80 per cent load. Notwithstanding the above, if the MSEB is not able to lift power at the optimum load, it is because its precarious financial health limits its ability to make payments. This, in turn, is because of supply of electricity to agriculture and households at subsidised rates and high transmission and distribution losses (power theft). Without tackling these two problems on a war footing, we cannot easily come out of the Dabhol imbroglio. Besides yielding benefits by significantly lowering per unit cost, the above steps will also help build confidence with DPC, especially considering its consequential ability to optimally utilise generating capacity. The negotiating committee can then leverage this to seek from DPC a meaningful reduction, particularly in the fixed charges. Under the PPA, all liabilities towards foreign capital - servicing of loans and return on equity - are denominated in dollars/forex. In the event of the rupee's depreciation, this automatically results in the increased burden on the MSEB. This is contrary to established business practices the worldover and needs to be rectified by freezing all foreign currency liabilities with reference to the exchange rate prevailing at the time of commissioning of the project. Likewise, with fuel cost, efforts should be made to protect the variable component of tariff from the rupee's depreciation. The DPC should be in a position to absorb its effect especially considering that the actual fuel consumption is lower than the norm used for arriving at variable cost. - Uttam Gupta (The author is Chief Economist, Fertiliser Association of India. The views expressed are personal.) Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron to relocate DPC managers abroad Anto T Joseph 05/11/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) MUMBAI WITH confrontation with the Maharashtra State Electricity Board deepening by the day, Enron is starting the process of re-locating senior officials to its operations in other countries. Company sources said its multinational parent is working towards absorbing manegerial talent at its Indian subsidiary in its operations abroad. The company is expected to give a choice to its remaining staff whether to continue with the company abroad or opt for a golden handshake. Many senior officials currently working with Enron are planning to stay with the company, no matter which country they are re-located to. Enron is a professionally-run company, and tops the chart of the best-run global companies, annually brought out by Fortune. Unfortunately, the company could not pursue its projects in India, and has decided to fold up its operations in the country, said a senior Enron official, who expects to be transferred either to Houston or London. The whole process of re-locating the Indian staff is expected to be completed within a month or two. An Enron spokesperson refused to comment on these developments. Company sources also said a new VRS is on the anvil for the Dabhol Power Company staff. The Houston-based energy giant has pulled out of all its existing projects in India except the Dabhol power project, which is currently in the thick of controversy. The other group companies Metgas (which was setting up a liquefied natural gas pipeline in Maharashtra ), and Enron Broadband Solutions (which was laying an optic fibre cable network across the country) have already virtually folded up operations. The other group company Enron Oil & Gas (India) which is a joint venture between Reliance and ONGC, is currently in the process of selling its stake. Enron, which had earlier proposed to set up a few more power projects in India, has already decided to drop these plans, after it ran into a series of payment problems with MSEB. Enron has already got rid of around 50-60 people by way of a successful voluntary retirement scheme. Enron India now has a little over a dozen employees on its rolls. The focus of Enron Corp, which occupies the seventh position on the Fortune 500 list in terms of revenues (with over $100 bn) has shifted to trading. A lions share of its turnover came from its trading activities all over the world, especially in the US market. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Dabhol: Back to the table 05/11/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, May 10. MANY turbulent years later, when Enron sits across the negotiating table tomorrow, several people would remember the day it stepped into the "liberalised" India, promising power, growth and greenbacks. They would also remember 1995, when Ms Rebecca Mark, the high-profile go-getter of Enron, talked out the "sinking project clear out of the Arabian sea". Undoubtedly, throughout the decade it has been here, Enron has shown tremendous tenacity and stamina in completing the Dabhol power project. And now, just as the stacks of the second phase of the project were about to begin spewing smoke, the players are back at the table - "let's talk what's wrong". This time, however, Enron makes its "courtesy visit" to the Godbole panel knowing fully well it can afford to talk holding an axe over the project. In 1995, when the Shiv Sena Government cancelled the DPC project, Enron pulled arbitration and simultaneously started renegotiating the power purchase agreement with the Negotiating Group of the Maharashtra Government. Several "hard bargains" later, the project was revived with a "$330-million reduction in capital cost and a 201-MW increase in the gross output". However, nothing had changed fundamentally and most of the "problems" continued to plague the project. The negotiation details were not available and only a summary report was given. Even though there were protests, and cases filed against the company, the project went on and things quietened for a while. That is, till phase I of the plant went on stream and MSEB started paying through its nose for the power purchased (or not purchased). As one anti-Enron activist put it: "The enormity of the trap fully manifested then." Inevitably, the board defaulted and that triggered off another chain reaction. It has come a full circle to arbitration, conciliation and negotiation. However, this time around it appears Enron has the upper hand especially since the damage wreaked will be most on Indian financial institutions and Governments. The financial institutions are going ape because they had committed funds to the project, not strictly considering its merits but bowing to political pressure, say officials. They say that the Government backing was "instrumental" in their taking the exposure. They want the project to continue because that is the best way for them to get their money back. MSEB is really cheesed off because it is caught between carrying out the "social obligations" of those in power and the rigours of doing business in the open market. Adding insult to injury are the barbs of being inept and unbusinesslike and talk of reform school. In the melee, the Centre - the one player capable of making any decisive difference to the issue - has maintained more or less a studied silence. It is understood to be reluctant to get too deep into the matter for fear of contracting another "headache". It wants the other three - the State Government, MSEB and DPC - to thrash it out among themselves. But they want the Centre to talk shop. Enron does not appear interested in hanging around running a multi-billion- dollar power plant, even though it has consistently denied so. It also has not categorically ruled out the sell-out option. The end-game is getting more convoluted with all the players clinging on to even the pawns. Enron has already said it does not agree with the interim report of the Energy Review Committee headed by Dr Madhav Godbole, which had suggested some workable solutions, never mind if they were really tough. Enron is hesitant to compromise on its returns, institutions cannot reduce interest rates beyond a limit, MSEB is adamant on "going by the book", and the Centre is mum. The going is getting tougher...the tough should get going. - Dinesh Narayanan Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. DPC mounts pressure on lenders for PPA termination S Ravindran Mumbai 05/11/2001 Business Standard 3 Copyright © Business Standard The Enron-promoted Dabhol Power Company (DPC) has stepped up pressure on lenders to permit it, without further delay, to terminate the power purchase agreement (PPA) with the Maharashtra State Electricity Board (MSEB). The company has reportedly told the lenders that there should not be any delay in serving the termination notice as the engineering procurement and construction (EPC) contractor Bechtel has threatened to pull out of the project on June 11. Bechtel holds 10 per cent stake in the project. The lenders are, however, not yet ready to back DPC's demand. They are of the opinion that phase two of the project should be completed first. The MSEB decision to clear the April bill (Rs 139 crore) has also come as a shot in the arm for lenders. "Financially, phase two is 93 per cent completed while 97 per cent of the physical construction is over. The lenders want the project to be completed without any cost and time overrun. At this juncture, if the PPA termination notice is served, it will preclude any further disbursements by the lenders," a source said. A DPC spokesperson declined to comment on the development. A fully completed phase two will be in the lenders' interest as they will inherit the project if it is terminated. The lenders have first charge on the assets of DPC. A fully completed project will enable the lenders to find a buyer and secure a better valuation. The domestic lenders however argued against termination as their exposure to the project is not backed by the counter guarantee. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Military nominees say corporate ties won't influence decisions By CHRISTOPHER NEWTON Associated Press Writer 05/10/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. WASHINGTON (AP) - Three top executives of major corporations nominated by President Bush as civilian heads of the nation's armed forces said Thursday that their corporate ties would not influence how the Pentagon doles out big defense contracts. At their confirmation hearing before the Senate Armed Services Committee, all three testified that they would consider disqualifying themselves from decisions that involved their corporate connections after Sen. John McCain, R-Ariz., raised the issue. "If there's a conflict with prior knowledge or involvement, then I would certainly recuse myself," said Gordon England, the executive vice president of General Dynamics and Bush's pick to be Navy secretary. "But if there is no conflict, I certainly would not plan to do that, sir." James G. Roche, Bush's pick for Air Force secretary, and retired Brig. Gen. Thomas E. White, nominated as Army secretary, also agreed to recuse themselves if they felt there was a clear conflict of interest. Roche is the corporate vice president of Northrop Grumman Corp. and White is the vice chairman of Enron Energy Services. General Dynamics and Northrop Grumman are among the nation's top defense contractors. Democrats were not so certain the nominees could remain impartial. "This is just more of the president filling posts with big business buddies who, without question, will make sure that the nation's contracts benefit their mutual friends," said Marcy Woodman, a Democratic policy analyst based in Washington. "Even if they recuse themselves, their underlings will know which company they better award a contract to." Roche, a 23-year Navy veteran, was a Democratic aide for the Senate Armed Services Committee from 1983 to 1984, and was a senior staffer for the Senate Select Committee on Intelligence from 1979 to 1981. White, who served in the Army for 23 years, has served as chairman and chief executive officer of Enron Operations Corp. and as chairman and chief executive of Enron Power Corp. since joining Enron in 1990. He was executive assistant to Secretary of State Colin Powell when Powell headed the Joint Chiefs of Staff in the first Bush administration. England, the Navy nominee, has worked for General Dynamics since 1980, except for four years when he served as president of Lockheed Fort Worth, as a program manager for Amecom (Litton Industries) and as chief executive of GRE Consultants. Rear Adm. Craig Quigley, a Pentagon spokesman, said recusal might be the best option in some cases. "There needs to be a sense of confidence by the American people that these are honorable men that are making these decisions," Quigley said. "If there comes a point where there's a recusal or something like that necessary to create that public confidence, I'm sure that will be the case. I also think there's all kinds of checks and balances built into the system to make sure that the public confidence in those officials remains high." The hearing will continue into next week. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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