FW: Developments

FYI. Please call me if you would like any additional information. Thanks.
-----Original Message-----
From: Katwala, Sandeep
Sent: Monday, March 12, 2001 12:53 AM
To: Brownfeld, Gail; cwalker@linklaters.com; kelly.quinn@linklaters.com
Subject: Developments

Thought you ought to be aware of the following.

1. Maharashtra Pollution Control Board
DPC received a letter from MPCB asking it to cease generation until a Consent
to Operate is obtained. Kraske and his team are dealing with this. We have
heard that MPCB is likely to make a further visit to the site today to "dig
up the drains" and clearly the water pollution issue could arise as part f
that visit. The visit is rumoured and may not be fact as yet. Suhas has asked
Atul R to start working on a petition re the ceasing of generation issue. My
read of this is that the original approval given by MPCB clearly contemplates
that DPC is allowed to generate electricity while it is testing without a
Consent to Operate; it can do so under its Consent to Establish which was
given prior to financial close. MPCB disagreed at the time of the testing of
Phase I but seemed to have conceded the point eventually and DPC did test
before obtaining the Consent to Operate. This time DPC wrote to MPCB and told
them that it was going to test. MPCB wrote back and said that it should not
do so until a Consent to Operate had been obtained. DPC seems to have ignored
that instruction from MPCB and proceeded to test and export power to MSEB.
MPCB then visited the site and discovered that testing was going on and that
evening sent a letter to DPC asking it to stop generating. DPC may have to
file a writ petition on the generation issue - a meeting has been requested
with MPCB but has been declined.
On the rumoured site visit it seems that MPCB will turn up in force and no
doubt will find a number of things however minor.
My instinct is that this will end up in litigation in some form or other but
that it is going ot get very nasty. The Chief Minister is reported to have
gone on the offensive as far as the pollution issues are concerned.

2. Nagpur Petition
You will have read in the clippings that a GC Singh has filed a public
interest petition in the Nagpur High Court. I am trying to get hold of the
petition. DPC was apparently not a corespondent but the Court seems to have
issued a notice to DPC (which has not been received by DPC as yet) requesting
it to show cause as to why the petition should not be admitted. Atul R has
said that there may be a possiblity of knocking this out of the Nagpur Court
on the basis that that Court does not have jurisdiction over a matter which
has at its root a project in the Ratnagiri district which district does not
fall within the list fo areas that can be covered by the Nagpur Court. Atul R
is confirming this with Atul S. The Court seems to have given a time limit of
6 weeks in which DPC is required to send in an affidavit although some
reports in the press say that (i) the petition has been admitted and (ii)
that there is a hearing in 7 days time. Atul R's sense is that the petition
has not been admitted and that we have a 6 week period. More will be revealed
when we get a copy of the petition which hopefully is today. Press reports
indicate that the petition alleges the usual bag of things.

3. Invoices
Can Chris/Kelly please let me know if they have copies of the January and
February invoices. On the declaration issue you ought to know that DPC has
agreed a deal with MSEB whereby DPC waives the requirement of MSEB to
dispatch a minimum of 180MW and instead DPC will supply Block B testing power
instead of Block A power. Testing power is, under the PPA, to be paid for by
way of a Commissioning Fee (basically fuel costs) which is payable once the
Block has entered into ECS. The deal (recorded in letter agreements) is that
in return for MSEB taking the testing power and not beong obliged to take the
minimum of 180MW it will pay the Commissioning Fee monthly instead of at the
end of the testing period. [I think that this has a negative impact on the
MPCB generation issue as DPC is receiving income from the sale of power
(albeit small) before it has a Consent to Operate - but I am not aware of the
full facts and this may be wrong]

Sandeep