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Enron Mail |
Rick:
This is a brief on the situation on the ground here based on observations and short talks with the various colleagues in India Team. I do have a meeting with Wade tomorrow (June 13th) to understand his requests of support from GA. While I do not expect much, I shall communicate to Wade the standing policy of GA, namely, "GA shall provide the required support". Notwithstanding this mandate, I shall communicate it in a manner to give Houston the final say. In the context of regulatory support, there two important areas for GA contribution; they are: a) Dealing with the regulatory commission (MERC), and b) third party sales. It is likely that India shall need a week per month, most conducted from Houston but may include a visit to Bombay. The feeling here is that the company wants to terminate the PPA, and exit India (but see point 5 below). It is the understanding that there are teams in London that are going through the reevaluation of assets in anticipation to transfer them to MSEB as per the contract (MSEB has to agree on the valuation which shall be a lengthy and an adversarial process). It is noteworthy that the transfer of these assets will not take place on market basis, but rather on accounting basis. As most chips are on terminating the contracts and exiting as the likely route (around 60%), renegotiation is not discussed much (hastily added however, renegotiation is the tacit direction of the lenders as communicated in Singapore the other day in the lenders' meeting; they also want ENRON to complete phase II which we are refusing). If renegotiation is to take place, its crux will be the reduction in energy and capacity costs to both phases and finding off-taker to Phase II (1400 MW kit and caboodle). NTPC, or PTC are the likely parties to assume such responsibility. Of course, we are trying to avoid any commercial risks associated with marketing this power. Whether we accept it or not, every issue related to dispatch and transmission must be minutely determined and solved. The decision making process here is entirely dependent on Houston highest level; that is directly from RMcDonald, and JS. The fact that both of them did not visit India and see for themselves how things are has been mentioned as a minus point. Perhaps this point should be communicated to them. As mentioned above, GA contribution could be in two areas, namely dealing the regulatory commission (MERC), and third party sales. Starting with the later, third party sales, it is perhaps the most important point in the renegotiation as it shall increase the commercial value of our commitment (incidentally, Enron's commitment in the project is between $0.65 and $0.825 billion--with B--depending on what to include and exclude). Ironing the issues for third party sales is clearly more valuable in the case of renegotiation, but can also add value when assets are reevaluated and there is a disagreement and some sort of market parameters are added. As for dealing with MERC, it an ongoing basis particularly that MERC is seeking to expand its jurisdiction in favor MSEB at every through of the dice. I shall keep you posted with progress, meanwhile, please let me know if you have any questions and/or advise. Best regards AI
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