|
|
Enron Mail |
THE ECONOMIC TIMES
Monday, June 04, 2001, http://www.economictimes.com/today/bn02.htm DPC's desi lenders rush to S'pore to woo bankers, Sugata Ghosh & Anto Josep= h=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Monday, June 04, 2001, http://www.economictimes.com/today/04edit09.htm =20 Duellers to the end=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Monday, June 04, 2001, http://www.business-standard.com/today/financ11.asp?= Menu=3D5 DPC lenders' engineers push for phase II completion ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Monday, June 04, 2001, http://www.business-standard.com/today/economy4.asp?= Menu=3D3 Dabhol lenders set to present a united front at Singapore meet , Renni Abra= ham=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Monday, June 04, 2001, http://www.business-standard.com/today/economy3.asp?= Menu=3D3 Bechtel stays, DPC lenders transfer funds to phase II=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Monday, June 04, 2001, http://www.business-standard.com/today/opinion5.asp?= menu=3D8 'Expert knowledge' and Dabhol Some way will have to be found to get Enron worried about the legal enforce= ability of its agreements, writes A V Rajwade ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Monday, June 04, 2001, http://www.business-standard.com/today/opinion4.asp?= menu=3D8 The Centre finally sees the light If the Centre had intervened earlier, the Dabhol crisis not have reached it= s current proportions, says P Vaidyanathan Iyer ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Monday, June 04, 2001, http://www.economictimes.com/today/04econ01.htm FIs not to loan IPPs till Enron issue is resolved, Shubham Mukherjee & Jame= s Mathew=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Saturday, 2 June, 2001 http://216.34.146.167:8000/servlet/Form Govt working out new Enron package ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Saturday, 2 June 2001, http://216.34.146.167:8000/servlet/Form Powerful suggestion ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Saturday, 2 June, 2001, http://216.34.146.167:8000/servlet/Form Fitch downgrades India's rating ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Monday, June 04, 2001, http://www.financialexpress.com/fe20010604/eco1.html MSEB refuses to backtrack from legal battle against Dabhol Power Company , = Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Monday, June 04, 2001, http://www.financialexpress.com/fe20010604/news2.htm= l DPC misdeclared availability: MSEB , Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Monday, June 04, 2001, http://www.financialexpress.com/fe20010604/news4.htm= l DPC power cost MSEB Rs 3,363 cr since '99 , Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Monday, June 04, 2001, http://www.financialexpress.com/fe20010604/fed1.html The gathering clouds=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Monday, June 04, 2001, http://www.timesofindia.com/today/04busi1.htm Indian FIs leave for Singapore meet on Enron=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Monday, June 04, 2001, http://www.timesofindia.com/today/04busi2.htm MSEB asks DPC to refund Rs 1,200 cr as capacity charges , By Vinu Lal=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Saturday, 2 June 2001, http://www.timesofindia.com/020601/02busi4.htm New package on cards for DPC: Gokak=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Saturday, 2 June 2001, http://www.timesofindia.com/020601/02busi5.htm MSEB opposes DPC arbitration in London , By Vidyadhar Date=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Sunday, 3 June, 2001, http://www.timesofindia.com/030601/03busi2.htm PM for central initiative to salvage DPC ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Sunday, 3 June 2001, http://www.timesofindia.com/030601/03busi12.htm SWAMINOMICS / Swaminathan S Anklesaria Aiyar The many blunders of Enron=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS Monday, June 04, 2001, http://www.indian-express.com/ie20010604/bus6.html No avoidance of legal battle: MSEB, Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE HINDU BUSINESS LINE Monday, June 04, 2001, http://www.hindubusinessline.com/stories/040456pd.ht= m Dabhol Power Project: What next , S. Padmanabhan ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE HINDU BUSINESSLINE Sunday 3 June, 2001, http://www.indiaserver.com/businessline/2001/06/03/sto= ries/14035604.htm DPC power: Govt to pursue sales to States=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Monday, June 04, 2001 DPC's desi lenders rush to S'pore to woo bankers, Sugata Ghosh & Anto Josep= h=20 IN PERSUADING foreign bankers not to pull the trigger, the most vulnerable = lot in the Dabhol fiasco - domestic lenders - left for Singapore on Sunday = with promises that more avenues are being pursued to save the controversial= project and eschew a disaster. While talks are far from conclusive, the lo= cal lenders have already mooted the option of converting the 16 per cent do= llar return on equity given to Enron into a rupee-denominated return, top s= ources told ET.=20 These lenders, who perforce have taken a proactive role on the Dabhol issue= , have also revisited the proposal to partly exclude the $500 million LNG t= erminal from the $2.9 billion project to bring down thefixed cost and in th= e process the power tariff. Understandably, a rupee-denominated return (as = opposed to a dollar return allowed in the '91 power policy) has not found f= avour with Enron. But, the lenders in consent with the state and Central go= vernments are expected to raise the issue at the negotiating table. And, se= ctions think that these negotiations could emerge as a benchmark in correct= ing the Narasimha Raogovernment's liberalised power policywhich was heavily= loaded in favour of foreign investors. The exclusion of the LNG terminal f= rom the project was a part of the Godbole Committee recommendations. While = Enron may be agree to this, analysts put a question mark on the economic vi= ability of the project, thanks to the robust and cost-effective LNG facilit= ies that Petronet is putting up in Dahej.=20 Sources said the Indian FIs' prime agenda would be to give some comfort to = the foreign lenders so as to prevent them from invoking the deferred paymen= t guarantees which the local lenders had offered against their exposures to= Dabhol. The main overseas institutions are Miti, Japanese Exim, US Exim an= d OND of Belgium. Some of them have the accelerated invocation clause in th= eir contracts. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Monday, June 04, 2001 Duellers to the end=20 =20 THERE has extensive media coverage of Dabhol Power Company's disputes with = MESB, the Centre and the state government. That is explained by the high f= inancial stakes and fears that wrong signals may affect future FDI inflows = into power. But MESB's present stance will heat up, not cool matters. Even = arbitration, or court cases, take time and their outcome is uncertain. DPC = must appreciate that MSEB is in the right on its counterclaim for the compa= ny's failure to generate optimum power within the stipulated period. But DP= C too is correct in seeking payment according to the PPA. But renegotiated = or not, the cessation of power drawal by MSEB can lead to complications. Al= so, it is drastic to treat the PPA as not being valid while a solution is b= eing sought. The legalities will matter only later, when agreement details = are redrawn afresh.=20 It will be futile to try sale of power to third parties, or even to get oth= er states to evacuate the entire 740 MW (Phase-I) output. Both will be har= d given the backdrop of high prices which deterred MESB from timely payment= . Third party or no, few will be able to pay given the present pricing of D= PC power, plus the wheeling charges to MESB. The right approach would be to= reduce the cost of power and delink from the dollar. DPC should accept a p= rice that does not lead to loss, even if profits are lower. FIIs could inde= ed play a role in this matter for their own good, and for DPC's. C R BHATTA= CHARJEE, Kolkata ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Monday, June 04, 2001 DPC lenders' engineers push for phase II completion Stone and Webster, lenders' engineers to the Dabhol power project, is pushi= ng for completion of phase II without time and cost over-runs. The firm wil= l make a formal presentation to the global lenders of the Dabhol Power Corp= oration in Singapore on Monday on the technical aspects of the plant, with = White & Case, the New York-based legal firm dealing with the legal implicat= ions of mothballing the project.The global lenders to the project are meeti= ng in Singapore for two days in a last-ditch attempt to keep the project af= loat. The meetings will discuss the finer aspects of "sacrifices" to be mad= e by the equity and debt stakeholders of the company. While DPC is ready to= cut the tariff and the internal rate of return (IRR), the lenders are will= ing to cut the interest costs, stretch the maturity period of loans and rai= se the moratorium on repayment. Cash-strapped Maharashtra State Electricity= Board is likely to be allowed to issue bonds to DPC, thereby deferring pay= ments."The feasibility of adopting the securitisation route will also be ex= plored to bail out MSEB," a source said.=20 Both the Indian and global lenders are pitching for speedy completion of th= e project. With both the phases operational, DPC can avoid the embarrassmen= t of delay in generating power "cold-start," "Going by the terms of the pow= er purchase agreement, both the plants cannot be shut at the same time," sa= id a source. The likely cost over-run -- about 30 per cent ($450 million) -= - will be capitalised. Repayment for phase II, which is slated to commence = in 2002, may only start in 2003, thereby raising the moratorium on loan rep= ayment by one year. The loan amount will go up to the extent of the install= ment slated to be cleared in one year. "The foreign lenders are not adverse= to supporting the Indian lenders on the issue of project completion. Colle= ctively, they will try to convince DPC against putting phase II in cold sto= rage," said a source. The Indian government is likely to approach the US Ex= im and J-Exim to persuade them against invoking the accelerable guarantee c= lause, shielding the Indian lenders. ICICI executive director S Mukerjee and IDBI executive director RS Agarwal = left for Singapore on Sunday morning, while State Bank of India will be rep= resented by its Singapore office CEO at the meeting. On the eve of his depa= rture, Agarwal told Business Standard that the financial institutions would= take up the issue of MSEB slapping a termination notice on DPC. He added: = "We can understand MSEB's viewpoint because they cannot absorb the power fr= om phase II." The state electricity board is seeking intervention of the Ce= ntre in the issue.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Monday, June 04, 2001 Dabhol lenders set to present a united front at Singapore meet , Renni Abra= ham=20 Domestic lenders attending the meeting of international financial instituti= ons and other lenders of the Dabhol Power Co (DPC) in Singapore on Tuesday = and Wednesday will press for a united stand among themselves for ensuring a= workable solution to the Enron-promoted power project. On Saturday, a dome= stic lenders combine met with senior officials in the Maharashtra State Ele= ctricity Board (MSEB) as also the state government seeking a cessation in f= urther notices and counter-notices being issued so that the DPC imbroglio c= ould be resolved amicably.=20 Confirming this, a senior MSEB official told Business Standard, "They (dome= stic lenders IDBI, ICICI, IFCI, SBI and Canara Bank) want MSEB to stop liti= gation and create an environment for a meaningful discussion with DPC so th= at the second phase can be completed." MSEB, on its part, pointed out that = with the preliminary termination notice (PTN) already served by DPC and the= board's notice for rescinding the contract already being in force, it woul= d be a difficult task to freeze the entire process."We pointed out that the= PTN and our rescinding notice were completed actions, however, adding that= the rescinding notice in any case provided for continuing dialogue to reso= lve the imbroglio," the official said. Earlier in the week, executive direc= tor of IDBI R S Aggarwal told Business Standard about the proposed meeting = with the state government and MSEB to emphasise upon the futility of legal = wrangling that could jeopardise the DPC project."We have also decided as a = strategic plan to combine the domestic and international lenders as a unite= d front so as to work out a solution to the whole dispute."=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Monday, June 04, 2001 Bechtel stays, DPC lenders transfer funds to phase II=20 Bechtel, the engineering, procurement and construction (EPC) contractor whi= ch holds 10 per cent stake in the Dabhol Power Company, has been persuaded = to stay back. Bechtel had threatened to pull out of the project in the firs= t week of June as the DPC was not in a position to stick to its payment sch= edule for the EPC contractor. Lenders across both phase I and II have voted= in favour of a resolution allowing the company to transfer $5 million from= phase I kitty to phase II for the purpose of completion of the project wor= k."Over 66 per cent of the lenders were in favour of this resolution. There= is no problem in clearing Bechtel's dues. It has agreed to stay back," sai= d a source. It may be recalled that the phase I lenders overwhelmedly suppo= rted the issuance the preliminary termination notice (PTN) to MSEB. But whe= n it came to the transfer of funds from phase I to phase II to clear Bechte= l's dues, lenders of both phases supported the motion.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Monday, June 04, 2001 'Expert knowledge' and Dabhol Some way will have to be found to get Enron worried about the legal enforce= ability of its agreements, writes A V Rajwade It has now been a few weeks since the appointment of a committee under Mr G= odbole to renegotiate the tariffs payable to the Dabhol Power Company Ltd b= y Maharashtra State Electricity Board (MSEB). There has been hardly any tan= gible progress in the negotiations. Legal notices issued by either side hav= e been flying around but the problem remains intractable. At present neithe= r DPC, nor its parent Enron, has any incentive whatsoever to hold serious n= egotiations. It is sitting pretty on an agreement that one can be sure has = been drafted by some very clever lawyers. And given that all obligations of= MSEB are guaranteed by the Government of India, it probably is not too wor= ried about the safety of its money. It also knows that, in the interest of = its international reputation, the Indian authorities cannot afford to take = a cavalier attitude to the subject. In the circumstances, if progress is to= be achieved, some way will have to be found to get Enron worried about the= legal enforceability of its agreements. Only if this happens will Enron be= persuaded to start a serious renegotiation of the tariffs.=20 In an earlier article in this newspaper (see Business Standard May 22, 2001= ), I had referred to the now famous Procter & Gamble vs Bankers Trust Compa= ny case in the United States. While I have not been able to get hold of the= P&G plaint despite an extensive search on the Web, I have managed to get h= old of a copy of the judgement in the case. This has limitations because th= e substance of the dispute was settled out of court. And yet the judgement = does make a few useful points. The bulk of the judgement discusses arcane p= oints of law, in particular the applicability of various legislations in th= e United States to the case. On most of these points the judge has rejected= the contentions of Procter & Gamble, and granted summary judgement in favo= ur of Bankers Trust. However, the judge goes on to argue that: "This does n= ot mean, however, that there are no duties and obligations in their swaps t= ransactions. Plaintiff alleges that in the negotiation of the two swaps and= in their execution, defendants failed to disclose vital information and ma= de material misrepresentations to it?=20 "New York case law establishes an implied contractual duty to disclose in b= usiness negotiations. Such a duty may arise where 1) a party has superior k= nowledge of certain information; 2) that information is not readily availab= le to the other party; and 3) the first party knows that the second party i= s acting on the basis of mistaken knowledge?=20 "Additional cases which explicate the duty to disclose indicate that a duty= may arise when one party to a contract has superior knowledge which is not= available to both parties?" "Even though a fiduciary duty may not exist be= tween the parties, this duty to disclose can arise independently because of= superior knowledge?" "The duty to deal fairly and in good faith requires a= ffirmative action even though not expressly provided for by the agreement?"= "I conclude that defendants had a duty to disclose material information to= plaintiff both before the parties entered into the swap transactions and i= n their performance, and also a duty to deal fairly and in good faith durin= g the performance of the swap transactions?"=20 The judge has cited a number of court cases in support of these points whic= h seem to be based more on case law and common law principles than on any s= pecific legislation. As such, one would imagine that the enunciated princip= les would have wider application than narrow infringements of specific laws= . In the May 22 article, I had referred to the discount factor of 17 per ce= nt per annum which seems to have been used to calculate the present value o= f the fixed cost payable by MSEB to DPC. The discount rate is an inferred o= ne from the available data; it seems that the actual rate of discount used = is not available in any of the documents. This is surprising; one obvious r= eason could be that, for what are effectively dollar payments, a 17 per cen= t discount rate is absurd and it was obviously better not to bring it on re= cord. Can its non-disclosure in the negotiation or in the agreement come un= der the various points made in the P&G vs BTC case?=20 Again, an old Business Week report on the case quotes from the P&G complain= t that it "was bound by a pricing model which (Bankers Trust) did not discl= ose to the very party that it asserted was bound by such model...". An exac= t parallel to the MSEB/DPC dispute?=20 A couple of other points occur to me. The Godbole Committee Report thanks I= DFC for the excellent work done as the Committee's secretariat. Having put = in a considerable degree of analytical input, as is evident from the report= , perhaps the analysts may like to try out one other exercise. This is the = projection of DPC's balance sheet at the end of the power purchase agreemen= t, on the following assumptions:=20 ?=09No dividend payment and current tax rates;=20 ?=09Dollar appreciation against the rupee of 6 per cent per annum, which is= the actual rate of the last five years.=20 ?=09Interest on rupee surplus funds at 11 per cent per cent, and domestic i= nflation, say, 8 per cent per annum=20 The exercise would give a final value of DPC's net worth and readily permit= the calculation of the internal rate of return on the capital invested. Ho= w does that compare with the returns in dollar terms assured by government = policy? If the return turns out to be absurdly high, as it well might, this= could be another example of "superior knowledge" available to the investor= but not made known to MSEB. This apart, in its own affidavit in one of the= court cases, MSEB has argued why the competitive bidding process was not f= ollowed:=20 "The competitive bid requires expert knowledge and experience for evaluatin= g the competitive bids, which at present is still not sufficiently up to th= e mark. For evaluation of such specialised projects, it is also necessary t= o have knowledge of risk identification and allocation, which is not suffic= iently developed." As if this "expert knowledge" is not needed in bilateral= negotiations! ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Monday, June 04, 2001 The Centre finally sees the light If the Centre had intervened earlier, the Dabhol crisis not have reached it= s current proportions, says P Vaidyanathan Iyer The Indian government has clearly lost the public relations battle in the E= nron controversy. A flashback to the turn of events in the last week shows = why. After months of studied indifference, the Centre suddenly started offe= ring concessions that suggest that the $ 3 billion power project may not sh= ut shop after all. A few months ago, when the crisis started, the Centre st= eadfastly refused to get involved - despite the fact that the Dabhol Power = Company (DPC) has a central government guarantee. Just about every time the= Maharashtra State Electricity Board (MSEB) failed to honour DPC's bills, t= he Centre insisted it couldn't do anything about it. "It is a dispute betwe= en DPC and the Maharashtra government and needs to be sorted out between th= em," power minister Suresh Prabhu iterated at the time. He also went on to = say that the central power utilities had the wherewithal to generate all th= e power needed for the country, suggesting that the private power producers= were redundant.=20 But all through the pre-conciliation negotiations that followed in London a= nd in India, the Centre did little to intervene. It was only towards the en= d of May, as things started looking grimmer and grimmer that the Centre abr= uptly changed its stance. By then, Enron, Dabhol's US parent, had started s= ignalling an exit by issuing a pre-termination notice, hiring Arthur Anders= en to value its business worth in India and Jones Lang La Salle to value it= s real estate investments. Then on May 29, the situation grew worse with th= e Maharashtra Electricity Regulatory Commission issuing an injunction restr= aining DPC from proceeding with arbitration till June 14, the next hearing = date of the negotiating committee. MERC also restrained DPC from operating = MSEB's escrow account till June 14.=20 The first signs of Centre's direct involvement came soon after K Wade Cline= , CEO, DPC flew to Delhi on May 25 to brief the power ministry on the groun= d situation in Dabhol. The same day, Prabhu met finance minister Yashwant S= inha the same day - but apparently to discuss "power sector reforms". The C= entre then got into the act. Just when Enron had made its mind - in line wi= th its global strategy - to pull out of the generation businesses and focus= on trading, the Centre displayed a remarkable keenness to stop the corpora= tion from calling it quits. The government's representative on the negotiat= ing committee A V Gokak now said the Centre would play an "active role" in = resolving the crisis. Madhav Godbole, who had chaired the panel that re-exa= mined the project and made recommendation to correct its many anomalies, al= so said he was looking at negotiating a new deal with DPC.=20 DPC reciprocated to these placatpry noises. It now said it could cut cost b= y about 10 per cent. It was Centre's turn to "sacrifice" now. The power min= ister asked the Central Electricity Authority to initiate talks with power-= deficient states and check on the quantity of power they could lift from DP= C and the cost at which they could absorb it. With this decision, the Centr= e, in effect, has okayed third party sales, in line with the Godbole panel = recommendations. More "sacrifices" followed from the Indian banks and finan= cial institutions. IDBI, the lead Indian FI which has an exposure to the tu= ne of Rs 2,158 crore said that it was ready to cut the cost of loans (the a= verage being 16.5 per cent) by another two percentage points. All this for = Enron to stay in the 2,144 MW project.=20 It is easy to see why the Centre is bending over backwards. DPC's fate woul= d, in a sense, determine the future of foreign direct investment (FDI) in I= ndia. Reforms have progressed too far for any government to want to turn FD= I-unfriendly in global - and especially US - eyes. The point is, it's taken= the Centre almost six months to wake up to this reality. If it had interve= ned earlier, not only would the crisis not have reached its current proport= ions, the government could have saved itself the embarrassment of going bac= k on its own words too. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Monday, June 04, 2001=20 FIs not to loan IPPs till Enron issue is resolved, Shubham Mukherjee & Jame= s Mathew=20 THE Enron imbroglio has pulled the plug on the future of all major power p= rojects, with FIs taking a stand that until the issue gets sorted out, they= will not go in for any further disbursements to independent power producer= s for which loans have been sanctioned.=20 According to FI sources, in a recent meeting, FIs have taken a stand not to= disburse loans for the power projects for which they have already sanction= ed debt. The development comes in the wake of mounting pressure on FIs to r= educe interest rates for the Dabhol Power Project as part of a compromise p= ackage for ending the current impasse. "We have raised funds at a particula= r cost to lend the same to IPPs keeping a thin spread for ourselves. Now, i= f mid-way the interest rates are to be brought down, this would create a se= rious mismatch. In view of the Dabhol experience, we are now going extremel= y cautious on disbursing funds to projects for which sanctions have already= been approved," top FI officials said. Significantly, the latest move of t= he FIs follows the earlier decision of FIs such as IFCI and IDBI to stop fu= nding fresh projects in the power sector. More than 50 projects are likely = to get further delayed due to the FIs posturing. FIs have also cleared loan= for some mega projects like the 3,960-mw Hirma power project being develop= ed by Reliance and Southern Energy and the Dakshin Bharat Power project bei= ng developed by CMS and Unocal.=20 Though some of these projects are in advanced stages of operation, the deci= sion of the FIs would be a major blow on them. A section of the industry ha= s, however, questioned the stand of the FIs and have said that they cannot = go back on their intent to provide finances for projects. "IDBI, for instan= ce, has taken a stake in S Kumars' 400-mw Maheshwar power project, how can = they refuse loan for the project?" they asked. All the same, FIs have taken= an in principle decision to adopt a cautious positioning and are unlikely = to decide on making further disbursements to the next crop of IPPs in a hur= ry, a senior IFCI official said. FIs have also not taken kindly to the pres= sure being mounted on them for reducing interest rates for the loan disburs= ed to the Dabhol power project to save the project. Other FIs also feel tha= t the Enron issue is a cause of great concern to the financing community an= d there is a lot of uncertainty in the power sector. Given the Enron experi= ence, it would be a tough decision for FIs to pick up projects for funding = in the future, the industry watchers said.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Saturday, 2 June, 2001 Govt working out new Enron package IN order to sort out the payment crisis of the Enron power project, the Ce= ntre is working on a new package which will be acceptable to all the affect= ed parties. A V Gokak, the centre's representative in the negotiating commi= ttee, met the finance minister on Friday to appraise him of the solutions t= hat are being explored to get over the payment crisis. "A solution acceptab= le to all is being contemplated. Things are moving in the right direction a= nd the government is playing a constructive role in resolving the issue," G= okak said.=20 According to him, none of the parties to the dispute are in favour of closu= re of the $3-billion project. According to officials in the power ministry,= both sides are now willing to make some sacrifices which is a healthy sign= . Union power minister Suresh Prabhu earlier met the Prime Minister to disc= uss the Enron project. The power minister has already reiterated that the g= overnment would make all efforts to settle the matter in consultation with = the stake holders. Asked if any time-frame has been set to break the impass= e, Gokak said " that the delay is in nobody's interest, but there are no re= adymade solutions either." The negotiating committee, headed by Madhav Godb= ole, has held two rounds of negotiations. The last round held earlier this = week has been termed "positive" by both DPC and MSEB.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Saturday, 2 June 2001 Powerful suggestion IT'S time the government reconsidered its archaic rule mandating sale of po= wer by independent power producers to the concerned electricity board. IPPs= must be allowed to sell power to anybody who is willing to purchase it for= distribution or retail sale. The Gujarat Electricity Regulatory Commission= has taken the lead in this direction. It is willing to let three independe= nt power producers sell power directly to consumers.=20 India's laws classify power distribution as a state subject, and all states= say that generators have to sell power to state electricity boards, owned = by state governments. Experience shows that this can't work - most SEBs are= broke, plagued by power theft, poor administration, graft and politically = motivated pricing. Insolvent SEBs cannot pay for the power that only they a= re allowed to purchase from IPPs. This has thrown all private power generat= ion projects into jeopardy. The real reason for the controversy over Dabhol= Power Company is that the IPP can't be paid because the local SEB is broke= . DPC is not the only generator in trouble: the future of the 3,700 MW Hirm= a project as well as some smaller projects, are also in doubt. Today, all S= EBs together owe central power utilities about Rs 26,000 crore. Given these= dues and the failure of most state governments to reform the SEBs, private= investment in power generation is likely to grind to a halt. That will be = a disaster for power starved India.=20 The GERC's suggestion, if implemented by the Gujarat government - which own= s the SEB - will let IPPs become viable again. If private power producers c= an sell power to consumers who pay regularly, these generation projects wil= l become viable. Paying consumers will be spared the trouble of frequent po= wer cuts. If quality power supply is assured, investors can save themselves= the costs of setting up captive power plants. SEBs will argue that IPPs wi= ll take away the best paying customers and with them, the most lucrative re= venues. They have only themselves to blame for that. If SEBs run into serio= us financial trouble with IPPs selling directly to consumers, then an impen= ding crisis might provoke real reforms. Other states should follow GERC's e= xample. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Saturday, 2 June, 2001 Fitch downgrades India's rating INTERNATIONAL rating agency Fitch has downgraded India's sovereign rating = from stable to negative, citing concerns about fiscal policy, privatisation= and deterioration in the foreign investment climate and the Enron fracas. = Currently, it rates the foreign and local currency obligations of India as = BB plus and BBB minus, respectively. The negative rating outlook reflects t= he slow progress of the government in implementing privatisation and addres= sing the weakness of public finances, the agency said in a release. Continu= ed fiscal profligacy and back-paddling on privatisation and other structura= l reforms could adversely affect sovereign credit worthiness, prompting a m= ore severe rating action over time, it said. (PTI) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Monday, June 04, 2001 MSEB refuses to backtrack from legal battle against Dabhol Power Company , = Sanjay Jog The Maharashtra State Electricity Board (MSEB) categorically told the India= n financial institutions (IFIs) that it would not be possible to keep legal= battle aside against the Dabhol Power Company (DPC), although Dabhol phase= -II is 90 per cent complete.In fact, the MSEB made it clear that, although = it has rescinded its power purchase agreement (PPA) with the DPC, it would = continue to participate in the renegotiations "without prejudice, but with = a positive mind." MSEB sources told The Financial Express on Sunday that the Indian rupee len= ders led by the Industrial Development Bank of India (IDBI) wanted that the= MSEB should keep aside the legal battle and the Dabhol phase-II should be = completed."However, we made it clear to them that MSEB has certain compulsi= ons to continue its legal battle in view of various legal notices served by= the DPC. However, we are not opposed to renegotiations and will participat= e in the process without prejudice," sources added.The board made its stand= clear at its meeting with IFI representatives held on Saturday. MSEB chair= man Vinay Bansal, accounts member A Krishna Rao and state principal secreta= ry (energy) VM Lal participated in the meeting.The board asked the IFIs to = persuade the BJP-led government at the Centre for the despatch of Dabhol ph= ase-II power. The board expressed its inability to purchase Dabhol phase-II= power at the existing tariff and said that the Centre should make all effo= rts for its disposal. The IFIs reiterated that the Dabhol phase-II should be allowed to be fully = completed and "an alternative mode for distribution of power should be expl= ored in view of MSEB's inability to absorb the phase-II power. The IFIs, wh= ich will participate at the lenders meeting at Singapore beginning from Jun= e 5, are believed to have explained the repercussions if Enron ultimately d= ecided to pull out at this crucial stage. "Terminating the PPA will have se= rious consequences with regard to the investments made by the IFIs in the p= roject," these lenders reportedly told the MSEB.However, MSEB, while making= its position clear said that it had entered into a legal battle since the = DPC disputed the misdeclaration and default on the availability of power oc= curred on January 28, 2001. "Although we stick to our stand that DPC has de= faulted and is entitled to pay a rebate of Rs 401 crore, DPC avoided its pa= yment under the garb that the imposition of rebate was not as per the conve= ntions and provisions of PPA," sources said. Further, DPC invoked the state and counter guarantee of the Centre besides = political force majuere. This was followed by the issuance of arbitration n= otices to the Centre and state governments and the MSEB. The board sources = said that the DPC did not stop here but also served a preliminary terminati= on notice on May 19 and a notice to reactivate escrow account. "We were lef= t with limited choice and thus issued an avoidance notice on May 23 and fil= ed a petition at the Maharashtra Electricity Regulatory Commission on May 2= 5," the sources added.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS,Monday, June 04, 2001 DPC misdeclared availability: MSEB , Sanjay Jog The Dabhol Power Company (DPC) had defaulted and misdeclared the availabili= ty of power immediately after the commissioning of Dabhol phase-I in May an= d July 1999, according to sources from the Maharashtra State Electricity Bo= ard (MSEB) .The board had also planned to serve a total rebate of Rs 300 cr= ore for these defaults. However, it ultimately pardoned the DPC and verball= y waived the rebate. MSEB sources confirmed these misdeclarations and defaults, which took place= before January 28, February 13 and March 29, 2001. These sources told The = Financial Express that in view of the series of meetings between the MSEB a= nd DPC officials and clarification provided by the latter, the rebate was n= ot charged. "Had MSEB slapped rebate of around Rs 150 crore for May default= misdeclaration, DPC was obliged to compute it in its billing statement the= reafter as MSEB is entitled to claim rebate only at the end of four months = block of January, May and September," sources added.=20 MSEB had argued that as per the power availability curve incorporated by th= e DPC in the power purchase agreement (PPA), it was entitled to provide the= instructed power by MSEB within three hours. However, during these occasio= ns, the DPC, though admitted that it had defaulted on the availability of p= ower, later clarified that the Dabhol plant machines were new.The DPC had a= lso questioned the board's move to slap rebate in the past and is believed = to have told that MSEB cannot do so as the Dabhol plant was developed on ba= se load capacity and not peak load capacity. MSEB had argued that in terms of Clause 8.4(b) in the event of shortfall in= delivery of energy contrary to DPC's declaration, Available Baseload Capac= ity is calculated at ten times the difference between the Declared Baseload= Capacity (DBC) and the Active Power produced subtracted from the total act= ive power generation during that availability period or hour."This leads to= a rebate (under Clause 10), which is meant to adjust capacity payments mad= e during the period having regard to the Rated Baseload Capacity as well as= to discourage misdeclaration by DPC of DBC," sources said. Under Clause 10.2(b), the capacity payments payable by MSEB are subject to = adjustments of rebate in January for the first four months of the peak seas= on (October to January) and as per Clause 10.2© in May for the whole of t= he peak season.=20 The board is entitled to a rebate under these provisions. The DPC is oblige= d under Clause 11.1(b) to compute such rebate in its billing statement for = the months of January, May and September. The reason being that in the PPA = the year is divided into the peak season (October to May) and monsoon seaso= n (June to September).In addition to this, MSEB had said that the DPC shoul= d follow standard and not ambient conditions at the time of declaration of = base capacity. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS,Monday, June 04, 2001 DPC power cost MSEB Rs 3,363 cr since '99 , Sanjay Jog The Maharashtra State Electricity Board (MSEB), which has recently refused = to pay the April bill of Rs 136 crore to Dabhol Power Company (DPC), has in= curred total expenses of whopping Rs 3,362.90 crore over the purchase of 6,= 451.78 million units from DPC between May 13, 1999 and April 2001.MSEB, whi= ch suspended the power purchase since May 29, 2001 after serving an avoidan= ce notice to DPC, has purchased 163 million units at a per unit tariff of a= round Rs 10. DPC may send the power purchase bill close to Rs 140 crore to = the MSEB by June 7. MSEB has paid as high as Rs 25.51 per unit for 39.12 mi= llion units in June 2000 and as low as Rs 3.02 per unit for 327.58 million = units in August 1999. MSEB had paid an average per unit cost of Rs 4.98 for= power purchase quite below the 90 per cent availability as incorporated in= the power purchase agreement (PPA).MSEB sources told The Financial Express= that in view of its "precarious" finances, MSEB restricted the power purch= ase at around 180 mw with a monthly fixed charges maintained at Rs 95 crore= . "The question of resuming power purchase from DPC does not arise at this = point as the power purchase agreement has been rescinded since May 23 and t= he matter has been taken up at the Maharashtra Electricity Regulatory Commi= ssion (MERC)," sources said.=20 According to MSEB, it was managing the show until May 2000 when the per uni= t cost was ranging between Rs 3.78 and Rs 3.49, except Rs 4.85 (226.88 mill= ion units) in June 1999, Rs 4.49 (298.79 million units) in July 1999, Rs 5.= 79 (249.03) in October 1999 and Rs 4.37 (447.49 million units) in April 200= 0. Majority of these purchases were below 90 per cent availability. "Howeve= r, the per unit tariff suddenly skyrocketted to the level of Rs 25.51 in Ju= ne 2000 following the hike in the naphtha prices in the international marke= ts and thereafter it became an unmanageable show," MSEB sources said.In Jul= y 2000, MSEB's outgo towards per unit tariff was Rs 7.81 (179.47 million un= its) which was reduced to Rs 6.81 (231.45 million units) in August 2000, an= d to Rs 5.10 (257.75 million units) in September 2000. Curiously, the per u= nit tariff rose at Rs 6.90 (267.26 million units) in October, Rs 8 (179.02 = million units) in December 2000 and Rs 21.06 (52.92 million units) in Janua= ry 2001. The per unit tariff again fell at Rs 14.74 (75.04 million units) i= n February, Rs 9.34 (156.82 million units) in March and Rs 10 (128.46 milli= on units) in April. "Had MSEB purchased power at 90 per cent availability, = the per unit tariff would have remained in between Rs 2.92 and Rs 5.21. The= average per unit tariff would have been Rs 4.02," sources said. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS,Monday, June 04, 2001 The gathering clouds=20 Too many negative voices on the economy=20 The plot indeed thickens on India's economic front. A pessimistic outlook f= or the second decade of its reforms by a leading international magazine, Th= e Economist, and a downgrade of the country's ratings outlook by Fitch add = to the onset of gloom over recent performance. While reforms since 1991 res= ulted in faster growth and improved the balance of payments, the second dec= ade of reforms began on a dull note: growth slowed to less than 6 per cent = last fiscal. A series of scandals intensified the crisis of governance. The= dismantling of quantitative restrictions has "spooked" India's farmers and= industrialists. And the end game has begun for the saga of the Dabhol Powe= r Company versus Maharashtra's electricity board - which is sending out sig= nals that India is not serious about power sector reform. The government ne= vertheless hopes to raise growth to 8 per cent and attract FDI of $10bn, up= from $2bn now. But these targets are not easy: they entail raising investm= ent from 25 per cent to 38 per cent of GDP and policies that "rekindle the = excitement of the early 1990s", to borrow an expression from The Economist.= =20 Nowhere is this more evident than on the fiscal front. The combined deficit= of the centre and the states is 10 per cent of GDP, hardly different from = the early 1990s. Failure to address such fiscal imbalances resulted in the = change in India's rating from stable to negative by Fitch. The latest offic= ial numbers also point to a slippage from budgetary targets for 2001-2002: = the government's borrowings in April-May work out to more than half of the = target for the fiscal. Thanks to this binge, real interest rates remain hig= h; resources are crowded out for private investment and a stop-go growth cy= cle has been triggered. Last fiscal, the centre's fiscal deficit was limite= d to 5.2 per cent of GDP through cuts in spending. This is bad news for rai= sing growth, as plan capital expenditures were slashed. Additional resource= s will be available for such expenditures only if revenue deficits are cont= rolled - but this is not happening. This implies recourse to more borrowing= s, pushing the fisc deeper into an internal debt trap. It is time for serio= us stocktaking, not for quibbling on judgements, however pessimistic. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Monday, June 04, 2001 Indian FIs leave for Singapore meet on Enron=20 MUMBAI: Representatives of Indian financial institutions on Sunday left for= Singapore to attend the two-day lenders' meeting beginning on June 5 in a = last ditch effort to defuse the escalated financial crisis between the Maha= rashtra State Electricity Board (MSEB) and Enron-promoted Dabhol Power Comp= any (DPC). The FIs team is led by Industrial Development Bank of India (IDB= I) executive director R.S. Agarwal, who is also a DPC board member. The gro= up also comprises representatives of State Bank of India and ICICI.=20 The domestic lenders would update their foreign counterparts about the curr= ent imbroglio and legal tangles, including MSEB's petition filed in Maharas= htra Electricity Regulatory Commission (MERC) and the board's simultaneous = decision to stop drawing DPC power from May 29 noon. "One thing worrying th= e Indian FIs is the foreign lenders' probable decision to encash their secu= rities, which runs into more than Rs 2,500 crore," a senior state official = said here. "I think, the divide between the domestic and foreign lenders wi= ll widen on this issue. The former are desperately trying to save their gua= rantees from being encashed," he added.=20 Last week, IDBI acting chairman and managing director S.K. Chakrabarti had = said that the total exposure of Indian lenders was Rs 6,600 crore. IDBI's e= xposure was Rs 2,158 crore, including guarantees worth Rs 1,528 crore and r= upee loans of 630 crore, he had added.=20 FIs had on Saturday evening, held a meeting with MSEB, trying to comprehend= the state electricity board's views and stand on resolving the crisis befo= re embarking on the visit to Singapore. "MSEB has firmly told us that it wi= ll be able to draw power from DPC's first phase only at a renegotiated less= er price and it wanted the Centre to take over phase II," FI sources said.= =20 The foreign lenders have already taken a tough stance on the issue and had = also approved the preliminary termination notice in the April 23 meeting he= ld in London, the sources added. Prime Minister Atal Bihari Vajpayee is und= erstood to have asked Union power minister Suresh Prabhu in a meeting betwe= en them on June 1 in Delhi to pursue the sale of power to deficit states as= part of efforts to help DPC. Government sources had said that sale of powe= r to other states had emerged as the only option for the Centre to help the= troubled project as purchase of power by central utilities was not possibl= e. The success of central initiative would also hinge on the stance taken b= y the Maharashtra government and MSEB on the issue, the sources had added. = (PTI)=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Monday, June 04, 2001 MSEB asks DPC to refund Rs 1,200 cr as capacity charges , By Vinu Lal=20 In another counter attack on the Dabhol Power Company (DPC), the Maharashtr= a State Electricity Board (MSEB) has demanded a refund of Rs 1,200 crore to= wards undue capacity charges paid to the company till April 2001. This is i= n addition to the penalty of Rs 760 crore slapped on Enron for misdeclarati= on of capacity.=20 The board claims that money paid to DPC since May 1999 as capacity charges = were not legitimate since the company defaulted on its declared capacity. T= his has also been incorporated in its petition filed before the Maharashtra= Electricity Regulatory Commission (MERC) last week. Till April 2001, MSEB = has paid a whopping Rs 3,499 crore to Enron as bill payments. Here out of R= s 3,499 crore, the board claims that Rs 2,087 crore is paid as capacity cha= rges and since the company defaulted on capacity Rs 1,200 crore should be r= efunded to the board. However, the company has not responded to this demand= since the penalty dispute has been referred to arbitration. As per the pow= er purchase agreement, if the Dabhol plant fails to generate its maximum ca= pacity within 3 hours of notice, the board can claim penalty for the same, = which in this case have amounted to Rs 760 crore for default in two instanc= es.=20 Meanwhile, representatives of all domestic financial institutions met Vinay= Bansal, chairman, MSEB on Saturday to clarify on the stance taken by the b= oard.``The lenders wanted to know MSEB's stance on the entire controversy a= nd whether we are willing to participate in renegotiations. All issues, esp= ecially on the penalty dispute was discussed at length and they wanted MSEB= to explain the impact,'' said Bansal. Lenders were apprised of the recent = developments which are crucial before their Singapore meet. Banking sources= informed that domestic lenders made it clear to the board that the penalty= issue should not be clubbed to monthly bill payments and that it should be= treated independently. However, it is learnt that the board officials were= not agreeable to this proposal. Sources added that lenders were quite peev= ed on the way MSEB advised the Centre not to acknowledge the sovereign guar= antee. Institutions informed the board that the foreign lenders have taken = a serious note of this development. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Saturday, 2 June 2001 New package on cards for DPC: Gokak=20 A new package acceptable to all is being evolved to resolve the seven-month= old wrangle between Enron-promoted Dabhol Power Company and Maharashtra St= ate Electricity Board (MSEB) over the issue of cost of power and payment of= bills, A.V. Gokak, Centre's representative in Maharashtra's negotiation co= mmittee said on Friday. "Solution acceptable to all is being contemplated. = Things are moving in the right direction and the government is serious to r= esolve the crisis," Gokak said after a meeting with finance minister Yashwa= nt Sinha here. Gokak said that none of the parties to the dispute were in f= avour of closure of the $3 billion project.=20 Earlier, Centre had asked Central Electricity Authority (CEA) to explore po= ssibility of selling DPC power to deficient states. But power minister Sure= sh Prabhu had ruled out possibility of National Thermal Power Corporation (= NTPC) lifting DPC power. Prabhu had stated that the government would make a= ll efforts to settle the matter in consultation with the stake holders. Ask= ed if any timeframe had been set to break the impasse, Gokak said "delay is= in nobody's interest, but there are no readymade solutions." The negotiati= ng committee, headed by Madhav Godbole, has held two rounds of negotiations= with the last round held earlier this week being termed "positive" by both= DPC and MSEB. Gokak is believed to have put forward alternative solutions = in resolving the crisis.=20 Asked if sale of power by DPC to states other than Maharashtra was part of = the new package being considered, Gokak said "I will not say anything at th= is moment. There are so many ramifications as number of technical aspects h= ave to be taken into consideration." "There are so many alternatives and an= gles. We are looking at all with an open mind and there are positive develo= pments," he said, but declined to give any further details.=20 Gokak, however, said that the government was not in favour of DPC shutting = down its operations. The thrust of the efforts was to find a solution accep= table to all concerned parties, which meant evolving a package. The seven-m= onth long wrangling between MSEB and DPC has seen the latter serving a prel= iminary termination notice while the former resorting to cancelling the pow= er purchase contract and refusing to buy any further electricity from the 7= 40 mw phase-I. 1,444 mw phase-II was to be commissioned this month but is u= nlikley to see the light of the day following MSEB's decision not to purcha= se any more power from DPC till the issue of cost of power was resolved.=20 Of late, DPC has indicated that there was a possibility of reducing cost of= power by up to 10 per cent, but it hasn't come out with any official annou= cement to this effect. (PTI)=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Saturday, 2 June 2001 MSEB opposes DPC arbitration in London , By Vidyadhar Date=20 The arbitration in London sought by Dabhol Power Company (DPC) regarding it= s dispute with the Maharashtra State Electricity Board (MSEB) cannot be rec= ognised by any law in India, the MSEB has said in its petition to the Mahar= ashtra Electricity Regulatory Commission (MERC). Opposing the arbitration m= ove, MSEB said it would incur a huge cost to the board and would be a futil= e exercise since it would not be enforceable in India.=20 DPC has given notice of arbitration under clause 20 3 a of the power purcha= se agreement (PPA). This is an attempt on the part of DPC to obfuscate real= issues and deflect attention from misrepresentations made by DPC in the PP= A, the board said. MSEB has also opposed the move of Dabhol to invoke the p= olitical force majeure clause. DPC had alleged that the government of Mahar= ashtra, the central government and MSEB had sought to frustrate the corpora= tion's obligations under the PPA. The board urged the commission to order D= PC to pay Rs 458 crore of damages due to the shortfall in supply because DP= C failure to generate energy on demand on January 28, February 13, March 29= , April 23 and May 3, 16 and 17. DPC should also pay Rs 1200 crore which it= wrongly charged to MSEB between March 1999 and April 2001. While MSEB has = taken its battle with DPC to the commission, the trade unions in the energy= sector, irrespective of party affiliations, have decided to take the fight= against Enron to the streets.=20 `We expect 10,000 people to attend the demonstration in front of the Dabhol= generation station on Tuesday,' said AB Bardhan, president of the MSEB wor= kers' federation and All India federation of electricity employees. He desc= ribed as ridiculous the offer made by Enron to reduce the tariff by 10 per = cent. This would make little sense since the tariff was steep and thoroughl= y unjustified, he said.=20 Bardhan called for scrapping the PPA with Enron. If small states like Pakis= tan and Croatia can do that there is no reason why we cannot show Enron its= place, he said. He said Enron was involved in the energy crisis in Califor= nia and the region's governor Gary Davis had threatened to prosecute the po= wer company for its wrongdoings. ``At present in the name of renegotiations= , some people are focussing on ways to bail out Enron. The point is to resc= ue the public from the crushing burden imposed by Enron,'' he said.``It is = now being projected as a dispute between MSEB, Enron and the government wit= hout taking into account the interests of consumers and power workers and e= ngineers,'' Bardhan said. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Sunday, 3 June, 2001 PM for central initiative to salvage DPC =20 Prime Minister Atal Bihari Vajpayee is understood to have asked power minis= ter Suresh Prabhu to pursue the sale of power to deficit states as part of = the efforts to help Enron-promoted Dabhol Power Company. The option of sale= of power from 2nd phase of the three billion dollar project in Maharashtra= was discussed in detail in a 90-minute meeting Prabhu had with Vajpayee on= Friday to consider the fallout of Enron imbroglio, cited by international = rating agency Fitch as one of the reasons for lowering India's rating from = stable to negative. Official sources said the meeting sought by Prabhu was = fourth in the series after the Enron controversy erupted due to payments pr= oblems seven months ago.=20 The meeting assumes importance in the wake of Maharashtra State Electricity= Board (MSEB) refusing to buy power and challenging the validity of the pow= er purchase agreement with DPC which in turn stopped commercial electricity= generation. While Prabhu could not be contacted for comments, government s= ources said that sale of power to other states had emerged as the only opti= on for Centre to help the troubled project as purchase of power by central = utilities was not possible. While Vajpayee wanted the project to continue, = the success of central initiative would depend on the paying capacity and r= eforms pursued by states which could be interested in buying power from DPC= if it lowered the tariff. Cabinet Secretary T R Prasad was also present du= ring the meeting, sources said. (PTI)=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Sunday, 3 June 2001 SWAMINOMICS / Swaminathan S Anklesaria Aiyar The many blunders of Enron=20 The Dabhol saga goes on and on. Most commentators think that Enron took Mah= arashtra officials for a ride. This is partly true. But it is equally true = that Dabhol is a bad deal for Enron.=20 Enron's first blunder was to see liquefied natural gas as the fuel of the f= uture, clean and non-polluting. In the early 1990s, many power plants in Ja= pan and Korea came up using LNG. Coal and fuel oil were considered dirty fu= els with no future. LNG prices are linked to oil prices, and many observers= then thought that oil would remain cheap. Enron sank billions into an LNG = project in the Gulf, to supply Israel and India. In retrospect, this emphas= is on LNG was an error. Japanese households now pay a whopping Rs 10 per un= it for power based on LNG. It is simply not the fuel of the future.=2
|