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Wednesday, June 06, 2001, http://www.economictimes.com/today/06infr01.htm DPC lenders' Singapore meet inconclusive The above article also appeared in the following newspaper: Wednesday, June 06, 2001, http://www.dailypioneer.com/secon3.asp?cat=3D\bus= i5&d=3DBUSINESS FIs meet on Enron remains inconclusive=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.timesofindia.com/today/06busi1.htm Lenders split over DPC transfer notice to MSEB , Pradipta Bagchi=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.indian-express.com/ie20010606/bus1.htm= l DPC lenders meet opens on a positive note --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.financialexpress.com/fe20010606/top6.h= tml DPC lenders to resume talks today in Singapore=20 The above article also appeared in the following newspaper: Wednesday, June 06, 2001, http://www.business-standard.com/today/economy7.a= sp?Menu=3D3 DPC lenders to meet again today=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.business-standard.com/today/economy6.a= sp?Menu=3D3 MSEB refuses DPC power at 90% PLF , Renni Abraham --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.hindubusinessline.com/stories/14065601= .htm Dabhol says ready to extend conciliation , Shaji Vikraman , Balaji C. Mouli= =20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.hindubusinessline.com/stories/14065602= .htm MSEB unruffled amid power talk , Dinesh Narayanan=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, http://www.financialexpress.com/fe20010606/news2.= html CEA to assess viability of Dabhol power despatch to various states' , San= jay Jog --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Wednesday, June 06, 2001, www.asianageonline.com Gujarat, Up High on Power Reforms, By Rajesh Unnikrishnan --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Wednesday, June 06, 2001=20 DPC lenders' Singapore meet inconclusive =20 THE CRUCIAL talks between the foreign and Indian lenders of US energy major= Enron-promoted Dabhol Power Company at Singapore remained inconclusive on = Tuesday and are slated to continue on Wednesday. "The meeting has spilled o= ver to the second day with DPC to participate in the proceedings on Wednesd= ay," financial institutions sources said. The sources said Enron India mana= ging director K Wade Cline and DPC president Neil McGregor were likely to p= articipate in the second day of the meeting. They said the meeting, which w= ent on for over an hour, discussed the ongoing financial and legal disputes= between DPC and the Maharashtra State Electricity Board. "Nothing has been= finalised as yet," they said when asked whether both the Indian and foreig= n lenders were able to arrive at any solution for solving the current statu= s quo. At the Singapore meet, the lenders have come together to try and dif= fuse the tension and unite the two "warring partners" - DPC and MSEB.=20 The foreign lenders were expected to be updated by their Indian counterpart= s about developments like DPC's preliminary termination notice to MSEB, whi= ch in retaliation rescinded the PPA and stopped drawing power from the mult= inational from May 29. The Indian lenders would press for completion of the= $3-billion project, as DPC has stopped commercial production and doubts ar= e being expressed for commissioning of its 1,444-mw phase-II, due on Thursd= ay. The Indian team is led by Industrial Development Bank of India executiv= e director R S Agarwal, who is also DPC board member, along with representa= tives of State Bank of India and ICICI. The foreign lenders include a conso= rtium led by ABN-Amro, Citibank NA, Japan Exim Bank and Opic. (PTI) --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Wednesday, June 06, 2001=20 Lenders split over DPC transfer notice to MSEB , Pradipta Bagchi=20 Lenders to the $ 2.9-billion Dabhol Power Company are split over whether DP= C should be allowed to issue a transfer notice to MSEB. Last Friday, Enron = sought the lenders' permission--for the second time in a month--to issue a = transfer notice to MSEB. A transfer notice allows the valuation of all fixe= d assets to begin with and is the first step in starting the process of tra= nsfer of assets to the MSEB. While domestic lenders like IDBI, ICICI and SB= I--with an exposure of more than Rs 5,000 crore to the project--are opposin= g the move to issue a transfer notice, most foreign lenders including the l= ead arrangers to the project are now agreeable to the transfer notice being= issued by the DPC. On the first day of lenders' deliberations in Singapore= , vast differences emerged between the domestic and foreign lenders in this= regard.=20 While domestic lenders are worried about the impact of the huge exposure on= their balance sheets, foreign lenders, who typically have smaller exposure= , are of the opinion that without any alternative concrete solutions, it ma= y be worthwhile to pull the plug on the project. ``Without any concrete sol= utions and no fixed time-frame, foreign lenders are not willing to go to th= eir respective credit committees for further disbursals,'' a lender from Si= ngapore told The Times of India. ``There is no point throwing more good mon= ey after bad, is the consensus among foreign lenders,'' said the lender.=20 Among other issues discussed on the first day of the meetings was whether t= he lenders should throw Enron out of the project and take over the operatio= ns of DPC. However, without a proper team of skilled managers in place, it = is unlikely that the lenders will risk throwing out the current operators. = Fresh disbursals from the lenders are unlikely. Among the first casualties = will be an Enron affiliate company, which is the EPC contractor for the LNG= terminal. On June 8, a payment of $ 13 million is to be made to the LNG co= ntractor, which will not be disbursed by the lenders. Another big payment o= f $ 25 million has to be made to Bechtel, the EPC contractor for the power = plant, by June 18 as well.=20 Enron and DPC officials will make a presentation on Wednesday to the banker= s, following which, further deliberations will be held among the lending ba= nks. --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS, Wednesday, June 06, 2001=20 DPC lenders meet opens on a positive note The first day of the crucial meeting between the Indian and international l= enders in Singapore has opened on a positive note with the foreign lenders = showing signs of giving more time to Indian government to resolve the probl= em.=20 Foreign lenders are enthused by the fact that the Centre is ready to give i= ncentives to the project so that DPC can reduce its tariff. The Centre' pac= kage include cutting interest rate on the project, and asking the Central E= lectricity Authority (CEA) to work out a contingency plan for sale of power= to other States from the Dabhol power project.''The international lenders = are ready to give some more time to find out a solution. Lenders will take = the maximum hit if the Enron pulls the plug into the project,'' FI sources = said. Hence, the rethinking among the international lenders. The Centre's p= ackage, to be ready in another two months, would also lower the customs dut= y on imported LNG which would further help the company to lower the tariff. Enron India managing director K Wade Cline and DPC president Neil McGregor = are likely to participate in the second day of the meeting on Wednesday to = present their side of the story. Tuesday's meeting, which went on for over = an hour, discussed the on-going financial and legal disputes between DPC an= d its partner Maharashtra State Electricity Board (MSEB).At the meet, the l= enders have come together to try and diffuse escalated tension and unite th= e two warring partners, DPC and MSEB, say FI sources.=20 While loans from international FIs enjoy the Indian government guarantee, i= t would be Indian FIs which will have to take the maximum hit if the projec= t gets derailed. On Tuesday, the foreign lenders were updated by the Indian= counterparts over series of events like DPC's Preliminary Termination Noti= ce to MSEB, which in retaliation rescinded the PPA and stopped drawing powe= r from the multinational from May 29. The Indian team is led by Industrial = Development Bank of India (IDBI) executive director R S Agarwal, who is als= o DPC board member, along with representatives of State Bank of India and I= CICI. The foreign lenders include a consortium led by ABN-Amro, Citibank NA= , Japan Exim bank and OPIC.=20 Sanjay Jog=20 The Central Electricity Authority (CEA) has launched an exercise to assess= the viability of despatch of Dabhol power to various power deficit states = across the country, announced the Union minister of state for power Jayavan= tiben on Tuesday. Mehta said that the CEA, which has been asked to undertak= e this exercise recently, will take into account the burden to be borne by = various power deficit states during the despatch of power. Currently, if th= e power has to be transported from eastern grid to western grid, there is c= ertain fixed charge imposed on it. "The CEA will have to carry out this exe= rcise at length so that the exact picture will emerge whether or not the Da= bhol power despatch is viable and whether the states are keen to purchase t= hat power," the minister added. Mehta said that the centre will not purchas= e Dabhol power as its undertakings cannot take the additional burden on the= m. She informed that the union finance ministry in no uncertain terms made = it clear that the centre cannot purchase Dabhol power and sell it at cheape= r rate to the states especially when these states owe over Rs 30,000 crore = to various central public sector undertakings. Mehta said that prime minist= er AB Vajpayee who has been apprised him of the present situation on the Da= bhol front has assured to provide necessary assistance especially technical= one to resolve the issue. --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Wednesday, June 06, 2001 DPC lenders to resume talks today in Singapore=20 THE two-day talks to resolve Dabhol tangle opened on a positive note in Si= ngapore on Tuesday.Sources in Indian financial institutions (IFIs) told The= Financial Express that the IFIs comprising representatives of IDBI, ICICI,= State Bank of India (SBI) met to chalk out their strategy at the two-day m= eeting with offshore lenders and Enron officials. The Indian team was lead = by Mr RS Agarwal, IDBI executive director, along with the other officials f= rom other lending institutions including those from the SBI and ICICI.Appar= ently, the IFIs, on Tuesday revived their efforts to convince DPC's offshor= e lenders to maintain "restraint" to save the Dabhol project. The meeting b= etween the IFIs and their foreign counterparts remained inconclussive on Tu= esday. The foreign lenders are expected to take a clear stand on Wednesday. Interestingly, the meeting is expected to be participated by members of the= DPC on the second day, said financial institutions sources. The sources sa= id, Enron India managing director K Wade Cline and DPC president Neil McGre= gor are likely to participate in the second day of the meeting. The meeting= was also attended by a consortium led by ABN-Amro, Citibank NA, Japan Exim= Bank and OPIC. According to sources in IDBI: "The foreign lenders have giv= en us a patient hearing to our views suggesting that they should not precip= itate the crisis by any of their further moves." The sources said the IFIs = are determined to take up the issue of completion of the Dabhol phase-II in= view of 90 per cent of its completion. "The IDBI has recieved a mandate fr= om the government that an all-out effort be made to save the Dabhol project= ," the sources added. The offshore lenders are believed to have sought various details with refer= ence to the payment guarantees from the Maharashtra State Electricity Board= (MSEB) as well as fulfilment of contractual obligations in the wake of rev= oking of the power purchase agreement. The IFIs are likely to press for the= revocation of suspension of loan disbursement by offshore lenders so that = phase-II be completed. The offshore lenders had suspended loan disbursement= after the DPC board meeting of London on April 25.=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Wednesday, June 06, 2001 MSEB refuses DPC power at 90% PLF, Renni Abraham The Maharashtra government will not buy power from the first phase of the = Dabhol Power Company's (DPC) project at a 90 per cent plant load factor (PL= F), a senior state government official said here today. The statement repre= sents a hardening of Maharashtra's position on talks with DPC and virtually= kills the latter's proposal to split tariffs for the Centre and Maharashtr= a. The Maharashtra State Electri- city Board (MSEB) is now required to buy = 90 per cent of the power generated by the first phase (740 mw) of the proje= ct. But during negotiations with the Godbole Committee, it has been demandi= ng that the requirement be cut to 35 per cent. At the last Godbole Committe= e meeting, DPC had put forward a plan to split tariffs for the Centre and M= aharashtra, with the Centre paying Rs 3.30 per unit of power and MSEB payin= g Rs 3.50.=20 The Centre, DPC suggested, could buy two-thirds of the power it generated, = once the second phase (1,444 mw, taking the total capacity to 2,184 mw) was= completed. Maharashtra's latest position undermines DPC's proposal since t= he Enron-promoted company's tariff hinges on MSEB absorbing 90 per cent of = the power it generates in the first phase. A senior state government offici= al said: "The Centre has been talking a lot about playing the role of a fac= ilitator. What we need is a buyer for the second phase." Despite recent cen= tral government pronouncements, state government officials privately argue = that the Centre is not playing an active role in resolving the problems tha= t have plagued the DPC project. At the very first Godbole Committee meeting= he attended, the Centre's nominee, AV Gokak, adopted a non-committal stand= . The Maharashtra government official added: "Gokak said he was merely atte= nding the meeting in the capacity of a messenger and would communicate to t= he Centre any solution worked out by the renegotiation committee. The Union= power ministry has stated that a solution worked out by the renegotiation = committee would be acceptable to it. Unless the Centre takes an active part= and assures the offtake of the second phase, no solution can be worked out= ." --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE HINDU BUSINESSLINE, Wednesday, June 06, 2001=20 Dabhol says ready to extend conciliation , Shaji Vikraman , Balaji C. Mouli= =20 THE Dabhol Power Company (DPC) has accepted the Finance Ministry's proposal= for a two months' extension for the conciliation process. The extension wi= ll be effective from June 7. This development is perceived by the Governmen= t as a positive signal as it offers more leeway to work out a solution to r= esolve the Dabhol crisis. DPC's nod for an extension, which was communicate= d to the Finance Secretary on Monday, is subject to the Government acceding= to the company's stand on the ongoing arbitration proceedings. The company= has said that it would continue to pursue the arbitration proceedings whic= h have already been initiated by the company, according to senior Ministry = officials. Under the power purchase agreement (PPA), conciliation and arbit= ration are two methods under the contract to resolve disputes between the t= wo parties. Normally, arbitration is resorted to only after conciliation fa= ils. However, in this case, DPC has dragged MSEB to the arbitration forum e= ven as the conciliation process is being pursued.=20 DPC has already slapped three arbitration notices on the Maharashtra State = Electricity Board (MSEB). The first notice was issued to the board for its = failure to honour the December 2000 bill of Rs 102 crore and the January 20= 01 bill of Rs 111.6 crore while two other notices were for failures to hono= ur the Maharashtra Government's State support agreement and the supplementa= ry State support agreement. The conciliation process was adopted in the wak= e of the dispute arising over the settlement of DPC's December bills of Rs = 102 crore, followed by the MSEB's counter claim of Rs 400 crore for the sam= e period.=20 The conciliation process was agreed upon on April 7 and was to be concluded= in two months. However, simultaneously, arbitration proceedings were trigg= ered between DPC and MSEB. With the conciliation process making little head= way, the Finance Ministry sought an additional two months time for concludi= ng the process. Prior to that, the Attorney General's interpretation of the= MSEB-DPC contract was that the payment could be made to DPC only if the bi= ll was undisputed. Hence, the Centre decided to opt for the conciliation pr= ocess.=20 During recent meetings between the Government and the DPC officials, the la= tter had pointed out that if the Government was able to work out a package = in six months, it would withdraw its termination notice and reamin in the p= roject for up to a year. The Finance Ministry officials feel that the Centr= e has been dragged into the DPC controversy well beyond its contractual obl= igation. ``The Centre's involvement in DPC-MSEB issue is restricted to the = first phase. The fate of the second phase is entirely a matter between the = MSEB and DPC,''they said.=20 Analysts feel that the Power Minister, Mr Suresh Prabhu's words of hope to = defuse the Dabhol crisis are not grounded in reality. ``The Centre is totti= ng sale of Dabhol power to third-party as a key solution. However, first, u= nder the existing electricity laws, the Centre cannot authorise third-party= sale since it is in the State's domain. Secondly, since it is a purely com= mercial decision, the Central Electricity Authority's (CEA) intervention do= es not offer any significant breakthrough.'' Recently, the Power Ministry h= ad instructed the CEA to survey the demand requirement of neighbouring Stat= es over the next two years as well as their purchase price.=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE HINDU BUSINESSLINE, Wednesday, June 06, 2001=20 MSEB unruffled amid power talk , Dinesh Narayanan=20 EVEN as officials from various financial institutions and banks split hairs= in Singapore on whether to sink or sail with the Dabhol power project, the= Maharashtra State Electricity Board (MSEB) is cool about the entire affair= . Unlike previous instances when the odds were stacked against it, this tim= e MSEB knows pretty well that whatever happens, it will remain unscathed. I= f someone has to take a hit, it has to be the financiers and maybe the Gove= rnments.At the hearing before the Maharashtra Electricity Regulatory Author= ity (MERC), the Advocate-General, Mr Goolam Vahanvati, had said on behalf o= f the board that MSEB was being kind towards Enron when it rescinded the co= ntract for ``material misrepresentation''. One more step, and it's fraud, h= e had told MERC.=20 Knowing this fully well, MSEB has kept its cool throughout the altercation.= It firmly believes that if nothing else, it can pin down the company on ju= st this one point at any forum. Enron too has not said at any point of time= that it can actually perform as per the ``cold-start graph'' in the power = purchase agreement. In fact, it has said such performance -- making availab= le full power in 180 minutes -- is ``not possible'' by any such plant in th= e world. In a way, it was MSEB's defiant posturing coupled with the Maharas= htra Government's passing the buck up that got the Central Government to ac= t.=20 One thing evident throughout the crisis is that all the players are trying = to save their own skin. In spite of the developments, Enron has played its = cards close to its chest, and hinted to institutions at taking a hit on its= returns only a few days ago. Even that, Mr Wade Cline, Managing Director, = Enron India Pvt Ltd, is reported to have told Indian lenders, would hinge o= n substantial give and take. Indian lenders have a genuine case in that the= y are the ones without any assurances apart from the plant itself. And, the= y are not in the business of running power plants. They cannot do much exce= pt try get the players to somehow shake hands. They had tried to convince t= he Government some time ago to get MSEB to activate the escrow and increase= the letter of credit amount. But they were told off by MSEB which was in n= o mood to relent. Today's meeting in Singapore remained inconclusive and th= e talks will continue tomorrow. Tomorrow, Enron will make presentations to = lenders at Singapore on what it feels can be done to move ahead. Whatever t= he outcome of the meeting, MSEB is unlikely to agree to anything that might= queer its pitch.=20 --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Wednesday, June 06, 2001=20 CEA to assess viability of Dabhol power despatch to various states' , San= jay Jog THE Central Electricity Authority (CEA) has launched an exercise to assess = the viability of the despatch of Dabhol power to various power deficit stat= es across the country, Union minister of state for power Jayavantiben Meht= a on Tuesday. Ms Mehta told The Financial Express that the CEA, which has b= een asked to undertake this exercise recently, will take into account the b= urden to be borne by various power deficit states during the despatch of po= wer. Currently, if the power has to be transported from eastern grid to wes= tern grid, there is a certain fixed charge imposed on it. "The CEA will hav= e to carry out this exercise at length so that the exact picture will emerg= e whether or not the Dabhol power despatch is viable and whether the states= are keen to purchase that power," the minister added. Ms Mehta said that t= he Centre will not purchase Dabhol power as its undertakings cannot take th= e additional burden on them.=20 She informed that the Union finance ministry had in no uncertain terms made= it clear that the Centre cannot purchase Dabhol power and sell it at cheap= er rate to the states, especially when these states owe over Rs 30,000 cror= e to various Central public sector undertakings. Ms Mehta said that Prime M= inister Atal Behari Vajpayee, who has been apprised of the present situatio= n on the Dabhol front, has assured that he would provide necessary assistan= ce, especially technical, to resolve the issue. "The Centre is quite eager = for the resolution of issue and will provide necessary cooperation," she ad= ded. Ms Mehta said that she had a meeting with the representatives of the Bank o= f America and ABN Amro before they left for the Singapore meeting. "These l= enders explained their position and the amount involved in the Dabhol plant= . However, they also expressed their wish to participate in finding an acce= ptable wayout," she added. --------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ASIAN AGE, Wednesday, June 06, 2001 Gujarat, Up High on Power Reforms, By Rajesh Unnikrishnan Uttar Pradesh, Delhi and Gujarat are moving ahead with implementing reforms= in the power sector, even as the reforms in Maharashtra have come to a sta= ndstill due to the Dabhol fiasco. Maharashtra was one of the first states t= o initiate steps for reforms phase-II, by appointing a state regulatory com= mission and going in for unbundling MSEB. Uttar Pradesh State Electricity B= oard and Delhi Vidyut Board are finalising plans to privatise transmission = and distribution, while Gujarat is planning to set up one more power projec= t with private sector participation.=20 According to State Bank of India Capital Markets officials, UPSEB is going = to float a new tender, inviting private sector players for power supply in = Kanpur region. Due to employees' protests against the privatisation, the st= ate electricity board had cancelled its earlier tender floated in 2000. SB= I Caps had also short-listed four companies: L&T, CESC, BSES and Tata Power= for transmission and distribution in Kanpur. The officials said: "UPSEB wi= ll come out with a new tariff order for Kanpur by this week end and a new t= ender will be floated by month-end. We would undertake the short-listing pr= ocess by mid-July."They said that besides this, the UP State Industrial Dev= elopment Corporation is also setting up a 30 MW captive power project for t= he newly-developed industrial park, Tronica City, in the state. Total cost = of the project is estimated at Rs 100 crores and BHEL is the equipment supp= lier for the project. SBI Caps short-listed six private players for supplying power in three regi= ons Tata Power, BSES, Reliance Power, China Light&Power, AES, the AV Birla = Group and CESC. Two months back, the Delhi government had cleared State Ban= k of India Caps' proposal for the unbundling of DVB by dividing the board i= nto five separate units. The proposal envisaged three transmission and dist= ribution companies and two generation companies. DVB makes losses to the tu= ne of Rs 1 crore per day. Officials said the Gujarat, on the other hand, is= focussed more on generation and the state electricity board recently propo= sed a 500 MW project in Mundra and invited a proposal from the private sect= or. The project will use imported coal as fuel and the state will keep a minimu= m equity in it. There are two independent power projects in Gujarat: the Re= liance-promoted, 500 MW, naphtha-based Hazira project and the 500 MW, gas-b= ased project promoted by Gujarat Power Corporation. According to the offici= als, the unbundling of Gujarat SEB has failed to take off because the state= government has not yet appointed any merchant banker for it. The governmen= t initiated the state electricity board unbundling around two years back.
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