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Enron Mail |
Thursday, June 07, 2001, http://www.financialexpress.com/fe20010607/news1.h= tml Vajpayee says state, Enron should resolve Dabhol crisis themselves=20 Thursday, June 07, 2001, http://www.financialexpress.com/fe20010607/news4.h= tml ...but Deshmukh insists Centre should help resolve the dispute=20 Similar articles as above also appeared in the following newspapers: Thursday, June 07, 2001, http://www.economictimes.com/today/07infr01.htm Enron dispute will be solved, says Vajpayee THE ASIAN AGE, Thursday, June 07, 2001 'MSEB-DPC Crisis To be Resolved' Thursday, June 07, 2001, http://www.timesofindia.com/today/07busi28.htm Enron imbroglio will be solved: PM=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.economictimes.com/today/07infr02.htm DPC lenders to continue talks on Thursday=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.financialexpress.com/fe20010607/top4.ht= ml DPc foreign lenders to hold their horses , Sanjay Jog & Sitanshu Swain ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.indian-express.com/ie20010607/bus2.shtm= l FIs buy more time in DPC lenders meet ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.economictimes.com/today/07edit01.htm A step forward ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.business-standard.com/today/corp17.asp?= Menu=3D2 Dabhol to challenge MERC order in high court, Arijit De & S Ravindran=20 The above article also appeared in the following newspaper: Thursday, June 07, 2001, http://www.financialexpress.com/fe20010607/news5.h= tml DPC challenges MERC order in high court=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.business-standard.com/today/state1.asp?= menu=3D32 DPC to continue billing MSEB for Phase II power, S Ravindran=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- Thursday, June 07, 2001, http://www.financialexpress.com/fe20010607/news6.h= tml 'Captive, decentralised power projects are the answer to power shortage pro= blem', Rajeev Jayaswal ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE FINANCIAL EXPRESS, Thursday, June 07, 2001=20 Vajpayee says state, Enron should resolve Dabhol crisis themselves=20 PRIME Minister Atal Behari Vajpayee on Wednesday passed on the buck to the= Maharashtra state government and Enron to find a way out to resolve the Da= bhol impasse. Hoping that both the parties will solve the imbroglio mainly = concerning the disposal of costly power, he said the steps initiated by the= state government and the Dabhol Power Company (DPC) are in the right direc= tion of resolving the issue. Addressing a press conference immediately after his arrival at the Mumbai a= irport, Mr Vajpayee shared the state government's sentiments on the purchas= e of the "costly" Dabhol power. The prime minister admitted that there are = difficulties in finding a solution to the Enron issue, but he was confident= that it would ultimately be found. By putting the ball in the court of the= state government and DPC, the prime minister has made it amply clear that = the Centre would not like to associate itself directly to either purchase D= abhol power or its despatch to various states until tariff is reduced after= renegotiation. Mr Vajpayee's remarks have come as a major setback to the s= tate government as it has been appealing to him for the takeover of the Dab= hol phase-II in view of its inability to bear the mounting burden. Chief Minister Vilasrao Deshmukh, in his recent communication to Vajpayee o= n February 6, April 17 and May 10, repeatedly demanded that Dabhol's surplu= s power be disposed by national organisations such as the NTPC and the Powe= r Trading Corporation in power deficit states. "The negotiations with DPC w= ith a view to reducing the tariff hinge around the question whether the ent= ire power from this project at 90 per cent PLF would be purchased. DPC may = be willing to reduce tariff from the existing high levels, provided they ge= t such an assurance from the government of India," Mr Deshmukh had said.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE FINANCIAL EXPRESS, Thursday, June 07, 2001=20 ...but Deshmukh insists Centre should help resolve the dispute=20 THE Maharashtra chief minister Vilasrao Deshmukh on Wednesday said that hi= s government's stand that the state cannot afford to buy "costly" Dabhol po= wer has ultimately been vindicated by Prime Minister Atal Behari Vajpayee. = "We stick to our position that the Centre should step in to bail out the st= ate as we cannot bear the additional burden. The purchase of additional 722= MW from block b of Dabhol phase-II is simply out of question as the state = has not drawn more than 300 MW from the Dabhol phase-I of 740 MW," Mr Deshm= ukh said. Mr Deshmukh was reacting to the prime minister's statement that i= f Maharashtra cannot purchase such costly power who else would buy it.Mr De= shmukh told reporters after the weekly Cabinet meeting that something would= emerge from the ongoing renegotiations between the Maharashtra State Elect= ricity Board (MSEB) and the Dabhol Power Company. "However, DPC will have t= o sacrifice something and the MSEB will also have to do some balancing act = for the resolution of the Dabhol issue," he added. Mr Deshmukh admitted that the he has been consistent on his demand that the= Centre should take over Dabhol phase-II which is the only way in which the= complex problem of this project can be resolved. The chief minister said t= hat his government will seek legal opinion on how to tackle the arbitration= proceedings initiated against it by the DPC. He added that at present the = MSEB has got stay from the Maharashtra Electricity Regulatory Commission on= implementation of arbitration process by the DPC. "Let the DPC take action= on this front against the state government, we will take the necessary ste= ps after seeking legal advise," he added. On making the Dabhol papers open for public, Mr Deshmukh said that his gove= rnment will also seek legal advise in this regard and take necessary action= thereafter. At present, DPC has declined to release certain documents on t= he grounds of "confidentiality." Mr Deshmukh ruled out any possibility of a= dverse impact on receiving foreign direct investment in the state in view o= f the ongoing Dabhol imbroglio. "The question does not arise, as according = to the power purchase agreement between DPC and MSEB, the latter was entitl= ed to purchase all power. In case of FDI, the state is not entitled to buy = the products of the FDI investor," he added.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE ECONOMIC TIMES, Thursday, June 07, 2001,=20 DPC lenders to continue talks on Thursday=20 THE talks between Indian and foreign lenders of the Enron-promoted Dabhol P= ower Company will continue Thursday in Singapore. The DPC is reported to ha= ve made a presentation at the meeting Wednesday and explained its disputes = with Maharashtra State Electricity Bord and the pending case in the state r= egulatory commission, financial institution sources said here.=20 Thursday's meeting is scheduled with foreign banks.=20 Earlier, in a desperate bid to convince foreign banks to not invoke guarant= ees issued by them, Indian lenders to the Dabhol Power Company assured inte= rvention by the central government in salvaging the project. Institutional = lenders run the risk of guarantees worth Rs 2,463 crore being invoked by fo= reign lenders, who are under pressure to prevent their loans from going bad= . During the DPC lenders' meet in Singapore on Tuesday, Indian lenders aske= d foreign ones to not take "individual decisions" in respect of loans to th= e project. Instead, they should wait for the outcome of negotiations. The l= enders meeting was also attended by senior DPC officials. Among foreign ban= ks, senior officials from Citibank, ABN Amro, ANZ Grindleys, Bank of Americ= a and Opec were present.=20 The 2,184-MW power project, with an estimated cost of $2.9bn, stopped gener= ation last week following MSEB's decision not to buy power from the DPC. Th= is has aggravated the matter, making it difficult for the lenders to adopt = a softer stand. Indian lenders have guaranteed loans by foreign banks and i= nstitutions to the extent of $524 million (Rs 2,463 crore). The guarantees = given by lead institution IDBI alone is around Rs 1,528 crore while its tot= al exposure to the project stands at Rs 2,158 crore. The other major Indian= lenders include ICICI, State Bank of India and Canara Bank. Indian lenders= are worried that foreign banks would invoke the guarantee if the current s= talemate continues. "However, lenders have to depend on the central governm= ent, MSEB and the DPC to resolve the issue. Indian lenders can only mediate= between the government and DPC and also plead with foreign lenders not to = pull the plug," said an analyst. Officials who attended the meeting said,= =20 "We hope to arrive at some decision by tomorrow." DPC is expected to make a= presentation to the lenders on Wednesday while small foreign banks will be= meeting on Thursday. Asking foreign banks not to take an individual decisi= on is because of the fear that foreign lenders are considering invoking the= guarantee. "Although Indian banks maintain that foreign banks are not cons= idering invoking the guarantees, it definitely appears that they are consid= ering such a move given the stringent accounting norms followed in the inte= rnational market," an analyst pointed out. -=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE FINANCIAL EXPRESS, Thursday, June 07, 2001=20 DPc foreign lenders to hold their horses , Sanjay Jog & Sitanshu Swain IN a significant turn of events, the foreign lenders to the Dabhol Power C= ompany (DPC) have decided to adopt a wait-and-watch approach, rather than p= recipitate matters on the basis of the termination notices served by both p= arties - the power company and the Maharashtra State Electricity Board (MSE= B) - on each other. This development comes even as the lenders' meeting rol= led on to an unscheduled third day to iron out further issues among themsel= ves. This decision was taken after two days of hectic deliberations among the le= nders where the Industrial Development Bank of India (IDBI)-led domestic le= nders briefed their foreign counterparts about the positive signs relating = to the continuance of the power project, top sources associated with the me= eting told The Financial Express on Wednesday evening. The sources said thi= s effectively means that the foreign lenders would not immediately insist o= n encashing the guarantees on their funds provided by the domestic lenders = to the project. The Dabhol lenders' meeting will now continue for an "unsch= eduled" third day on Thursday.=20 The lawyers of offshore lenders White & Case have confirmed that the meetin= g will continue on Thursday. However, the representative of Industrial Development Bank of India (IDBI) = Mr RS Agarwal left Wednesday's meeting mid-way to catch the flight back to = India. Sources said Enron India managing director K Wade Cline made a detai= led presentation for over two-and-half hours before the lenders. Mr Cline i= s believed to have outlined the series of events that have brought Enron to= the brink of quitting India.Mr Cline said after the presentation: "We have= made a presentation. The presentation went well." Dabhol Power Company, on= its part, has already made it known that it is willing to revise some of i= ts earlier projections to suit the requirements of the state government. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE INDIAN EXPRESS, Thursday, June 07, 2001 FIs buy more time in DPC lenders meet The two-day meeting between Indian and foreign lenders of the Enron-promote= d, Dabhol Power Corp (DPC) remained inconclusive on Wednesday with foreign = lenders deciding to give some more time to the Indian government to decide = the fate of the project.While officials of Indian FIs (IFIs) decided to fly= back on Wednesday, foreign lenders are expected to discuss among themselve= s on what action should be taken on the project on Thursday. IFIs have alre= ady sunk over Rs 5,000 crore on the project and if international lenders pu= ll the plug on the project, it would be IFIs which will have to take anothe= r Rs 2,463 crore hit on their balance sheet as they have guaranteed all the= international loans taken by DPC. IFIs, led by IDBI have already told the foreign lenders that they should no= t take any hasty decision as even the PM has intervened in the dispute. The= foreign lenders include a consortium led by ABN-Amro, Citibank NA, Japan E= xim bank and OPIC. With this, foreign lenders have now decided to adopt a w= ait-and-watch posture instead of fighting with Indian lenders.The IFIs had = pressed for completion of the $3 billion project, as DPC has stopped commer= cial production and doubts are being expressed for commissioning of its 1,4= 44 MW phase-II due on Thursday. The Indian team, led by IDBI executive dire= ctor R S Agarwal, flew back to India alongwith representatives of SBI and I= CICI. On Wednesday, DPC also made presentations to the lenders about the fa= te of the project. Analysts say that foreign lenders cannot give much time = to the project as they have to follow stringent accounting norms followed i= n the international market. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE ECONOMIC TIMES, Thursday, June 07, 2001=20 A step forward DABHOL Power Company is reportedly ready to extend the period for conciliat= ion till August. This is a good idea. Nobody, least of all Enron, which own= s the majority stake in DPC, gains from terminating a costly project sudden= ly. India is desperately short of electricity, whether or not Maharashtra c= laims that it can do without Dabhol power. The least that will be achieved = by extending the conciliation period will be a more organised withdrawal of= Enron from the $2 billion project.=20 However, if MSEB, the governments of Maharashtra and India act sensibly, th= en the project can be salvaged by some renegotiation. Enron, which reported= ly plans to specialise in energy trading and pull out of power generation w= orldwide, might still pull out, but a renegotiated Dabhol will be a cheaper= source of large volumes of electricity which India desperately needs. The = Godbole committee reckons that by renegotiating DPC's PPA and its gas contr= acts, and by some financial re-engineering, the cost of DPC electricity can= be nearly halved. That will mean very attractive prices for electricity fr= om a new gas driven plant. It also means that domestic financial institutio= ns and banks, who have a huge exposure to Dabhol, will not have to contend = with the worrisome prospect of having to provide for loans that become non-= performing.=20 Meanwhile the government in New Delhi has to stop waffling about the need f= or reforms and get some work done. The first thing to do is to issue an ord= inance permitting all independent power producers to sell power to whoever = is willing to pay for it. Private investment is already allowed in transmis= sion and distribution. With generators free to sell to entities other than = SEBs, India will move towards a more competitive market for power. Privatis= ing power distribution has proved to be a mixed success - it has succeeded = to some degree in states like Orissa and flopped in UP, mainly because nobo= dy has faith in the government's ability to administer. Reforms of state ow= ned distribution networks and SEBs are uncertain and will take a long time = to succeed. In the meantime, it is a good idea to set up parallel, privatel= y owned and operated systems for generation, transmission and distribution = that will provide reliable, quality power to consumers who are willing to p= ay. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- BUSINESS STANDARD, Thursday, June 07, 2001 Dabhol to challenge MERC order in high court, Arijit De & S Ravindran=20 The legal battle between the Dabhol Power Company (DPC) and the Maharashtra= State Electricity Board (MSEB) has taken a fresh turn with the former deci= ding to challenge, in the Mumbai High Court, the order of the Maharashtra E= lectricity Regulatory Commission (MERC) restraining it from seeking recours= e to international arbitration till June 14. The case is slated to come up = for hearing on June 11, three days before the next MERC hearing. DPC's cont= ention, it is learnt, is that it is beyond MERC's jurisdiction to debar the= company from proceeding with international arbitration. DPC has informed M= ERC about its decision in a communication dispatched this evening, MERC off= icials said.When contacted, the DPC spokesperson declined to comment on the= issue. MSEB has slapped a claim of Rs 401 crore on DPC for non-supply of p= ower at adequate levels on January 28. In a submission before the commission, it also said that DPC has to pass on= Rs 1,200 crore which had been paid as capacity charges. On May 29, MERC ha= d passed an interim injunction restraining DPC from going in for arbitratio= n on its payments dispute with MSEB till June 14. The commission had also t= aken the line that DPC could not activate the escrow account for the second= phase of the project. The terms of the power purchase agreement inked betw= een MSEB and DPC provide for international arbitration between the two side= s if payments disputes arise. DPC lawyers had questioned MERC's authority t= o settle disputes with MSEB. They had argued that MERC, created in May 1999= , did not have the jurisdiction to adjudicate on disputes between DPC and M= SEB. The DPC argument was that since the amended PPA with MSEB had been ink= ed in 1998, there was no question of MERC having any role to play. MERC sou= rces concede that they cannot reopen the PPA. But they point to another ame= ndment to the Electricity Regulatory Commissions Act on October 27, 2000, w= hich empowered MERC to settle all disputes between power utilities. The com= mission's stand is that since both DPC and MSEB are power utilities, it has= the right to adjudicate on all disputes between the two. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- BUSINESS STANDARD, Thursday, June 07, 2001 DPC to continue billing MSEB for Phase II power, S Ravindran=20 Dabhol Power Company (DPC) will continue billing the Maharashtra State Elec= tricity Board (MSEB) for the power generated from its phase II, which was d= ue to commence operations on Thursday. Sources close to DPC said: "If MSEB = had fully cooperated with DPC, commercial production could have begun from = tomorrow. Under the power purchase agreement (PPA) they would have been for= ced to buy this power.""While MSEB's contention is that they have rescinded= the PPA, DPC's contention is that the PPA continues to be in force. Under = these circumstances, DPC will definitely charge MSEB for the second phase p= ower at some future date," the sources added.=20 MSEB has already stopped buying power from DPC. MSEB chairman Vinay Bansal = could not be reached for comment. Meanwhile, lenders to the Enron-promoted = Dabhol Power Company (DPC) are yet to arrive at a decision on the crucial i= ssue of a transfer notice being served to the MSEB.DPC executives made a pr= esentation to a consortium of domestic and foreign lenders in Singapore on = Wednesday. "The lenders are yet to get back to DPC with their views on the = subject," sources said. This was one among various suggestions put forth by= DPC executives to the lenders. The other issue that was discussed was the mothballing of the 1,444 mw seco= nd phase of the project.Further, DPC executives also spelt out the differen= ces between the company and the Godbole committee to a consortium of Indian= and foreign lenders."DPC representatives pointed out that there was a huge= gulf between the members of the Godbole panel and the company. The bone of= contention is the plant load factor (PLF) at which DPC will sell power to = Maharashtra State Electricity Board (MSEB). Dabhol Power is keen on a PLF o= f 90 per cent which will bring down the tariff. The Godbole panel on the ot= her hand wants a much lower offtake of power by MSEB," sources close to DPC= told Business Standard from Singapore.=20 The meeting was attended by Enron India, managing director, Wade Cline; DPC= president and CEO Neil McGregor and representatives of Indian financial in= stitutions and banks like Industrial Development Bank of India, ICICI, Stat= e Bank of India. The foreign lenders were represented by the arrangers to t= he loan for DPC including to Credit Suisse First Boston. DPC also sketched = out a number of possible scenarios to the lenders in the wake of the prelim= inary termination notice issued to MSEB. Sources however refused to elabora= te further. DPC executives are scheduled to hold another round of discussio= ns with the lenders to the project on Thursday.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= --------------------------------------- THE FINANCIAL EXPRESS, Thursday, June 07, 2001=20 'Captive, decentralised power projects are the answer to power shortage pro= blem', Rajeev Jayaswal THE failure of big power projects such as Dabhol proves that captive and de= centralised power generation projects are the solution to the massive power= shortage in India, according to global power major Wartsila Corporation's = president and CEO Ole Johansson. "The future of small power projects or dis= tributed generation in India is quite promising, compared to large power pl= ants," he said citing the company's growth in India."Wartsila, India, is ad= ding about 200 MW power generation plants every year in India for the last = five year and the growth is likely to continue even in the future," he said= . Wartsila, India, has commissioned a number of distributed generating stat= ions in India in the last 15 years, which altogether crossed the installed = capacity by 2,000 MW. The power generation plants have been installed for i= ndustries, utilities and independent power producers (IPPs). "Out of the t= otal 2,000 MW power projects installed, 50 per cent of the capacity was add= ed in the last five years, showing the trend for small distributed generati= ng stations located close to the load centres," he said. Stating, there is a large demand and supply gap in India, Mr Johansson said= : "India is currently short in peak demand by about 11 per cent. According = to an estimate, about 1,00,000 MW will have to be added over the next 12 ye= ars to the existing generating capacity of about 1,00,000 MW, to support a = GDP growth rate of 6 per cent per annum."Speaking about the Enron controver= sy, he said, "The company, the foreign lenders involved in the projects, an= d both the state and the Central governments can find an amicable solution.= " He, however, added that the big plants are always difficult to finance, whe= reas there are little financial and completion risks involved in small powe= r projects. The company claims to install a captive power plant of 150 MW i= n about 14 months which can run on both furnace oil, as well as natural gas= .Stating that gas is the fuel of the future, Mr Johansson said that power g= enerated by using gas fuel is cheaper than oil by about Rs 1, depending on = the availability of gas and its market price. "The cost of power generation= is under Rs 3 per unit in case of gas, whereas in case of oil it is about = Rs 4 per unit," he said. The Finnish company, Wartsila
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