|
|
Enron Mail |
Rediff.com,Tuesday, May 29, 2001
Meeting with DPC was good, says Godbole, Priya Ganapati in Bombay=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Ndtv.com, Tuesday, May 29, 2001: Centre offers set of proposals to end Enron crisis=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Reuters.com,Tuesday, May 29, 2001 Enron, India panel make no progress on power row , By Sriram Ramakrishnan ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- PTI, Tuesday, May 29, 2001 Govt offers set of proposals for solving Dabhol dispute=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Mid Day, (Chalomumbai.com)Tuesday, May 29, 2001 http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&cat_code=3D2f5748415= 45f535f4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=3D11287 No proposal from Enron at renegotiation meet ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Mid Day,(Chalomumbai.comTuesday, May 29, 2001 http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&art_id=3D11289&cat_c= ode=3D2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152 Govt will play active role in Enron crisis: Godbole ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Rediff.com,,Tuesday, May 29, 2001 MERC set to hear MSEB petition=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES,Tuesday, May 29, 2001 http://www.economictimes.com/today/bn05.htm DPC willing to further cut tariff by 10% The above article also appeared in the following newspapers: BUSINESS STANDARD, ,Tuesday, May 29, 2001 http://www.business-standard.com/today/financ14.asp?Menu=3D5 Dabhol willing to cut tariffs by 10 per cent THE HINDU BUSINESSLINE,Tuesday, May 29, 2001 http://www.hindubusinessline.com/stories/14295601.htm Dabhol offers to cut tariffs 10 pc MID DAY, Tuesday, May 29, 2001 http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&cat_code=3D2f5748415= 45f535f4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=3D11260 Enron ready to slash tariff by 10 %: IDBI chief ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Tuesday, May 29, 2001 http://www.economictimes.com/today/29infr01.htm DPC rejects MSEB's legal notice ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES,Tuesday, May 29, 2001 http://www.economictimes.com/today/29infr02.htm Dabhol Indian lenders to meet on May 30 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD,Tuesday, May 29, 2001 http://www.business-standard.com/today/state2.asp?menu=3D32 MERC clubs Prayas, Hogade suits , Renni Abraham=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS,Tuesday, May 29, 2001 http://www.financialexpress.com/fe20010529/top1.html Govt shoots down plan to sell DPC power to central utilities , Anupama Airy ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, ,Tuesday, May 29, 2001 http://www.financialexpress.com/fe20010529/news2.html MSEB refuses to issue cheque towards April bill to DPC , Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA,Tuesday, May 29, 2001 http://www.timesofindia.com/today/29busi1.htm DPC signals climb down, sees scope to cut power tariffs , Pradipta Bagchi ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA,Tuesday, May 29, 2001 http://www.timesofindia.com/today/29busi2.htm DPC rejects MSEB's legal notice=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- FINANCIAL TIMES May 29, 2001, http://globalarchive.ft.com/globalarchive/articles.html?id= =3D010529001722&query=3Denron Enron rocks India's flagship investors: Fears are growing over rift between= domestic and foreign lenders to power project, Khozem Merchant and David G= ardner:=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS,Tuesday, May 29, 2001 http://www.indian-express.com/ie20010529/bus7.html Worried FIs in fresh bid to defuse Dabhol crisis ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Rediff.com Meeting with DPC was good, says Godbole, Priya Ganapati in Bombay=20 Officials of US energy giant Enron Corp-promoted Dabhol Power Company who m= et with the Godbole committee on Tuesday to discuss the fate of the controv= ersial $2.9-billion power project were non-committal on the outcome of the = talks, but said that the "meeting was good". Both the sides, however, were = unanimous that it would take more discussions to arrive at a peaceful solut= ion to the vexed issue. Tuesday's meeting was cordial and broke fresh groun= d, said sources, indicating that the problem may yet be resolved. Both the = parties have decided to meet again and take the discussions forward. Energy= secretary V M Lal, speaking to the reporters, informed that both the parti= es have decided to meet again and continue the deliberations, but fresh dat= e for the meeting has not been fixed yet. The meeting concluded with both t= he sides agreeing to extend the tenure of the Godbole committee which was s= lated to expire on Wednesday. The period for which the panel's tenure has b= een extended has not yet been decided.=20 Speaking after the meeting Madhav Godbole, chairman of the committee set up= to renegotiate the power purchase agreement with DPC, said: "The meeting w= as quite productive. Basically, we discussed each other's position in the i= ssue. The Government of India has put forth a set of proposals before the D= PC and we shall see how things proceed from here." He, however, declined to= spell out what the 'new set of proposals' comprised. When asked what did t= he committee think of DPC's proposal to cut power tariff by 10 per cent, Go= dbole said: "It is too early to talk about specifics at this point. We disc= ussed generalities and it was a satisfactory meeting." Central government n= ominee A V Gokak, who attended the meeting for the first time, said: "The g= overnment is keen to resolve the vexed issue and will actively participate = in the process and talks."=20 "The negotiations would take into account the interests of all the sides," = Gokak said. "Nobody's intentions can be doubted as the deliberations are on= to come to an amicable solution which is agreeable to all," he said when a= sked to comment on DPC's earlier posture of taking the meeting only as a co= urtesy call. DPC chief K Wade Kline said that only general issues were disc= ussed at the meeting and that the deliberations were "good". The renegotiat= ion committee meeting was headed by Madhav Godbole, energy secretary V M La= l, MSEB chairman Vinay Bansal, finance secretary S K Srivastav and central = nominee A V Gokak, HDFC chairman Deepak Parekh. The Dabhol Power Company te= am was represented by DPC chief K Wade Cline, president Neil McGregor, Bech= tel representative Phiroz J Nagarwala, DPC chief financial officer S Mohan = Gurunath, DPC vice-president Sanjeev Khandkar and IDBI official Mukesh Tyag= i, Rajesh Sivaraman, and Paul Kraft, general counsel.=20 Earlier analysts had said the meeting is unlikely to yield any result as Da= bhol Power Company had announced that the meeting would only be a courtesy = call. The panel was formed last month by the Maharashtra state government t= o renegotiate the tariffs charged by the 2,184 MW power project. Maharashtr= a State Electricity Board, which agreed in 1995 to buy the plant's entire o= utput, says the power is too costly and has defaulted on $48 million of pow= er payments. Dabhol issued a notice this month to cancel its power purchase= deal. The Maharashtra government has asked the panel to renegotiate the pr= oject with Dabhol and bring down the tariff. The first meeting scheduled fo= r May 5, was cancelled as Enron sought more time to attend the meeting, whi= le the second meeting which was held on May 11 concluded without any transa= ction in which, of the nine members, five including central nominee A V Gok= ak were absent. Later, it was fixed for May 23, which also had to be cancel= led in wake of the resignation by the committee chairman Madhav Godbole fol= lowing remarks by NCP chief Sharad Pawar about the negative attitude of the= renegotiation committee.=20 However, the Maharashtra Cabinet unanimously decided not to accept his resi= gnation. Maharashtra Chief Minister Vilasrao Deshmukh wrote a letter to him= after the Cabinet meeting stating that "the state government has full fait= h and confidence in his working, and urge you to withdraw your resignation = as the chairman of the committee." An MSEB official had on Monday said that= the success of the re-negotiations would largely depend on the co-operatio= n of DPC officials as well as the Union government, particularly over the i= ssue of the second phase's 1444 mw power offtake. The second phase would be= commissioned from October this year. After the commencement of second phas= e, the MSEB will have to pay Rs 5 billion per month from the beginning of n= ext year, which is unaffordable for the MSEB. Phase-I, comprising 740-mw po= wer, was commissioned three years ago, but the cost of the power from the p= lant based on imported naphtha has made a dent in the profitability and mar= gin of the state-owned electricity board.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Ndtv.com, Tuesday, May 29, 2001: Centre offers set of proposals to end Enron crisis=20 The Godbole Committee today held a meeting to discuss the Enron imbroglio. = The Committee was set up by the Maharashtra government to renegotiate the p= ower contract between Maharashtra State Electricity Board (MSEB) and Enron = promoted Dabhol Power Company.After the meeting the Chairman of the renegot= iation committee, Dr Madhav Godbole said, "We discussed each others positio= n. We have listed out a few issues which are going to be discussed and then= we will meet again after some time. If there is anything concrete we will = definitely proceed further. We are prepared to play an active role but what= ever solution emerges has to take care of the interests of all sides."The r= epresentative from the Centre, A V Gokak said they have given a set of prop= osals to the Committee. Controversy has surrounded the Committee specially = since Enron has made it clear that it will not accept the recommendations o= f the Committee as the basis for renegotiations. However, even as the central representative reiterated the Centre's willing= ness to play an active role in solving the Enron controversy, Power Ministe= r Suresh Prabhu has ruled out that the Centre will bail Maharashtra out by = buying expensive power produced by the Dabhol project. "How can the central= utilities buy power from Dabhol and sell it elsewhere when it is not possi= ble for Maharashtra government to buy it," informed Mr Prabhu. In another crucial meeting scheduled to be held later today, the Maharashtr= a Electricity Regulatory Commission (MERC) will hear MSEB's petition about = the validity of the power contract or the Power Purchase Agreement (PPA). PTI adds: The Union government today offered a set of proposals for solving the ongoi= ng dispute between Enron's Dabhol Power Company (DPC) and Maharashtra State= Electricity Board (MSEB).The offer was made at the second meeting of the r= enegotiating Committee, headed by Madhav Godbole, held in Mumbai today to r= esolve the crisis over the DPC-MSEB dispute.Godbole later told reporters th= at the meeting was "positive" and the committee discussed and tried to know= the position of the two sides. However, he declined to reveal the set of p= roposals put forth by the Centre for resolving the issue. "Centre's represe= ntative A V Gokak told Enron India managing director K Wade Cline that Nati= onal Thermal Power Corporation (NTPC) will not be able to buy power from DP= C", an official who attended the meeting told PTI.Asked whether DPC had mad= e any reference to a 10 per cent cut in its tariff, Godbole said "it was to= o early for any comment on specifics of the discussions". Gokak, Former telecom secretary, said the Union Government was quite keen o= n resolving the matter and "will definitely play an active role" in the ent= ire process. "In the second round of our meeting, our discussions were good and the dial= ogue will continue. However, the next date of the meeting will be fixed lat= er", state energy secretary V M Lal said. Wade Cline too echoed the sentime= nt and said "we discussed a variety of issues".Asked if DPC had agreed for = a possible 10 per cent tariff cut, Cline said "no proposal has been submitt= ed before the committee and discussions were on".Lal said the committee dis= cussed all issues which "were hindering the progress of the project".Howeve= r, he refused to divulge further details of the discussions, saying "it has= been made clear time and again that renegotiations cannot be done through = the media".The DPC delegation included president Neil McGregor, vice presid= ents Sanjeev Khandekar and Mukesh Tyagi and chief financial officer Mohan G= urunath and Bechtel India managing director Feroze Nagarwala.The other comm= ittee members who attended the meeting were MSEB chief Vinay Bansal, HDFC c= hairman Deepak Parekh, and state principal finance secretary S K Srivastava= . ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Reuters.com,Tuesday, May 29, 2001 Enron, India panel make no progress on power row , By Sriram Ramakrishnan Talks between U.S. energy giant Enron Corp's Indian unit and a government = panel ended on Tuesday without resolving a contentious dispute over a giant= $2.9 billion power project, officials said.But they said the talks will co= ntinue.Participants at the meeting, which lasted an hour, discussed the iss= ue of a reduction in tariff rates charged by Enron's unit for the power it = sells to Indian state utility the Maharashtra State Electricity Board (MSEB= ), government and company officials said. Also discussed was the option of a third entity, apart from the sole buyer = MSEB, purchasing the power from the second phase of the project. "We had a = good meeting. We discussed a lot of issues. But no proposals were submitted= ," K. Wade Kline, chief operating officer, Enron India Pvt Ltd, told report= ers.V.M. Lal, principal secretary to the Maharashtra government, said the d= iscussions will continue with Dabhol Power Company, which is 65 percent own= ed by Houston-based Enron <ENE.N<."We are negotiating on the various issues= that are coming in the way of the project," he told reporters, adding that= no date has been fixed for the next meeting.Enron and MSEB have been sparr= ing for over six months on the 2,184 MW project, which was originally slate= d to sell its entire output to MSEB at a fixed price.The row is seen as a t= est case of India's ability to attract foreign investment in the power sect= or, which needs 100,000 MW over the next 10 years to meet growing demand.MS= EB began buying the 740 MW of power produced by the the project's first pha= se in May 1999, but late last year, it started to default on payments sayin= g the tariffs were too high. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- PTI, Tuesday, May 29, 2001 Govt offers set of proposals for solving Dabhol dispute=20 Mumbai,Tuesday, May 29, 2001: The Union government today offered a `set= of proposals' for solving the ongoing dispute between Enron's Dabhol Power= Company (DPC) and Maharashtra State Electricity Board (MSEB). The offer = was made at the second meeting of the renegotiating Committee, headed by Ma= dhav Godbole, held here today to resolve the crisis over the DPC-MSEB dispu= te. Godbole later told reporters that the meeting was `positive' and the co= mmittee discussed and tried to know the position of the two sides. However,= he declined to reveal the set of proposals put forth by the Centre for res= olving the issue. "Centre's representative A V Gokak told Enron India mana= ging director K Wade Cline that National Thermal Power Corporation (NTPC) w= ill not be able to buy power from DPC," an official who attended the meetin= g told PTI. Asked whether DPC had made any reference to a 10 per cent cut = in its tariff, Godbole said "it was too early for any comment on specifics = of the discussions". Gokak, former telecom secretary, said the Union Gover= nment was quite keen on resolving the matter and "will definitely play an a= ctive role" in the entire process. (PTI)=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- MID DAY,Tuesday, May 29, 2001 No proposal from Enron at renegotiation meet The U S Energy major Enron promoted Dabhol power company (DPC) did not put = up any proposal before the renegotiation committeee headed by Former Home s= ecretary Madhav Godbole at its crucial meeting which began this morning. ''= We have not put up any proposal before the renegotiation committe, but the = discussion during the meeting was fairly good'', DPC India Chief K Wade Cli= ne told reporters, after attending the meeting. The re-negotiation committe= e meeting which started at 11.00 am continues and discussions are still on.= Besides, K Wade Cline, DPC President Neil Mcgregor, Chief Financial offic= er Mohan Gurunath, Vice President Sanjeev Khandekar and Mukesh Tyagi were p= resent at the meeting from Enron. While the MSEB is being represented by MS= EB chairman Vinay Bansal, Energy Secretary V M Lal. The Union Government's = nominee A V Gokak is also attending the meeting. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- MID DAY,Tuesday, May 29, 2001 Govt will play active role in Enron crisis: Godbole The government of India (GoI) will play an active role to resolve the ongoi= ng dispute over the Power Purchase Agreement (PPA) between Enron promoted D= abhol Power Company (DPC) and the Maharashtra State Electricity Board (MSEB= ), re-negotiation committee chairman Dr Madhav Godbole said today. Briefin= g the mediapersons after the crucial meeting today, Dr Godbole said the Cen= tre submitted some proposals in the meeting making their position clear in = regard of resolving the issue. During the meeting the committee has made a = list of issues which will be discussed in the next meeting, for which a fre= sh date has not yet been finalised. =20 ''The meeting was quiet productive, we had a good discussion,'' he said, a= dding, we have discussed several issues and tried to understand each others= position in the meeting. On being asked about the issues which were discus= sed in the meeting, he declined to disclose them saying it is at a prelimin= ary stage, therefore it would not be proper to say anything on the subject = at the moment. When quired by the journalists whether the DPC is ready to = cut down the tarrif, Dr Godbole said ''It is very early to talk on a specif= ic issue.'' ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- Rediff.com, Tuesday, May 29, 2001 MERC set to hear MSEB petition=20 The Maharashtra Electricity Regulatory Commission will also hear a petition= filed by MSEB against DPC for their non-performance as per the PPA on Tues= day.=20 Lenders' meet=20 Meanwhile, Indian lenders to Dabhol are scheduled meet in Bombay on Wednesd= ay to try and find a way to protect their interests in the project, a lende= r said on Monday. The meeting's top priority will be the adoption of a comm= on strategy to convince foreign lenders not to invoke guarantees issued by = local financial institutions and banks. The project is being built at a tot= al cost of $2.9 billion, of which $2 billion has been funded through loans.= Of this amount, the local lenders have contributed $1.4 billion and foreig= n lenders have provided the rest. Foreign lenders are protected by guarante= es issued by domestic banks and financial institutions. They have called a = meeting on June 5 and 6 in Singapore to discuss invoking guarantees on thei= r loans in the project. At stake is not just the investment in the project,= but also India's efforts to reform the power sector. Indian lenders would = also take a hit on their books if their foreign counterparts insist on paym= ents.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES,Tuesday, May 29, 2001 DPC willing to further cut tariff by 10% DABHOL Power Company has informed lenders that it is willing to bring down= its tariff by 10 per cent. This decrease will be over and above the fall i= n tariff due to the shift from naphtha to LNG. This has been indicated by E= nron to the lead financial institution, IDBI, recently. Once DPC switches o= ver fuel from naphtha to LNG by the end of this calendar year, the tariff= will automatically be reduced by 10 per cent. Apart from this, it is learn= t that Dabhol has agreed to reduce the tariff by a further 10 per cent. Whi= le this alone may not be adequate to resolve the on-going differences, the = proposal has reportedly been well received by domestic lenders. At the same= time, to protect their interest, domestic lenders have formed a committee = to look into the problems relating the DPC. The total debt to DPC amounts t= o Rs 6,600 crore of which 90 per cent has already been disbursed.=20 The committee is slated to meet on May 30 here, while all lenders will be m= eeting on June 5 and June 6 in Singapore to discuss various issues relating= to DPC. IDBI has total exposure of Rs 2,158 crore in phase I and phase II.= Of this, Rs 1528 crore constitute guarantees and Rs 630 crore is loan. IDB= I officials indicated that the domestic lenders will make an effort to pers= uade foreign lenders against invoking the counter guarantee or precipitate = matters any further. Officials from the term lending institution also maint= ained that finding a purchaser for the power generated is a bigger problem = than tariff reduction. "The tariff can be re-negotiated and reduced, but th= e larger issue is finding a buyer for the power," said IDBI officials.=20 Meanwhile , Union energy minister Suresh Prabhu today again turned down the= state's request to buy power generated by the Dabhol Power while CM Vilasr= ao Deshmukh accused the BJP-led NDA government at the Centre of "not being = very keen to resolve the ongoing imbroglio" between MSEB and DPC. Prabhu ex= pressed the Centre's `helplessness' saying that his government has hardly a= ny role to play as far as buying DPC power is concerned. He was speaking to= media persons after attending a symposium over power reforms. Tomorrow, th= e controversy is likely to take a new turn with MERC all set to hear the ca= ses of both the parties. DPC, after rejecting MSEB legal notice for "rescin= ding" the PPA, will be pleading its case before the MERC on Tuesday. In a t= hree-page response to MSEB's notice, Enron India MD K Wade Cline has said "= the legal notice is not acceptable to us, as according to the PPA, MSEB doe= s not have the right to rescind the agreement". ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Tuesday, May 29, 2001 DPC rejects MSEB's legal notice =20 ENRON'S Dabhol Power Company has rejected the Maharashtra State Electricity= Board's legal notice for"rescinding" the power, saying: "It (MSEB) did not= have the right to do so." The two partners are getting ready to plead thei= r case before the Maharashtra Electricity Regulatory Commission on Wednesda= y. In a three-page response to MSEB's May 24 legal notice, Enron India mana= ging director K Wade Cline has said: "The legal notice is not acceptable to= us, as according to the PPA, MSEB does not have the right to rescind the a= greement." The letter, dated May 26, also asks MSEB to comply with the "san= ctity" of the PPA: "Please confirm that the board would also pay all DPC du= es, including the disputed Rs 213-crore for December and January bills plus= the interest."=20 In its notice, MSEB has questioned the legal validity of the entire PPA as = per the Indian Contracts' Act 1872 and later also went a step further by fi= ling a petition with the MERC. "Other than non-acceptance of our legal not= ice, DPC has continued its demand for an escrow account, knowing fully well= that MSEB has filed a caveat in the Mumbai High Court for not activating t= he same," sources said. DPC has also demanded an increase in LC (letter of = credit) amount in line with the PPA, as MSEB was supposed to do 21 days bef= ore the firing of its second phase on June 6, they said. "We are tired now= with the same explanation that unless the political force majeure stands a= ctivated, we will not be in a position to increase the limit, but are yet t= o hear something positive from their side," state government sources said.= =20 Interestingly, the sources said, there was no mention of DPC paying Rs 401 = crore penalty and a subsequent rebate for December and January bills. DPC a= lso reiterated that the 2,194-mw power station was a "base" load one and c= ould not be treated as "peak" load, and hence, it took a minimum six hours = to ramp up to full capacity. The multinational has also expressed disappoin= tment at the loss-making board's "repeated attempts to create a situation a= llowing it to claim rebates for alleged misdeclarations" about the capacity= of the $3-billion power station. (PTI) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES,Tuesday, May 29, 2001 Dabhol Indian lenders to meet on May 30 =20 INDIAN lenders of Enron-promoted Dabhol Power Company led by Industrial Dev= elopment Bank of India will meet on May 30 to chalk out a strategy for pres= surising their foreign counterparts not to escalate the crisis by withdrawi= ng from the $3-billion project. "There is a rift between the domestic and = foreign lenders, but the forthcoming meeting will formulate our future cour= se of action to convince the latter not to precipitate the crisis any furth= er in the June 4-6 Singapore meet," IDBI acting chairman and managing direc= tor S K Chakrabarti told reporters here on Monday. "IDBI's exposure to DPC= project is to the tune of Rs 2,158 crore including guarantees worth Rs 1,5= 28 crore and rupee loans of Rs 630 crore," the CMD said. For the first time= the Indian lenders on Monday disclosed their exact exposure to DPC, which = stood at Rs 6,600 crore, Chakrabarti said. Other than IDBI, the domestic le= nders include ICICI, State Bank of India and Canara Bank. "IDBI does not ha= ve any non-performing assets in the power sector and as far as the US multi= national is concerned, its exposure would be considered as standard assets= ," he said, adding: "DPC had enough funds to meet the obligations for six m= onths." (PTI) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Tuesday, May 29, 2001 MERC clubs Prayas, Hogade suits , Renni Abraham=20 The Maharashtra Electricity Regulatory Commission (MERC) has clubbed togeth= er the petitions filed by Prayas (an NGO) and senior Janta Dal leader Prat= ap Hogade, which sought the copies of the power purchase agreements and o= ther associated documents of the Dabhol Power Co, Patalganga and Bhadrawati= power projects. The two petitions have additionally provided the opportun= ity to test the effectiveness or otherwise of the Maharashtra Right to Inf= ormation Act, 2000. The MERC members on their part are keen to ensure that= the much sought after transparency, since the act was passed by the state = legislature,actually translates into a reality.=20 Chairman of MERC P Subramaniam, during the last hearing on the issue of DPC= documents being made available to Prayas berated MSEB (Maharashtra State E= lectricity Board) for issuing conflicting statements in connection with th= e financing agreement for phase II of the project as also being unable to b= ackup with legal reasoning how it could withhold the documents sought by Pr= ayas.He subsequently directed MSEB to issue all the documents related to DP= C to the commission within a month, and granted two weeks time for the rel= ease of documents sought by Prayas. A senior MERC official told Business S= tandard, "While initially MSEB said that it was not in possession of the = documents, it later told the commission that the documents were in fact av= ailable with it but not the detailed document."=20 The commission also found it peculiar that MSEB had chosen to merely reiter= ate the legal submission made by DPC with regards to the confidentiality a= ttached to certain key documents instead of employing the services of the = large in-house legal department. According to a senior government officia= l, while the Reliance-promoted Patalganga project and Ispat-promoted Bhadr= awati projects are yet to achieve financial closure, the petitions before M= ERC would serve as the touchstone ruling for deciding upon the issue of pub= lic access to information.=20 Both MSEB and DPC as well as the Reliance and Ispat groups would have to ex= plain how they could withhold the documents sought by the common public und= er the provisions of the act. The Maharashtra Right to Information Act, 200= 0, clearly stipulates, "Every bonafide person requiring information may hav= e access to such information in accordance with the procedure specified und= er this act." The criteria for denying information is also specified under = the act where it would prejudice the security, integrity or sovereignity of= the nation or the state, information relating to defence matters.However, = according to well placed sources in the MSEB, its legal department has take= n the provisions of the act through a fine comb to find grounds for justif= ying the withholding of the documents sought by Prayas.=20 A senior MSEB official said, "For instance, one of the criterion for denyin= g information as stated in the act says that it is permitted if the discl= osure would prejudice negotiations or the effective conduct of personnel m= anagement or commercial or contractual activities. It also notes if the inf= ormation disclosure would harm the competitive position of a third party or= if the information has been supplied in confidence under a statutory guar= antee that its confidentiality would be protected, the act would not apply= ." ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Tuesday, May 29, 2001 Govt shoots down plan to sell DPC power to central utilities , Anupama Airy THE Centre has turned down the Maharashtra government's proposal that Natio= nal Thermal Power Corporation (NTPC) or the Power Trading Corporatiopn (PTC= ) be asked to buy and distribute Dabhol power. Top government officials t= old The Financial Express that the consequences of commercial decisions t= aken by the state government or the Maharashtra State Electricity Board (M= SEB) will not be passed on to the consumers across the country. Besides,= NTPC is a central power sector organisation whose main task is generation = and it has no expertise in power trading, the sources said. Moreover, as per officials, any attempt to force NTPC to buy high-cost pow= er will adversely affect the corporation's financial health, as it is alrea= dy struggling to recover huge dues from the state electricity boards (SEBs)= . "The basic objective of reforms in India's power sector is to provide po= wer at reasonable cost. The Maharashtra government's proposals to distribut= e high-cost Dabhol power through NTPC or through PTC will be clearly again= st the objective of reforms and consumer interests," said a senior governm= ent official.Sources said even PTC cannot be asked to buy and distribute po= wer of the Dabhol plant. This is because the Centre has already refused to = declare Dabhol project as a mega power project while PTC only deals with th= e power from mega projects, which are inter-state projects. Officials said = the Centre is of the view that if any decision is taken to impose high cost= power from Dabhol on other states, it will be an open invitation to other = states to pass on their existing liabilities vis-a-vis private producers to= the central government. "This will not be acceptable to the government of = India," the sources said. Coming down heavily on the Maharashtra government, the officials said the s= tate government's unwillingness to rationalise tariffs has crippled MSEB'= s ability to make available reasonably priced power in the state. "The Maha= rashtra government has been directly interfering in MSEB's efforts to colle= ct arrears which have mounted to a whopping Rs 5,000 crores," the officials= said. On the condition of anonymity, a highly placed central government of= ficial said, "Although the Centre is committed to support any worthwhile id= ea acceptable to both MSEB and DPC for settling the problem, it would be mo= re advisable for the state government to rise above politics and carry out = re-negotiations in a constructive manner so that sustainable solution is fo= und." Officials disclosed that between April 1997 and March 2000, MSEB doled out = Rs 2,800 crore of subsidies and, in the year 2000, MSEB was incurring cas= h loss of about Rs 5 crore per day, which is 40 per cent of the cost of ge= neration. "There has been no increase in tariff since September 1998 and, = the total receivables of MSEB are in the range of Rs 5,000 crore," the offi= cials said. Central government sources informed that the Maharashtra govern= ment has been announcing subsidies to specified categories of consumers suc= h as powerlooms and agriculturists without ensuring that subsidies are paid= to MSEB. The financial condition of MSEB, therefore, has deteriorated to s= uch an extent that it cannot pay for the power being purchased from Dabho= l," the sources informed. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Tuesday, May 29, 2001 MSEB refuses to issue cheque towards April bill to DPC , Sanjay Jog THE Maharashtra State Electricity Board (MSEB) on Monday refused to issue a= cheque of Rs 136 crore towards the April bill to the Dabhol Power Company = (DPC). MSEB sources told The Financial Express that the decision was taken = after the DPC's bank, Bank of America, returned the MSEB's cheque, deposite= d within two hours on May 23. Sources said that MSEB, which has decided to = pay the monthly bills "under protest," until the issue of non-payment of re= bate of Rs 401 crore by DPC for the misdeclaration and default on the avail= ability of power is resolved, would not accept any other conditions from DP= C on payment of bills. Sources said that Enron India managing director K Wade Cline and DPC chief = financial officer Mohan Gurunath, in separate letters had asked the MSEB no= t to pay the April cheque. They said that MSEB should make the payment with= out any 'ifs and buts' as there is no provision of payment under protest in= corporated in the power purchase agreement (PPA). MSEB was highly disappoin= ted over the return of its cheque by the Bank of America on grounds that it= cannot accept the cheque, following clear cut directives from the DPC.=20 "Suddenly, Mr Gurunath calls up this morning and tells that a company off= icial will come to collect the cheque, even if it is to be issued under pro= test. This is not acceptable to us and thus we refused to hand over the che= que today to DPC officials," sources said. According to MSEB sources, had i= t paid the April cheque without any protest, the DPC's stand on non-payment= of rebate would have been confirmed. Meanwhile, Mr Wade Cline, whose lette= r, written on May 23 to the MSEB chairman Vinay Bansal, was received by the= latter on Monday. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Tuesday, May 29, 2001 DPC signals climb down, sees scope to cut power tariffs , Pradipta Bagchi The Dabhol Power Company (DPC) has told its major lenders that there is roo= m for a downward revision in tariffs. According to S.K. Chakrabarti, actin= g chairman and managing director of the Industrial Development Bank of Indi= a (IDBI), DPC has informed lenders in writing that there may be scope to re= duce the power tariffs by ten per cent from the existing levels.This is the= first time since the Dabhol controversy exploded that Enron, the main prom= oter of DPC, has shown any sign of wanting to renegotiate tariffs. Accordin= g to bankers, DPC will charge a tariff of Rs 3.50 per unit after Phase II = of the project is commissioned as per the power purchase agreement. However= , in its latest communication to lenders through its lawyers, White and Cas= e, DPC has told lenders that there is room for the tariffs to be renegotiat= ed downwards by ten per cent to Rs 3.15 per unit from the existing rate of = Rs 3.50 per unit. Speaking to the press, Chakrabarti said that he was hopeful of an amicable = resolution of all outstanding issues between DPC and MSEB. ``We have also i= mpressed upon DPC that there is scope to reduce the tariffs further,'' he a= dded.According to the lending banks, DPC has said that tariffs can be revis= ed downwards if contracts for buying liquefied natural gas (LNG) are rene= gotiated with the sellers. This is because LNG prices have come down signif= icantly since the contracts were signed a couple of years ago.DPC has also = indicated that LNG shipping and carriage rates can also be renegotiated to = help reduce tariffs. These rates have also fallen since the contracts were = signed in the nineties. The major lenders are supposed to meet in Singapore= on June 5 and 6 to discuss matters further. Moreover, IDBI has set up a co= mmittee for the domestic lenders to help them take a united stand in the m= atter. ``We will try and convince the foreign lenders that they should not= take any action to precipitate matters further,'' Chakrabarti said. The In= dian banks and financial institutions together have an exposure in excess = of Rs 6,000 crore in the project. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Tuesday, May 29, 2001 DPC rejects MSEB's legal notice=20 Enron's Dabhol Power Company has rejected MSEB's legal notice for "rescindi= ng" the PPA, saying "it did not have the right to do so", as the two partn= ers get ready to plead their case before the state electricity regulatory = commission (MERC) on Tuesday. In a three-page response to MSEB's May 24 leg= al notice, MD of Enron India K Wade Cline has said, "The legal notice is no= t acceptable to us, as according to the PPA, MSEB does not have the right t= o rescind the agreement," state government sources said here on Monday. The= letter, dated May 26, also asks MSEB to comply with the "sanctity" of the = PPA: "Please confirm that the board would also pay all DPC dues, including = the disputed Rs 213 crore for December and January bills plus the interest= ." In its notice, MSEB has questioned the legal validity of the entire PPA = as per the Indian Contracts' Act (ICA) 1872, and later also went a step fur= ther by filing a petition in MERC.=20 "Other than non-acceptance of our legal notice, DPC has continued its deman= d for an escrow account, knowing fully well that MSEB has filed a caveat in= the Mumbai High Court for not activating the same," sources said. DPC has = also demanded an increase in LC (letter of credit) amount in line with the = PPA, as MSEB was supposed to do 21 days before the firing of its second pha= se on June 6, they said."We are tired now with the same explanation that un= less the political force majeure stands activated, we will not be in a posi= tion to increase the LC limit, but are yet to hear something positive from = their side," state government sources said. Interestingly, they added that = there is no mention of DPC paying Rs 401 crore penalty and a subsequent reb= ate for December and January bills. DPC also reiterated that the 2,194-MW p= ower station was a "base" load one and could not be treated as "peak" loa= d, hence it takes a minimum six hours to ramp up to full capacity.=20 In its notice, MSEB has alleged that DPC has not been able to conform to ce= rtain dynamic characteristics and operations of the PPA and time and again = had failed to comply with the same, they added. "As per ICA, such a confe= ssion amounts to material misrepresentation of facts, which, in this case, = has been knowingly committed by DPC," the sources informed. DPC has denied = this very charge and said, "There has been no material misrepresentation of= facts as alleged by MSEB in the avoidance notice." The MNC has also expres= sed disappointment at the loss-making MSEB's "repeated attempts to create a= situation allowing it to claim rebates for alleged misdeclarations" abou= t the capacity of the $ 3-billion power station.(PTI) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- FINANCIAL TIMES, May 29, 2001 Enron rocks India's flagship investors: Fears are growing over rift between= domestic and foreign lenders to power project, Khozem Merchant and David G= ardner:=20 A"basic rift" has emerged between domestic and foreign lenders to the Enron= power project near Bombay, which threatens to undermine attempts to rescue= India's flagship foreign direct investment.Indian banks account for about = 70 per cent of the Dollars 2bn in debt raised to finance the Dollars 2.9bn = Dabhol project. Foreign banks provide the balance of the loans but some of = them are protected by guarantees from Indian financial institutions. Indian= bankers fear the foreign banks may call in the guarantees. S.K. Chakrabati= , chairman of the Industrial Development Bank of India, which accounts for = about a third of Indian banks' total exposure of Rs66bn (Dollars 1.4bn), ye= sterday said he was "substantially hopeful" of solving the rift. Lenders to= Enron's Indian unit, Dabhol Power Company, will meet in Singapore on June = 5-6. The Indian lenders, which include the State Bank of India, the country= 's biggest, and ICICI, will meet tomorrow to devise a strategy that would r= ely more on "persuasion because we lack the power of veto", one Indian offi= cial said.=20 Foreign lenders, which include US Exim, Bank of America and Industrial Bank= of Japan, have become increasingly dissatisfied with the payments record o= f Dabhol's sole client, Maharashtra State Electricity Board. MSEB owes DPC = Dollars 45m in unpaid bills. Last month foreign banks gave Dabhol the autho= rity to withdraw from the project. Last week, Dabhol issued a "pre-terminat= ion notice" to withdraw in six months. The past few days of tit-for-tat mo= ves by Dabhol and MSEB have also raised complex legal issues. MSEB's decisi= on to cancel the power purchase agreement, which defines contractual relati= ons with Enron, seems destined to go to court. The question is: which court= ? The agreement is governed by and based on English law. But the MSEB has r= eferred the cancellation of the agreement, whose high tariffs are at the ro= ot of the dispute, to the untested electricity regulator. This is a risky = strategy. "The regulator is not the authority that can decide on a purely c= ontractual issue between parties," says a Bombay commercial lawyer. "In fac= t, even an Indian court of law would have to refer the matter to an arbitra= tion tribunal as identified in the agreement."=20 Enron launched arbitration proceedings on April 12 after increasingly bitte= r wrangling. Many foreign bankers regard this official undermining of a con= tract as a dangerous game of "power poker", which is already having a chill= ing effect on multinationals' plans to invest in India's power and telecom= munications sectors. Three companies have told the Financial Times privatel= y that they were reviewing their involvement with and strategy in India. On= e senior executive pointed out that the risk premium for investors in India= has already gone up in the past six weeks. He said the "hurdle rate of ret= urn" - the minimum rate of return on equity in dollars - that his and other= companies eyeing opportunities in India were seeking had risen by one to t= wo percentage points. "If this Enron thing works out badly," the senior exe= cutive said, "the hurdle rate is going to be infinity." Foreign companies= are also becoming nervous by increasing domestic hostility. At the weekend= , protestors attacked the Orissa-based subsidiary of the US energy company,= AES. Last week, about 2,000 protesters burnt down AES offices in northern = Orissa. The state of Orissa pioneered the privatisation of power distributi= on in India.=20 The Enron dispute has also forced Karnataka, to the south of Maharashtra, t= o re-open 11 power purchase agreements signed with independent producers in= a move to cut electricity tariffs. Enron's position on its agreement remai= ns unchanged. It refuses to renegotiate the contract, as the Indians sugges= t, based on the findings of a recently published official report by the res= pected politician, Madhav Godbole. Enron regards the report as hostile even= though the author was equally critical of the "quality of governance" in t= he early to mid-1990s when the agreement was signed. Commentators say this = is a reference to the administration of Sharad Pawar, who as the then leade= r of Maharashtra was, and remains, a keen advocate of Enron's interests.=20 Meanwhile, K. Wade Cline, managing director of Dabhol, has told MSEB in a l= etter dated May 25 that the utility's cancellation of the agreement is not = valid. MSEB axed the contract because, it says, of Enron's poor plant perfo= rmance, notably a failure to raise capacity from a cold start in three hour= s, which Enron disputes. Yesterday, an Enron official picked up for the sec= ond time a cheque for Rs1.37bn that MSEB paid last week "under protest", bu= t which was returned by the US company, apparently to clear any misundersta= nding about its position. As Mr Cline said in his leaked letter: "MSEB cann= ot have it both ways. We will rely upon any payment as constituting an uneq= uivocal affirmation of the validity of the PPA (power purchase agreement by= ) MSEB." Enron's choreographed show of corporate pique yesterday at least = shows it has learned something about the ways of Indian political play-acti= ng.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS, Tuesday, May 29, 2001 Worried FIs in fresh bid to defuse Dabhol crisis Worried over the prospects of their Rs 6,600 exposure to the Dabhol project= becoming non-performing assets (NPAs), Indian lenders led by the Industria= l Development Bank of India (IDBI) have decided to meet on May 30, here wit= h the main objective of persuading the offshore lenders against precipitat= ing matters further and request them to show restraint.IDBI, which has an e= xposure of Rs 2,158 crore in the Dabhol project and has provided a guarante= e forRs 1,528 crore to the offshore lenders, has taken the initiative to co= nvene the May 30 meet in a bid to avert a major lending crisis. IDBI is be= lieved to have expressed concern over the lack of guarantee cover for the I= FIs as against the similar protection enjoyed by the offshore lenders. For the first time the Indian lenders today disclosed their exact exposure = to DPC, which stood at Rs 6,600 crore. Other than IDBI, the domestic lender= s include ICICI, State Bank of India and Canara Bank. FIs feel that if En= ron ultimately decides to pull out at this stage, terminating the power pur= chase agreement, it will have serious consequences with regard to the inve= stments made by the FIs in the project. The Wednesday's meeting is expected= to be attended by the representatives of IDBI, ICICI, State Bank of India,= Industrial Finance Corporation of India and Canara Bank to chalk out futur= e course of action. "However, we will have to persuade the foreign lenders that crisis should n= ot be further precipitated and they should not exert pressure on the termin= ation of project," sources said, adding, "Considering all aspects, the FIs = are of the view that the Dabhol phase-II, which is already completed to the= extent of 90 per cent,should be allowed to be fully completed and an alter= native for distribution of power should be explored, having regard to the i= nability of the MSEB to absorb the Dabhol phase-II power."Foreign lenders, = already upset with the payment delays and the controversy over the PPA canc= ellation, are apparently not happy with the turn of events. "Indian lenders= will be the losers. Foreign lenders exposure is backed by guarantees. That= 's not the case with Indian lenders," FI sources said, adding, "looking at= their stand so far, foreign lenders may cash their guarantees." There is = also speculation that belligerent foreign lenders are all set to encash the= deferred payment guarantees.
|