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Enron Mail |
THE ECONOMIC TIMES Monday, 21 MAy, 2001,http://www.economictimes.com/today/21econ02.htm MSEB to slap yet another penalty on DPC THE ECONOMIC TIMES Monday, 21 MAy, 2001,http://www.economictimes.com/today/21econ04.htm Dabhol project suffers $400-m cost overruns, Anto T Joseph=20 BUSINESS STANDARD Monday, 21 MAy, 2001,http://www.business-standard.com/today/economy7.asp?Me= nu=3D3 DPC faces fresh Rs 400-crore penalty THE FINANCIAL EXPRESS Monday, 21 MAy, 2001, http://www.financialexpress.com/fe20010521/top3.html MSEB plans to dispute PTN validity , Sanjay Jog THE FINANCIAL EXPRESS Monday, 21 MAy, 2001,http://www.financialexpress.com/fe20010521/news3.html Govt, MSEB keen to probe role of IDBI in issue of Dabhol PTN, Sanjay Jog THE TIMES OF INDIA Monday, 21 MAy, 2001,http://www.timesofindia.com/today/21busi5.htm MSEB to slap yet another Rs 400 cr penalty on DPC=20 THE TIMES OF INDIA Monday, 21 MAy, 2001,http://www.timesofindia.com/today/21busi6.htm Maharashtra working on ways to avoid Enron penalty=20 THE ASIAN AGE Monday, 21 MAy, 2001, http://www.asianageonline.com/ MSEB PLANS RS 400-CR PENALTY ON DABHOL=20 THE ASIAN AGE Monday, May21, 2001, http://www.asianageonline.com/ Enr-off? THE AFTERNOON http://www.afternoondc.com/ 'CENTRE SHOULD SORTOUT ENRON CRISIS'=20 Bhujbal puts Suresh Prabhu on the mat=20 THE ECONOMIC TIMES Monday, 21 MAy, 2001,http://www.economictimes.com/today/21econ02.htm MSEB to slap yet another penalty on DPC UNDETTERED by issuance of the preliminary termination notice by Enron-promo= ted Dabhol Power Company, the Maharashtra State Electricity Board has decid= ed to go ahead with its decision to slap yet another Rs 400-crore penalty o= n the US energy major. "PTN or no PTN. In June first week, MSEB will slap o= ne more Rs 400-crore penalty on DPC for misdeclaration and default on the a= vailability of power, a review for which will be taken next month," MSEB so= urces said here on Sunday. The proposed penalty is in wake of DPC's inabili= ty to produce power on February 12 and March 13 as per MSEB's demand in sti= pulated time of three hours as per the power purchase agreement, they said.= "In fact, we would pay the Rs 139-= crore April bill on May 23 and this will be the last payment from MSEB's si= de, rest of the due amount should be adjusted in the penalty," the sources = added. MSEB follows a four month cycle, the first instance of failure on Ja= nuary 28 fell in the first cycle, while the other two instances fell in the= next cycle of February-May, a bill for which would be prepared and despatc= hed to DPC in June, the sources said. (PTI) THE ECONOMIC TIMES Monday, 21 MAy, 2001,http://www.economictimes.com/today/21econ04.htm Dabhol project suffers $400-m cost overruns, Anto T Joseph=20 AS IF the current dispute with the Maharashtra government was not enough, t= he Dabhol project now has to deal with cost overruns. The Enron-promoted Da= bhol Power Company has experienced a cost overruns to the tune of $400 mill= ion, taking the total project cost to $3.3 billion. DPC, which issued a pre= liminary termination notice to Maharashtra State Electricity Board on Satur= day (May 19), is in a fix as both domestic and offshore lenders have refuse= d to increase their exposure in the controversial power project, the larges= t-ever foreign direct investment, so far, in India. After Indian lenders s= topped disbursements as a fallout of a long payment crisis, DPC is believed= to have scouted for foreign debt, albeit unsuccessfully, to maintain the d= ebt-equity status quo at 70:30 ratio. DPC's issuance of PTN has compounded = the problem. According to the power purchase agreement between the MSEB and= Enron, issuing a PTN would mean fixing a deadline of six months for pullin= g the final plug on the project. "As of now, the FIs have held back $250-mi= llion debt to the project. Once the PTN is served, DPC can't expect lenders= to make any more disbursements, and it has almost sealed the fate of the p= roject," said a financial institution source.=20 While the 740-mw phase I is operational, the second phase of 1,144 mw was e= xpected to be fully operational by the year-end. One unit of 740 mw (part o= f the second phase) is undergoing trial-runs, and was expected to be commer= cially operational in June. Sources said the huge cost overruns had been a = major deterrent in project completion. Worried by the mounting payment defa= ults, the EPC (engineering, procurement and construction) contractor of the= project -- Bechtel - is believed to have threatened to pull out of the pr= oject by mid-June. The cost overruns stem from devaluation of the rupee vi= s-a-vis the dollar and an increase in equipment cost. Indian FIs are now wa= ry of further cost overruns owing to the delay in project execution. "India= n FIs, who have contributed 40 per cent of $2.9 billion (earlier project co= st), had refused to take more exposure. DPC was forced to approach foreign lenders for raising funds to cover the c= ost overruns. They have also taken a negative stand," said sources. The ABN= -AMRO led offshore consortium is believed to have refused to contribute any= more debt to the project. The only way out for DPC is for the promoters to= increase their equity contributions. Proportionately, Enron, which holds = around 65 per cent in DPC, will have to shell out a major chunk if this we= re to happen. DPC's move to issue PTN has considerably irked Indian institu= tions. Lenders were planning to cast a confidential vote on PTN this week. = However, armed with the required mandate from offshore lenders, DPC went ah= ead and issued the PTN. BUSINESS STANDARD Monday, 21 MAy, 2001,http://www.business-standard.com/today/economy7.asp?Me= nu=3D3 DPC faces fresh Rs 400-crore penalty The Maharashtra State Electricity Board has decided to go ahead with its de= cision to slap yet another Rs 400-crore penalty on the Dabhol Power Compa= ny, undeterred by the issuance of a preliminary termination notice (PTN) b= y the latter. "PTN or no PTN, in the first week of June MSEB will slap one= more Rs 400-crore penalty on the DPC for mis-declaration and default on t= he availability of power, a review for which will be taken next month," MS= EB sources said here Sunday. The proposed penalty is in the wake of DPC's i= nability to provide power on February 12 and March 13, as per MSEB's demand= in the stipulated time of three hours (according to the power purchase a= greement (PPA) guidelines), they said. "In fact, we will pay the Rs 139-cro= re April bill on May 23 and this will be the last payment from MSEB's side= . The rest of the due amount should be adjusted in the penalty," sources ad= ded. MSEB follows a four-month cycle, the first instance of failure on Janu= ary 28 fell in the first cycle, while the other two instances fell in the n= ext cycle of February-May, a bill for which would be prepared and despatche= d to the DPC in June, MSEB sources said. Earlier, MSEB had slapped a Rs 401-crore penalty on DPC for "not generating= " required power to meet the demand on January 28. DPC had yesterday issued= a PTN to MSEB, saying the loss-making board, the state government and th= e Centre had failed to meet their contractual obligations and therefore it = had no choice "but to issue the notice." Meanwhile, DPC is also attending = the next meeting of the Godbole panel on Wednesday. =20 =20 Enron India managing director Wade Cline confirmed that the power company h= as not closed its doors to negotiate a satisfactory solution. But state g= overnment officials said the onus of finding a workable solution is now wit= h the Centre, which has to spell out its position on the offtake of power = from phase-II of the project. The Central government nominee on the Godbole= committee, AV Gokak, is to attend deliberations for the first time this = Wednesday. State officials attach great importance to his presence as he is= likely to spell out Centre's view on the whole affair. A state official to= ld Business Standard that DPC had indicated its willingness to renegotiate = the tariff structure at its first presentation beforethe Godbole Committee.= The sole thorn now is the offtake of power from phase-II of the project. M= aharashtra Chief Minister has said on Saturday that the state cannot afford= to draw power from phase-II. So the issue is now to clear the decks for third parties to buy out power f= rom the second part of the project. "This is an issue that is in the Centre= 's realm, though there have been some statements that no central utility is= in a position to buy power from Dabhol. DPC is willing to talk to lower i= ts tariffs but we are not in a position to buy any of it even though we ar= e contractually bound to buy it. Sothe solution lies in allowing others to = buy it," the official said. A senior MSEB official also denied the Board w= as planning to issue a counter termination notice to the DPC.=20 THE FINANCIAL EXPRESS Monday, 21 MAy, 2001, http://www.financialexpress.com/fe20010521/top3.html MSEB plans to dispute PTN validity , Sanjay Jog The Maharashtra State Electricity Board (MSEB), in a bid to put up a brave = front, proposes to dispute the validity of the Preliminary Termination Noti= ce (PTN) served by the Dabhol Power Company (DPC) and take up the issue at = the dispute resolution panel. Simultaneously, MSEB has denied that it has r= epudiated the power purchase agreement (PPA) as claimed by the DPC. MSEB ha= s also rejected DPC's claim over its failure to meet contractual obligation= s. The MSEB, after consulting the state advocate general, lawyers and the s= tate government, may serve a notice with respect to the dispute over the PT= N to the DPC, as per clause 20.2 of the PPA. According to the provisions of clause 20.2, a dispute would be referred to = the dispute resolution panel comprising of one or two high-level representa= tives from the MSEB and the DPC. DPC had earlier served a notice with respe= ct to disputes over the payment of arrears towards the November and Decembe= r bills and interest thereon on January 25 this year. Accordingly, a disput= e resolution. MSEB plans to dispute PTN validity panel comprising Enron In= dia managing director K Wade Cline and MSEB accounts member A Krishna Rao w= as set up. Although the panel had held a series of meetings, it failed to a= rrive at an acceptable solution. MSEB sources told The Financial Express th= at it cannot accept the PTN at this point of time, especially when the rene= gotiation process had been launched. Further, according to MSEB, it had not= defaulted, neither had it avoided the payment of bills, but for certain di= sputes and thus, the PTN is disputed. MSEB sources said that if the DPC rejects its claim on disputes over PTN, t= hen it was prepared to fight it out at the arbitration. "However, it needs = to be legally studied whether, at a time, how many cases could be referred = to arbitration. In fact, DPC has already initiated arbitration by serving n= otices to the Centre on April 4 and to the Maharashtra government and the M= SEB on April 10 over the non-payment of the December 2000 and January bills= ," these sources added. The MSEB reiterated that the outstanding amount of = the December bill (Rs 102 crore) and the January bill (Rs 111 crore) is not= payable. Instead, it claimed that the DPC, inter alia, is entitled to pay = Rs 401.6 crore to the MSEB towards rebate charged for "misdeclaration and d= efault on the availability of power on January 28." The disputes and differ= ences have cropped up with regard to this payment and the same has been ref= erred to the arbitration and the pending resolution. The MSEB said that pen= ding the said resolution as to whether the amount is "payable" to MSEB by = the DPC, the latter cannot expect the payment of December and January bills= by the MSEB. THE FINANCIAL EXPRESS Monday, 21 MAy, 2001,http://www.financialexpress.com/fe20010521/news3.html Govt, MSEB keen to probe role of IDBI in issue of Dabhol PTN, Sanjay Jog The Maharashtra government and the Maharashtra State Electricity Board (MS= EB) are curious to know the role played by the Indian rupee lenders' cons= ortium leader Industrial Development Bank of India (IDBI) in the issuance o= f preliminary termination notice (PTN) by the Dabhol Power Company (DPC). = The sources in Mantralaya and MSEB told The Financial Express that if Indus= trial Development Bank of India, which has provided a guarantee of Rs 3,000= crore to dollar loans and also lent Rs 1,780 crore for Dabhol phase-I and = II, along with offshore lenders has voted in favour of authorising DPC to i= ssue PTN to MSEB, then it must have received blessings from the BJP-led go= vernment at the Centre. The Centre's nod is a must as IDBI is still a stat= e-run organisation. If Industrial Development Bank of India, which had voted against the propos= al to authorise Enron India managing director K Wade Cline for issuing PTN = at DPC's board meeting held in London on April 25, has opposed the PTN dec= ision, then it should be questioned as according to the agreement between D= PC and its lenders, the preliminary termination notice cannot be issued if= a single 'secured creditor' voted against it. The sources are of the view = that if IDBI has remained consistent and opposed the decision on issuance o= f PTN, then the validity of the issuance of PTN would be questioned on the = basis of a lending agreement between various lenders and DPC. "We are keen = to know whether IDBI has opposed this move," the sources said. Further, the sources said the IDBI should have blocked the move to issue th= e PTN as the high stakes of Indian financial institutions and banks have be= en involved in the Dabhol project. However, sources of Indian Financial Ins= titutions (IFI) have contradicted the state government and MSEB and said th= at offshore lenders control the decision relating to termination of the pow= er purchase agreement (PPA) "if they hold at least 4 per cent of the total = principal debt." "Overseas Private Investment Corporation, USA alone or the= rest of Dabhol phase-I foreign banks group have such requisite voting per= centage. In this situation, if they issue the consent to DPC for serving pr= eliminary termination notice, consent from other lenders including IFIs wou= ld not be necessary," sources added. The sources said that the IFIs, which = have a massive exposure of Rs 5,154 crore, have no protection of the Govern= ment of India counter guarantee. However, the Dabhol phase-I offshore lende= rs are protected under the guarantee of the Maharashtra government and the = Centre's counter guarantee. THE TIMES OF INDIA Monday, 21 MAy, 2001,http://www.timesofindia.com/today/21busi5.htm MSEB to slap yet another Rs 400 cr penalty on DPC=20 Undettered by issuance of the preliminary termination notice (PTN) by Enron= -promoted DabholPower Company, Maharashtra State Electricity Board (MSEB) h= as decided to go ahead with its decision to slap yet another Rs 400 crore p= enalty on the US energy major. "PTN or no PTN. In June first week, MSEB wil= l slap one more Rs 400 crore penalty on DPC for misdeclaration and default = on the availability of power, a review for which will be taken next month,"= MSEB sources said here on Sunday. The proposed penalty is in wake of DPC's= inability to produce power on February 12 and March 13 as per MSEB's deman= d in stipulated time of three hours as per the Power Purchase Agreement (P= PA), they said."In fact, we would pay the Rs 139 crore April bill on May 23= and this will be the last payment from MSEB's side, rest of the due amount= should be adjusted in the penalty," sources added.=20 MSEB follows a four-month cycle, the first instance of failure on January 2= 8 fell in the first cycle, while the other two instances fell in the next c= ycle of February-May, a bill for which would be prepared and despatched to = DPC in June, MSEB sources said. Earlier, MSEB had slapped a Rs 401 crore pe= nalty on DPC for "not generating" required power for January 28 demand. The= matter has been disputed since, as DPC has refused to ascertain the validi= ty of MSEB's claim, MSEB sources said, adding the matter is now under arbit= ration, process for which would commence soon. MSEB sources said, contrary = to the allegations made by DPC, the dispatch instructions were in line with= the PPA provisions and there were no procedures previously agreed or follo= wed about declaration of availability and delivery of dispatch instructions= during the start-up of the "cold plant".=20 "The instructions are revised for only those hours for which there were no = instructions earlier," they said, adding in the past DPC was able to achiev= e the instructed capacity at the specified hour. "We also fail to understan= d that why DPC is not accepting the fact that its machines and technology i= s substandard and that the Dabhol Power Project will never be able to reac= h 95 per cent capacity," the sources said. DPC had on Saturday issued a PT= N to MSEB as the loss-making board, state government and Centre had failed = to meet their contractual obligations and therefore it had no choice "but t= o issue the notice". (PTI) THE TIMES OF INDIA Monday, 21 MAy, 2001,http://www.timesofindia.com/today/21busi6.htm Maharashtra working on ways to avoid Enron penalty=20 Maharashtra is working out a strategy to avoid paying huge damages to US po= wer major Enron if its subsidiary, the Dabhol Power Company (DPC), axes its= power purchase agreement with the state electricity board.Chief Minister V= ilasrao Deshmukh, Nationalist Congress Party (NCP) leader Sharad Pawar and = senior bureaucrats have been huddle= d in discussions with legal experts since DPC issued a pre-termination noti= ce on the board on Saturday. "The governments of Maharashtra and India wou= ld face lawsuits to the tune of Rs 170 billion," an official said. With Ne= w Delhi providing counter guarantees for the project, it threatens to be a = liability for the entire country. Maharashtra has already begun to cover its flanks by charging DPC with prov= iding insufficient services and installing substandard equipment to prevent= its facility from generating 95 percent power. A penalty of Rs 4.01 billio= n was slapped on the company last month for not providing power to MSEB at = a notice of three hours. A notice for a similar penalty would be sent in Ju= ne as well, officials here said.MSEB officials have been quoted as saying t= hat no bills would be paid to the company after the April bill of Rs 1.39 b= illion. The bills for the remaining months would be adjusted against the pe= nalty. With Enron hardening its stand, it is possible the company could sto= p power supply from June, they indicated.Although the DPC has issued the pr= eliminary termination notice, the actual process of terminating the PPA cou= ld take as long as six months. "This initiates the process of terminating t= he power purchase agreement with the Maharashtra State Electricity Board (= MSEB)," DPC said in a statement.Simultaneously, it said it was open to "con= structive" negotiations on the issue. The DPC is demanding that the Central government participate in the negotia= tions between Enron and MSEB or provide credit support to purchasers of its= power as a pre-condition to talks. "While a lasting and feasible solution = to this issue may be possible, it can only occur if the parties contractual= ly bound to purchase DPC power (MSEB with guarantees from state and central= government) are willing to either purchase themselves or find "other" cred= itworthy entities," the company said. Enron also said the report of committ= ee on renegotiating the power purchase agreement should not be the basis fo= r discussions. The stalemate in the $3 billion project follows the Maharashtra government = disputing payments for power purchased by the MSEB from the DPC. The gover= nment cleared its February and March outstanding of Rs 1.13 billion and Rs = 1.34 billion respectively but under protest. The DPC currently produces 740= MW of power. This will go up to 2,184 MW when the second phase of the proj= ect goes on stream later this year. (IANS) THE ASIAN AGE Monday, 21 MAy, 2001, http://www.asianageonline.com/ MSEB PLANS RS 400-CR PENALTY ON DABHOL=20 Undettered by issuance of the preliminary termination notice by the Enron-p= romoted Dabhol Power Company, the Maharashtra State Electricity Board has d= ecided to go ahead with its decision to slap yet another Rs 400-crore penal= ty on the US energy major. "In June first week, MSEB will slap a penalty of= Rs 400 crores on DPC for misdeclaration and default on availability of pow= er, a review for which will be taken next month," MSEB sources said. The pr= oposed penalty is in wake of DPC's inability to produce p= ower on February 12 and March 13 as per MSEB's demand in stipulated time of= three hours as per the power purchase agreement, sources said. "In fact, w= e would pay the Rs 139 crores April bill on May 23 and this will be the las= t payment from MSEB's side, rest of the due amount should be adjusted in th= e penalty," sources added. MSEB follows a four-month cycl= e, the first instance of failure on January 28 fell in the first cycle, whi= le the other two instances fell in the next cycle of February to May, a bil= l for which would be preparedand despatched to DPC in June, MSEB sources sa= id.=20 Earlier, MSEB had slapped a Rs 400 crores penalty on DPC for "not generatin= g" required power for January 28 demand. The matter has been disputed since= , as DPC has refused to ascertain the validity of MSEB's claim, MSEB source= s said adding the matter is now under arbitration, process for which would = commence soon. MSEB sources said, contrary to the allegations made by DPC, = the dispatch instructions were in line with the PPA provisions and there we= re no procedures previously agreed or followed about decl= aration of availability and delivery of dispatch instructions during the st= art-up of the 'cold plant.'"The instructions are revised for only those hou= rs for which there were no instructions earlier," they said adding, in the = past DPC was able to achieve the instructed capacity at the specified hour.= "We also fail to understand that why DPC is not accepting the fact that it= s machines and technology is substandard and that the Dabhol Power Project = will never be able to reach 95 per cent capacity," the sources said.DPC had= on Saturday issued a PTN to MSEB as the loss-making board, state governmen= t and the Centre had failed to meet their contractual obligations and there= fore it had no choice 'but to issue the notice.' (PTI) THE ASIAN AGE Monday, May21, 2001, http://www.asianageonline.com/ Enr-off? With the Dabhol Power Company issuing a pre-termination notice, it should n= ow be reasonably certain that Enron, the controversial power project, will = wind up its operations in Maharashtra. It is indeed doubtful that the influ= ential political lobby which ushered the US giant in amid great controversy= will be able to do much this time. The series of renegotiations have faile= d, last minute attempts to humour Mr Sharad Pawar have failed and the lobby= which had helped Enron to hype its deal has been surprisingly silent. In t= he short run, the state will have to pay a price for the withdrawal; in fac= t, Enron was hoping that precisely that will happen and the government wil= l develop cold feet.=20 But with the Centre now washing its hands off the deal, any amount of econo= mic "diplomacy" and bargaining is unlikely to succeed. As the curtain comes= down on one of India's most controversial deals involving a multinational= corporation, it is time that the matter is looked at afresh. This does no= t mean that the conscious project be reviewed. What it does mean that the e= xperts who for various reasons opposed the project in the first place shoul= d be consulted by the state government. At the same time, Mr Deshmukh shoul= d ensure that those who have been votaries of the project do not become vic= tims of recrimination. Six months that have been stipulated for a last-ditc= h attempt to save a project which promised much, can have meaning only if E= nron is willing to come down from its high horse. But as reports from its p= arent country amply show, Enron is trying to woo US lawmakers in an era of = deregulation. Energy executives of Enron spent close to 30 minutes with Mr Dick Cheney, a= privilege which essentially exemplifies the importance of being Enron. But= this importance should not be overstretched, and a large section in the In= dian power establishment thinks so. Enron wields no magic wand, but its lea= ding status as a power-sector giant is not to be doubted. Be that as it may= , its Indian experience has been a far from happy one. Political opportunis= m may have queered the Indian picture, but it's primarily the Enron strateg= y to first target and then control markets. Its "insurgent" strategy someti= mes works. At other times, it does not. In the Indian experience, it has no= t quite worked. The story that the friends of Enron had deliberately circul= ated- that other MNCs will think twice before investing in India if Enron f= ails, have been proved unfounded. Enron may have registered phenomenal grow= th over the years, but that by itself was never any guarantee that its Indi= an bid would too, especially with conflicting political positions dogging i= ts high cost per unit power. The end of Enron is by no means the end of the world. A few comparable exam= ples would empirically sustain the fact that it is not impossible to live w= ithout Enron, whatever its high-profile supporters would suggest. The Mahar= ashtra government needs Central and overall support in facing the crisis it= is in, though the support may merely be a moral one. The late Rangarajan K= umaramangalam used to bemoan the absence of a realistic and long-term poli= cy for the power sector.The unhappy Enron example should make the Central a= nd state governments to thrash out a cohesive, constructive policy. At the = peak of summers, the absence of a genuine policy further complicates infras= tructural and other constraints. That is such an elementary fact anyway. THE AFTERNOON http://www.afternoondc.com/ 'CENTRE SHOULD SORTOUT ENRON CRISIS'=20 Bhujbal puts Suresh Prabhu on the mat=20 In the backdrop of the ongoing tussle between the state and the Dabhol Powe= r Company (DPC), Mr. Madhav Godbole, chief of the renegotiating committee o= f the government, is silent about la= test developments. "Negotiations are on at this moment so I am not speaki= ng to the press," said Mr. Godbole. The committee was set up last month to= find a solution to the crisis. When asked why the DPC is opposed to a Powe= r Purchase Agreement (PPA), he said, "It is anybody's guess." Deputy Chie= f Minister Chhagan Bhujbal charged the Centre with being indifferent toward= s the ongoing Enron imbroglio.=20 In an interview to a leading news channel yesterday, Mr. Bhujbal said that = the National Democratic Alliance government, especially Power Minister Sure= sh Prabhu, should have intervened to sort out the crisis which is putting t= he state on the verge of bankruptcy. "Apart from being a union minister, he= has a moral responsibility to-wards Maharashtra. Moreover, the second phas= e of Enron was also approved by the then Shiv Sena-Bharatiya Janata Party g= overnment. So he cannot wash his hands off when the state is heading toward= s serious problems," said Mr. Bhujbal.=20 Mr. Bhujbal, who also holds the state home portfolio, said that central gov= ernment intervention had become all the more necessary as it stood as a gua= rantor in the agreement. Meanwhile, in a counter to the arm-twisting tactic= s of the DPC, the Maharashtra State Electricity Board has planned to take t= he company to court in lieu of them seeking compensation for loss incurre= d due to inadequate power supply.=20
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