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Enron Mail |
THE FINANCIAL EXPRESS Thursday, May 24, 2001,http://www.financialexpress.com/fe20010524/top1.html Enron Drama In mumbai, Delhi makes gesture Godbole shakes govt to action Submits, takes back resignation=20 THE ECONOMIC TIMES Thursday, May 24, 2001,http://www.economictimes.com/today/24econ12.htm Godbole does a Mamata; quits, then back The above articles also appeared in the following newspapers: BUSINESS STANDARD Thursday, May 24, 2001,http://www.business-standard.com/today/economy5.asp?= Menu=3D3 Godbole relents, withdraws resignation after high drama=20 THE HINDU BUSINESSLINE, Thursday, May 24, 2001 A `hurt' Godbole quits, persuaded to stay on -- Dabhol meeting cancelled THE HINDU Thursday, May 24, 2001, http://www.the-hindu.com/stories/01240008.htm Godbole quits, relents later, Mahesh Vijapurkar=20 THE TIMES OF INDIA Thursday, May 24, 2001,http://www.timesofindia.com/today/24busi2.htm Godbole withdraws resignation from Enron panel=20 MID-DAY Godbole withdraws resignation=20 May 23, 2001, http://www.chalomumbai.com/home.asp ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA Thursday, 24 May 2001, http://www.timesofindia.com/today/24intw1.htm Enron Endgame ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES=20 Thursday, May 24, 2001, http://www.economictimes.com/today/bn01.htm Centre to avoid dispute with Maha on DPC ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Thursday, May 24, 2001,http://www.economictimes.com/today/bn02.htm Centre to accept Godbole panel recommendations ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Thursday, May 24, 2001,http://www.economictimes.com/today/24econ16.htm Is Pawar playing power politics with Enron?, Girish Kuber=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Thursday, May 24, 2001,http://www.financialexpress.com/fe20010524/eco15.htm= l Pawar seeks probe on resignations of Godbole committee members, Sanjay Jog Similar article as above also appeared in the following newspaper: THE ASIAN AGE Thursday, May 24, 2001,http://www.asianageonline.com/ My remarks on Godbole were private, says Pawar-----------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ----------- THE FINANCIAL EXPRESS Thursday, May 24, 2001,http://www.financialexpress.com/fe20010524/top2.html Prabhu reassures DPC lenders =20 The above article also appeared in the following newspaper: THE INDIAN EXPRESS Thursday, May 24, 2001,http://www.indian-express.com/ie20010524/bus5.html Centre makes a gesture: Assures Dabhol lenders ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Thursday, May 24, 2001,http://www.financialexpress.com/fe20010524/eco6.html Dabhol lenders hope for crisis resolution at Friday meeting=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Thursday, May 24, 2001,http://www.financialexpress.com/fe20010524/news1.htm= l Power trading corp to be roped in for disposing of Dabhol power , Sanjay Jo= g=20 The above article also appeared in the following newspaper: THE INDIAN EXPRESS Thursday, May 24, 2001,http://www.indian-express.com/ie20010524/bus2.html PTC likely to dispose Dabhol power, Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Thursday, May 24, 2001,http://www.financialexpress.com/fe20010524/news2.htm= l State refers DPC dispute to MERC , Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ASIAN AGE Thursday, May 24, 2001,http://www.asianageonline.com/ MSEB fails to submit report, Rajesh Unnikrishnan ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Thursday, 24 May 2001, http://www.business-standard.com/today/edit1.asp?Men= u=3D9 Cat amongst the pigeons ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Thursday, May 24, 2001,http://www.business-standard.com/today/opinion3.asp?= menu=3D8 The 'base load' question=20 This second extract from the Godbole Committe report highlight serious flaw= s in the basic design of the Dabhol project ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Thursday, May 24, 2001, Enron Drama In mumbai, Delhi makes gesture Godbole shakes govt to action Submits, takes back resignation=20 IN a day of dramatic developments, the Dabhol project renegotiation committ= ee chairman Dr Madhav Godbole, who had resigned in the wake of the criticis= m by former chief minister Sharad Pawar on the functioning of the committee= , ultimately withdrew it on Wednesday evening after the state Cabinet affir= med "full faith, support and confidence in the ability of the committee to = handle the complex and onerous task". Dr Godbole, whose resignation early o= n Wednesday morning led to cancellation of a renegotiation committee meetin= g with the Dabhol Power Company (DPC) team, told The Financial Express tha= t the next meeting would take place early next week. He said the state Cab= inet had unanimously rejected his resignation sent to the chief minister V= ilasrao Deshmukh and affirmed its full confidence in the committee.The DPC,= which had decided to attend Wednesday's Godbole renegotiation committee me= eting, declined to comment. Dr Godbole's resignation has literally shaken the Democratic Front (DF) gov= ernment in Maharashtra, which has been criticised day in and day out by som= e of its constituents on the Dabhol issue. Dr Godbole had put in his pape= rs on Wednesday morning, following Mr Shard Pawar's statement that the com= mittee's negative approach would not help resolve the Dabhol impasse. Dr = Godbole, in his two-page resignation letter, is believed to have said that = it would be impossible to continue to function especially when the leader o= f one of the major constituents of the state government, the Nationalist Co= ngress Party (NCP), had criticised the functioning of the committee. Dr Go= dbole had expressed his anguish over Mr Shard Pawar's remarks and seems to = have stated that it would not be proper on his part to discharge his duties= when serious aspersions have been cast on his abilities. However, Mr Deshmukh and his deputy, Mr Chhagan Bhujbal, who is also the Na= tionalist Congress Party legislative party leader, were closetted in a meet= ing and thereafter decided upon a strategy to pacify Dr Godbole. Thereaft= er, the state Cabinet wholeheartedly rejected Dr Godbole's resignation afte= r Mr Bhujbal clarified Mr Shard Pawar's statements appearing in a section o= f the press. Mr Deshmukh said he had appealed to Dr Godbole to withdraw his= resignation and added that "Dr Godbole's indepth knowledge and experience= makes him indispensible for handling a vexed issue such as renegotiation = with the US energy giant." Mr Deshmukh told reporters after the Cabinet me= eting that it was the state government which had appointed Dr Godbole for r= enegotiating the Power Purchase Agreement (PPA) with Dabhol Power Company (= DPC) and the Maharashtra State Electricity Board (MSEB) and not any particu= lar individual. "In fact, Dr Godbole's appointment was a Cabinet decision a= pproved by the members of Nationalist Congress Party," Mr Bhujbal said. "Mr= Sharad Pawar's statement has not been taken in the right spirit. Mr Pawar = had himself put his stamp on Dr Godbole's appointment," he added. Moreover= , Mr Bhujbal said Mr Pawar had said that Maharashtra would not be able to c= onsume the extra 1,900 mw generated by Dabhol Power Company and that the C= entre should play an active role in reducing the high tariff. Earlier, the DF constituents, specially the Janata Dal (S) and Peasants and= Workers Party (PWP), made several visits and calls to the chief minister u= rging him to prevail upon Dr Godbole to withdraw his resignation "in the la= rger interest of the state and its consumers." A veteran JD (S) leader Mr= inal Gore, accompanied by socialist leader PB Samant and Enron Virodhi Ando= lan convenor Pradyumna Kaul met Dr Godbole and made an appeal to withdraw h= is resignation. The Janata Dal (S) came down heavily on Mr Pawar and alleg= ed that he wanted to appoint a pro-Enron man on the renegotiation committee= . However, Mr Pawar claimed that Dr Godbole's decision was a personal one. = He said that he (Pawar) was not talking on behalf of the Maharashtra gover= nment when he commented on the "negative approach" of those leading the tal= ks. He reiterated that there was a need for renegotiations with Enron to re= duce the power tariff and the Godbole panel should complete its unfinished = work. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Thursday, May 24, 2001, Godbole does a Mamata; quits, then back IT'S not a comparison that springs naturally to mind. But Madhav Godbole, = the former home secretary in charge of renegotiations with Enron, on Wednes= day managed a passable imitation of Mamata Banerjee by resigning in the mor= ning and withdrawing his resignation later in the day. In a day marked by c= onsiderable drama that briefly threatened the renegotiation process with En= ron, Godbole decided not to press for his resignation after chief minister = Vilasrao Deshmukh personally expressed "full faith and confidence" in his a= bility to "handle the complex and onerous task of renegotiation".=20 Earlier in the day, Godbole, who took offence to former chief minister Shar= ad Pawar's "derogatory" remarks, decided to walk out of the panel. Pawar ha= d last on Tuesday night said he was doubtful about the outcome of the ongoi= ng renegotiations between the state and DPC as those heading the state gove= rnment's panel did have a positive approach to resolve the issue. Godbole's= swift decision to quit the panel sent shock waves at the Mantralaya -- hea= dquarters of the state government -- as it seemed to threaten the existence= of the government. The Janata Dal, Peasants and Workers Party and other sp= linter groups went to the extent of saying they would pull out of the nine= -party coalition if Godbole's resignation was accepted.=20 Following these development, the state government had to cancel the crucial= second round of renegotiations with DPC slated for Wednesday. Enron and th= e Centre's representative were to= attend the meet. "I have resigned due to the derogatory remarks made agai= nst me by Sharad Pawar last night," Godbole said on Wednesday morning. God= bole said instead of strengthening the negotiator's hands, such statements = "loosen the concerned authority's grip over the fragile situation". However= , chief minister Vilasrao Deshumukh appealed to him to reconsider his decis= ion. "Godbole's in-depth knowledge and experience makes him indispensable f= or handling vexed issues such as renegotiation with the US energy giant," = Deshmukh said.=20 Deshmukh, after the Cabinet meet, sent a letter to Godbole expressing full = confidence in him. "Godbole should not respond to statements from those out= side the government," said Deshmukh. Meanwhile, Pawar, too, tried to contr= ol the damage. "It was my personal opinion that was not aimed at any partic= ular person. Godbole should not have resigned. He should complete his task= ." Interestingly, Chagan Bhujbal, the state's deputy chief minister, was pu= t on a re-fighting mission and asked to express faith in Godbole on behalf = of the NCP, led by Pawar. Later in the evening Godbole decided not to press= for the resignation. "I have received a letter from the chief minister exp= ressing full confidence in my abilities. It also states the views expressed= by Sharad Pawar were his personal views. He has said the state government = had appointed me and they had no complaints against me. I, therefore, see n= o reason to press for my resignation," Godbole said. Meanwhile, the next me= eting of the renegotiating panel has been convened on May 29. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE TIMES OF INDIA, Thursday, 24 May 2001 Enron Endgame=20 As home secretary, Madhav Godbole was known as a no-nonsense administrator.= His report on the Dabhol Power Corporation deal - which he dubs ``an inex= cusable failure of governance'' - shows that he still believes in calling = a spade a spade. Godbole, who was responsible for renegotiating the power-p= urchase agreement with Enron, is the man in the news. He had tendered his r= esignation as the chairman of the negotiating committee after Sharad Pawar = said ``those leading the talks from the government side = are working with a negative approach'', only to take = it back on Wednesday evening after Pawar clarified that he had not made th= is comment on the state's behalf. On a day of such tumultuous development= s, he spoke to Aditya Chatterjeehours before withdrawing his resignation:= =20 You were appointed by the Maharashtra government to renegotiate the power p= urchase agreement with the Enron-promoted Dabhol Power Company. A key membe= r of the government, Sharad Pawar, has criticised you. Do you feel you have= been let down? The government should learn to first take a stand and then stand by it. As = you rightly pointed out, the Maharashtra government had appointed me as the= committee head. And now, an important constituent of the government has al= leged that the negotiating committee has a negative attitude. This type of= a statement weakens the committee's stand on the crucial issue of renegoti= ating the power purchase agreement with the Dabhol Power Company. The gover= nment should try to give all the support to the committee and help strength= en it. Recent comments made by the senior Nationalist Congress Party leader= are counter-productive in this light. I had put in my resignation letter b= ecause of the government's attitude. If the state government was not prepar= ed to place its full trust on my capabilities, there was no reason for me t= o stay on. Therefore, I had sent my resignation to the chief minister, Vila= srao Deshmukh.=20 Sharad Pawar was the chief minister of Maharashtra when the state had first= signed an agreement with the US-based power major Enron in 1993-94. You we= re also regarded as the thorn in Enron's flesh. In fact, Enron has publicly= said that it was not willing to accept your committee's report. If you ha= d not recalled your resignation, would Enron and its supporters havebenefi= tted? I would not like to comment on this. It's for you to decide.=20 If the ongoing negotiations with Enron fail to break the deadlock, what wil= l be India's best strategy to initiate damage control? Let me answer you this way. Two members of the Godbole committee had called= for a judicial enquiry into the entire issue. Only a judicial enquiry can = get into details as to whether Enron had received any undue favour from the= state, or whether facts were misrepresented knowingly by the authorities c= oncerned. It is also important to find out whether the contract signed with= Enron is legally valid. The committee had also suggested that the judicial= enquiry, headed by a serving or a retired Supreme Court judge, should be i= nitiated as soon as possible. One must understand that a committee like our= s has limited powers. We cannot, unlike a court, record evidence under oath= and issue summons to the state government, the centre, financial instituti= ons and other autonomous bodies.=20 A judicial enquiry will have a two-fold advantage. One, Enron would know th= at the Indian government is serious about finding out the truth about the a= lleged wrong-doings. This will force Enron back to the negotiating table. S= econd, if the judicial enquiry is able to prove that there were indeed undu= e favours accorded to Enron, the power purchase contract will be no longer = binding for India.=20 Some senior economists argue that the price per unit of power supplied by = Dabhol will come down dramatically if the Maharashtra State Electricity Bo= ard purchases its entire output. What is your opinion? That's a hypothetical argument. Even if we discount the fact that the MSEB = does not have the requisite funds to purchase Enron's entire output, there= is no way Maharashtra can utilise the entire 740 megawatt of power which i= s being produced by just the first phase of the Dabhol project. The state's= power utilisation has been steadily dropping over the last two years becau= se of falling demand. In fact, a judicial enquiry could examine as to wheth= er the MSEB had presented an inflated demand scenario when the DPC project = was being conceived. The World Bank had actually raised doubts about the de= mand scenario then. The average power utilisation of the Dabhol project is = only about 30-40 per cent of Phase I. And, I am not even counting the Phas= e II portion; that is completely unviable at this point of time.=20 So, does Maharashtra really need the Dabhol project? I would say that Maharashtra only needs a marginal portion of the first pha= se of the Dabhol project. At what terms, in your opinion, will the Dabhol project be viable for Mahar= ashtra? The Energy Review Committee has discussed this aspect in its report. We fou= nd that the state would be able to find buyers for the power at Rs 2.50 per= unit. As opposed to this, Dabhol Power Company sells its power at a variab= le rate between Rs 3.50 and Rs 8 - depending on the power utilisation by MS= EB. Is your decision to resign final or will you consider withdrawing the lette= r if the state government requests you to continue? I haven't considered this issue at this point of time.=20 Sharad Pawar did not specifically name you in his statement. He had actuall= y blamed the entire committee for having a negative approach. Do you think = that other conscientious members of the Godbole committee will now follow y= our lead and put in their papers?=20 That is a possibility. But, it's for the other members to decide. What is your future plan of action? Well, I will continue working on the report which involves the second phase= of the Dabhol project and restructuring the operations of the MSEB. The re= port will be completed over the next 10 days. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES , Thursday, May 24, 2001 Centre to avoid dispute with Maha on DPC IN ITS first reaction after Dabhol Power Company issued the pre-termination= notice last week, the Centre on Wednesday made it clear that it would cont= inue to play its role as a facilitator, but would not step in till such tim= e the state government walked out of the project Power ministry officials t= old The Economic Times that this was primarily to avoid any Centre-state di= spute in the crisis. The Centre would not require to intervene in case the = disputes were resolved bilaterally. "We will step in with our suggestions o= nly when the state government has taken a final decision on whether to go a= head or scrap the project. The first move has to be taken by the state gove= rnment as the matter involves the Maharashtra government and DPC." Union po= wer minister Suresh Prabhu who had been on a foreign tour met finance mini= ster Yashwant Sinha on Wednesday to discuss the Dabhol power project, and t= he financial implications of the pre-termination notice.=20 Although the finance ministry may not have to pay out anything immediately,= it has to be prepared for its obligations under the counter-guarantee and = particularly when decisions have to be taken within a deadline. Senior offi= cials of the power and finance ministries are meeting on Friday to discuss = the DPC problem. However, concerned over the affects the Enron controversy = is having on other private investments, the power ministry issued a stateme= nt highlighting its efforts to solve the ongoing dispute. The Centre has as= sured lenders of the Dabhol power project that all steps would be taken to = resolve the ongoing crisis and steps have already been initiated for an ear= ly settlement of the dispute between MSEB and DPC.=20 Prabhu has reiterated and confirmed that the Centre would be willing to con= sider any worthwhile idea emerging out of the consultations held by the neg= otiation committee for the settlement of the dispute. However, the solution= has to be acceptable to both DPC and MSEB as they are the concerned partie= s. The Centre has, however, clarified that State-run National Thermal Power= Corporation cannot be expected to bail out the Enron project as it would t= hen be unfair to keep all other IPPs pending. "There are several IPPS whos= e financial closure has been pending, and NTPC cannot be expected to bail t= hem out," sources said. The Centre has further said in its statement that i= t also played a proactive role by appointing A V Gokak, retired telecom sec= retary, as the Government of India nominee on the negotiating committee con= stituted by the Maharashtra government. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Thursday, May 24, 2001 Centre to accept Godbole panel recommendations THE CENTRE will accept recommendations of therenegotiating committee headed= by Madhav Godbole for the settlement of the dispute between Dabhol Power C= ompany and the Maharashtra State Electricity Board. A government statement = quoting power minister Suresh Prabhu said, "The government of India is read= y to consider any worthwhile idea emerging out of the renegotiating committ= ee for the settlement of the dispute." The proposal, Prabhu said, had to be= acceptable to the parties to the dispute - MSEB and Enron-promoted DPC - a= dding a quick settlement of the differences was essential for the power sec= tor of Maharashtra. DPC had last week slapped a preliminary termination not= ice on MSEB following the dispute over payment of power bills. While former= telecom secretary A V Gokak had been appointed as the Centre's nominee on = the Godbole Committee constituted by the Maharashtra government, a committe= e of senior officers of the concerned ministries had been set up to quickl= y examine the proposals emerging out of the negotiating committee, the stat= ement said. The committee officers comprise officials of ministries of fin= ance, power and petroleum. (PTI) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES, Thursday, May 24, 2001, Is Pawar playing power politics with Enron?, Girish Kuber=20 MAHARASHTRA'S former chief minister Sharad Pawar's statement criticising Ma= dhav Godbole, the head of the renegotiation team, and the timing chosen by = him to air his views, has focused attention on his role in the Enron contro= versy. Pawar, who had first inked the Enron deal as the chief minister of M= aharashtra in 1992, was at the center of controversy when the Opposition ac= cused him of favouring" the US energy giant. The issue of Rs 64 crore being= spent by Enron on "educating" Indians had become a political issue in the = 1995 state Assembly elections which Pawar lost. In more recent times, Pawar= has repeatedly intervened at crucial junctures. On the eve of Wednesday's = session of the Godbole panel, Pawar criticised Godbole of having " a negati= ve attitude" about Enron. Though Pawar did not name Godbole, the message w= as loud and clear. His statement comes at a time when the Maharashtra State= Electricity is planning to issue a pre termination notice to Enron after t= he Godbole panel's scheduled meet on Wednesday.=20 The board officials had discussed the issue with the state's advocate-gener= al and were believed to have received a go-ahead from chief minister Vilasr= ao Deshmukh. Last October, when the state government had decided not to pay= Enron's bills, Pawar convinced the state government to release Enron payme= nts. It was after his intervention that the state government decided to app= oint a committee to review the project. Surprisingly, last month, when Des= hmukh had a meeting with Yashwant Sinha and Suresh Prabhu at Delhi, Pawar w= as seen accompanying the chief minister though his name did not figure on t= he official list of invitees. However, subsequently, the committee could no= t be formed since the faction loyal to Pawar in the state government was cl= early against Godbole's appointment.=20 State energy minister and Pawar's trusted aide, Padmasinh Patil, had public= ly expressed his ire against Godbole. It was only after the Janata Dal, Pe= asents and Workers Party, CPI (M) and other anti-Enron groups threatened to= withdraw support of the government, the Godbole Committee came into being.= But not bofore a month was lost in a wrangling. Even after the committee's= formation, Patil continued his tirade against Godbole. It was only chief m= inister Deshmukh's support that the Godbole Committee could survive the opp= osition from within. Political observers believe that it was the Congress' = strategy to support the Godbole Committee that at the end could expose the = wrongdoings of the earlier governments. As expected, the Godbole Committee,= in its first report, exposed what it called the "lack of governance at eve= ry stage" in finalising the Enron deal. Godbole even suggested a judicial = probe to pin those guilty for this "faulty deal". It was against this backd= rop that Pawar's views on Godbole created a flutter on Wednesday. Although = Godbole withdrew his resignation, it has certainly widened the rift betwee= n the NCP and Congress. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Thursday, May 24, 2001, Pawar seeks probe on resignations of Godbole committee members, Sanjay Jog THE Nationalist Congress Party president Sharad Pawar on Wednesday called u= pon the Maharashtra government to probe the reasons for the resignations of= Mr RK Pachauri, Mr Kirit Parikh and Mr EAS Sarma from the Madhav Godbole r= enegotiation committee on Dabhol project. Mr Pawar in an exclusive intervi= ew to the The Financial Express said the government should find out why the= se members had quit on the grounds of "prior engagements." He said the rene= gotiation is the best possible option for the reduction of Dabhol tariff. = Mr Pawar, whose party is a major constituent of the Democratic Front gover= nment in Maharashtra, said that the state government is quite keen to reso= lve the Dabhol impasse. "The state government's bonafide cannot be challeng= ed as it is quite serious to resolve the Dabhol imbroglio," he remarked. He reiterated that the renegotiation committee as well as state government = should keep a positive approach for the resolution of the issue. He said = that the Centre's intervention is a foregone conclusion as the Maharashtra = State Electricity Board (MSEB) was not in a position to absorb nearly 1,90= 0 mw of power generated from the Dabhol plant. "In fact, questions are bein= g raised about the purchase of even 500 mw from Dabhol Power Company," he a= dded. Mr Pawar said that the Centre would have to step in and help the MSEB= to find a way for the disposal of excess power especially in the power def= icit states. He pointed out that the DPC's decision to serve preliminary te= rmination notice was in haste and uncalled for. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Thursday, May 24, 2001, Prabhu reassures DPC lenders=20 THE Centre has assured the lenders to the Dabhol Power Company (DPC) that = all necessary steps will be taken to defuse the Dabhol power crisis. In an= official statement issued on Wednesday, the Union Power Minister, Suresh P= rabhu said, "The government is ready to consider any worthwhile idea emergi= ng out of the negotiating committee for the settlement of the dispute." Si= gnificantly, this is the first official statement released by the Centre af= ter the issuance of the preliminary termination notice by DPC to the Mahara= shtra State Electricity Board (MSEB) a few days back. Sources said Mr Prabh= u also held discussions with the Union Finance Minister Yashwant Sinha on W= ednesday evening, over various issues concerning the Dabhol power project. = According to Mr Prabhu, a quick settlement of the Dabhol dispute is essenti= al and the Centre will give its full support to the implementation of any p= roposal, acceptable to DPC and the Maharashtra State Electricity Board (MSE= B) - the main parties to the dispute. Sources said in order to allay the fears of the domestic lender community, = the finance ministry has already responded to the letters written by IDBI, = ICICI and SBI to the ministry, wherein they had sought the latter's interve= ntion in resolving the ongoing Dabhol crisis. According to sources, the fi= nance ministry has asked the lenders not to panic as the government is maki= ng all possible efforts to resolve the crisis through the negotiations rout= e. "The Dabhol project is not only important for Maharashtra but for the en= tire country and, therefore, all possible efforts are being made by the Ce= ntre to revive this project," the officials said. According to top governm= ent sources, a team of senior officials from DPC will also be meeting the = top brass in the power and finance ministry on Friday. "In order to reach a= n amicable solution to the ongoing crisis, both sides will have to make so= me sacrifices. The details in this regard will be discussed with the DPC bi= gwigs on Friday," the sources said. As per the official statement, the Centre has been proactively taking a num= ber of steps to find a solution to the Dabhol project. The Centre wants thi= s issue to be settled through the negotiation route and it has already depu= ted its representative - former telecom secretary AV Gokak on the negotiati= on panel."Moreover, an inter-ministerial committee of joint secretaries has= also been constituted to assist Mr Gokak and to quickly examine the propo= sals emerging out of the negotiating committee," the statement said. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, Thursday, May 24, 2001, Dabhol lenders hope for crisis resolution at Friday meeting=20 THE domestic lenders to the Dabhol power project, who along with foreign le= nders had suspended further disbursements for DPC phase-II, have pinned the= ir hopes on the meeting called by the Centre on Friday in New Delhi to fin= d an amicable solution for the ongoing Dabhol impasse. "We are hopeful tha= t the meet, which will bring all the disputing parties together, will arriv= e at an amicable solution for protecting the national interest," said a t= op officials of State Bank of India. "We are not worried about the present = development and we are sure about a positive development at the end," he sa= id. Regarding the repayment of installments, the official said that he does= not expect any problem till September as the 'reserve fund' which takes = care of the quarter instalment has sufficient funds. Also the suspension of further disbursements by the lenders is a temporary = measure which has no long-term implications on the project. "As stipulated = by the PTN, they have got six months to sort out things and the time period= is enough to settle the differences," he said. The domestic lenders have a= lso given various suggestions to the Centre and MSEB as to how to tackle th= e crisis.While the foreign banks are, to an extent, comfortable with the id= ea of the termination of the project as they have Centre's counter guarante= e for the phase I, the local banks and financial institutions have to worry= about getting their exposure back as they are not at all covered by the co= unter guarantee.=20 However, the local lenders are confident that the profit making project, th= e insurance cover of which has been renewed recently, will be operational s= oon.The domestic lenders had also asked the Centre to convince MSEB and for= ce it to restrain from issuing a PTN to DPC. They may also skip the forth= coming two-day global lenders meet during June 4-6 in Singapore to discuss = the implication of PTN served by the DPC to MSEB. The Indian lenders, led = by the Industrial Development Bank of India, SBI and ICICI, have lent aroun= d $1.4 billion out of a total $3 billion for the 2,184 mw project. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- MID-DAY, May 23, 2001=09 Enron renegotiation to begin next week' By: Yogesh Naik The phone rings incessantly at the Godboles 16th floor apartment at Buena V= ista just 200 metres away from Mantralaya. The retired Home Secretary, Madh= av Godbole, who had been recently appointed as the chairman of the renegoti= ations committee, answers each one of them and speaks to the media men who = ask him whether he has taken back his resignation as chairman of the Enron = renegotiations panel or not. A visibly upset Godbole answers each call unt= iringly. " I have taken back my resignation after the chief minister sent m= e a letter saying that the entire cabinet had expressed faith in my work." Godbole had submitted a resignation to the CM, Vilasrao Deshmukh last morn= ing following a 'derogatory statement' from Nationalist Congress Party chie= f, Sharad Pawar saying that he was apprehensive of the outcome of the discu= ssions as those leading the talks from the government side had a negative a= pproach. Pawar had made a statement to the media on Tuesday evening. The NC= P chief did a volte-face by retracting it. Godbole told Chalomumbai, " Eve= n I had seen him on television as many of you reporters did. He said someth= ing else on the television and he is saying something else now. That' s the= way, world is." Though the Power Purchase Agreement with Dabhol Power Corp= oration is very tight. Godbole feels, " PPAs have renegotiated worldwide. W= hy can it not be done here." Though some allegations have been leveled Godbole report on Enron, the Pun= e based retired home secretary is known for his honesty and integrity. The = state government just provides him with remuneration of Rs 10000 per month = and to and fro transportation, while the lawyers who defend the case in the= international courts are paid upto 400 pounds an hour. Yesterday, Deshmuk= h tried a lot to undo the damage done to Godbole. He also clarified that no= one from the government had criticised Godbole. Godbole was supposed to he= ar the US energy giant yesterday but the hearing could not take place. The = Godbole resignation episode coupled with the resignations of three other me= mbers earlier this month has given a setback to the renegotiations. But God= bole says that the renegotiations will begin early next week. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, May 23, 2001 Power trading corp to be roped in for disposing of Dabhol power , Sanjay Jo= g=20 THE BJP-led government at the Centre, which had come under severe attack fo= r being a silent observer, has ultimately decided to step in to resolve the= ongoing Dabhol impasse. The Centre has asked the Union ministry of power t= o prepare a comprehensive proposal for the consideration of the union cabin= et for roping in the state-run Power Trading Corporation (PTC) for the dis= posal of Dabhol power in power deficit states across the country. Top sourc= es told The Financial Express on Wednesday that the Centre has asked the Un= ion power ministry to project the requirement of finances for the PTC to ma= ke the trading of Dabhol power a reality. "The Centre's nominee and former = bureaucrat nominated on the Madhav Godbole renegotiation committee for the = Dabhol project, AV Gokak, has been given the mandate in this direction. The= Union ministry is expected to submit a necessary proposal in this regard v= ery shortly," sources said. The inter-ministerial team, comprising secretaries of ministries of power, = finance and oil and natural gas have reportedly made a strong recommendatio= n in this connection, following the refusal by the National Thermal Power C= orporation (NTPC) to enter into the picture by dispatching Dabhol power. So= urces said that former Maharashtra chief minister Sharad Pawar is believed = to have played a major role in convincing the Centre to intervene directly= to enable the Dabhol crisis to blow over. In fact, Maharashtra chief mini= ster Mr Vilasrao Deshmukh, in his successive communications to the Prime = Minister Atal Behari Vajpayee on February 6, April 17 and May 10, had appea= led that the surplus power generated by the DPC would have to be disposed = by national organisations such as NTPC and PTC, in power deficit states. "T= he negotiation with DPC with a view to reducing the tariff of power from th= e Dabhol project, hinges around the question whether the entire power from = this project at 90 per cent plant load factor, would be purchased by a cred= it-worthy purchaser or not. The DPC may be willing to reduce the tariff fro= m the existing high levels, provided they get such an assurance from the go= vernment of India," Mr Deshmukh added. According to sources, PTC has alread= y stepped into the field of inter-state trading of power by identifying sur= plus and deficit states and regions and providing commercial payment arrang= ements. PTC traded power from Maharashtra to Karnataka for Jindal Vijaynaga= r Steel to the extent of 28.35 million units of energy during 1999-00 and 1= .44 million units during 2000-01. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS, May 23, 2001 State refers DPC dispute to MERC , Sanjay Jog THE Maharashtra government, in a tactical move, has decided to refer the on= going Dabhol disputes to the Maharashtra Electricity Regulatory Commission = (Merc) mainly to "buy time." The state cabinet on Wednesday has approved t= his proposal and is believed to have directed the chief secretary and power= secretary to complete the necessary formalities in this regard. Mantralaya= sources told The Financial Express that the state government has already i= nformed its intent to Merc in this connection. Merc has already been deleg= ated adequate power under section 22 (2)(n) of the Electricity Regulatory C= ommission Act 1998 to "adjudicate upon the disputes/differences between the= licencees and utilities and refer the matter for arbitration" through a go= vernment notification issued on December 5, 2000. The state government had delegated these powers to Merc, when it had referr= ed the disputes between the Tata Power and BSES over the payment of standby= charges. At present Merc is holding hearings on a petition filed by BSES i= n this connection. The disputes related to the issuance of preliminary term= ination notice arbitration notice, political force majuere and non payment= of rebate of Rs 401 crore by the DPC to Maharashtra State Electricity Boar= d (MSEB) for misdeclaration and default on the availability of power on Jan= uary 28, would be referred to the Merc for its consideration and ruling. Ac= cording to sources, this would defer the proposed proceedings on arbitrati= on notices served by the DPC, as these proceedings are likely to commence = within a month. "The idea of referring these disputes arisen between the MSEB and DPC is wi= th an objective to buy time, as well as transfer legal battles on the India= n soil," a senior minister said. He added that the DPC, would have to under= go the Merc route and thereby it could go on challenging its orders in the = Bombay High court and thereafter in the Supreme Court. Sources said that th= e DPC's move to serve PTN, was unwarranted especially when the MSEB has not= defaulted on the payment of monthly bills, neither it had expressed intent= in this regard. MSEB and state government, whose stand has been backed by = the Centre, have justified the rebate claim made by the MSEB, for misdeclar= ation and default on the availability of power. Both state government and M= SEB have also refuted the DPC's allegations, regarding the political inter= ference and have said that MSEB was not entitled to make the payment of Dec= ember (Rs 102 crore) and January (Rs 111 crore) bills, as it could be adju= sted against the rebate payment by DPC. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ASIAN AGE, May 23, 2001 MSEB Fails to submit report, Rajesh Unnikrishnan The Maharashtra State Electricity Board has failed to submit confidential d= ocuments and reports to the NGO, Prayas, as directed by the Maharashtra Ele= ctricity Regulatory Commission, on three controversial power projects in Ma= harashtra - the Enron-promoted Dabhol power project, Reliance promoted Pata= lganga project and Ispat Industry's Bhadrawati project. Based on a petition= filed last year by Prayas, a Pune-based non-governmental organisation, whi= ch sought confidential documents on various agreements signed by MSEB and t= he promoters of these power projects, Merc had asked the state electricity = board to give the NGO the documents requested. However, MSEB did not produc= e all the documents requested by Prayas.=20 The NGO has now filed a contempt petition before the Merc, which will be he= ard on Thursday. On the DPC, Prayas had asked for clearance notifications i= ssued by various ministries and government departments, various directives = of government and documentary evidence indicating fulfilment and achievemen= t of these clearances or directives, condition precedent as set out in Sect= ion 2 of the DPC-MSEB power purchase agreement that have either been met or= waived by DPC or MSEB. Prayas also asked for the mathematical and computer= models being used by MSEB to calculate or verify the payments to be made t= o DPC. MSEB produced only partial clearances, and some of them were even in= complete. ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Thursday, 24 May 2001 Cat amongst the pigeons Maharashtra's debacle over Enron's Dabhol project seems to have set the cat= amongst the pigeons. Karnataka has decided to review as many as 11 private= power projects. It seems to have suddenly realised that it, too, may be be= ing taken for a ride and wants to see if it can get independent power produ= cers (IPPs) to lower their tariffs. Fresh protests have been heard, meanwhi= le, against the likely cost of power from the Maheshwar hydel project in Ma= dhya Pradesh. And a fracas has developed in Orissa between Gridco and an IP= P. If anyone thought that the path to privatising the power basis would be = either smooth or easy, he had better think again. But 10 years down the roa= d from the time privatisation of electricity was first thought of, have any= lessons been learnt? Given the amazing features of the Dabhol power purcha= se agreement (PPA), suspicion about the nature of private power deals would= be entirely warranted, as only the na?ve would now hold that these PPAs do= not require a second look.=20 Recent experience with India's politicians suggests that either out of igno= rance or just plain knavery, but also because of the reality of commercial = risk, the IPPs may well have walked away with more than their fair due. The= re is a problem, of course, in determining what this is. But as the Enron P= PA shows, it is possible to sneak in all sorts of hidden costs that have th= e ultimate effect of raising the tariff payable by the purchaser. Take the = Karnataka example. The cost of thermal power (mostly) from the six stations= of the Raichur thermal power station, is around Rs 2.20 per unit, and the = cost of central purchase is about Rs 1.46 per unit. The purchase from one i= ndependent power producer (IPP), Jindal Tractabel Power, is at Rs 2.60 a un= it.=20 It is true that power from new projects will cost more than power from olde= r ones. The question is, how much more. On average, power from the coal-bas= ed public sector plants costs around Rs 2 to generate. The cost of power fr= om the newest amongst them, such as the NTPC one at Simhadri, is around Rs = 1.80 per kilowatt-hour. In contrast, the IPPs are charging over Rs 2.40. Th= e key issue, therefore, is to agree on how much more the power from an IPP = should cost. There is good reason why private power producers will budget f= or higher returns. They see the risks flowing from poor distribution system= s, high transmission/distribution losses, the poor financial condition of t= he electricity boards, and the chaotic power tariff structure, and realise = that entering a minefield such as this must only be for higher than normal = reward.=20 The official response of offering insurance against system risk, through co= unter-guarantees and escrow accounts, has now run into a dead end. What rem= ains now is to do the obvious thing: reform the distribution and tariff str= uctures and introduce greater commercial sense into the power sector. If th= ese are done, and if the electricity boards and governments have learnt how= to negotiate, then private investment in electricity generation can come a= t lower cost. If these are not done, prepare for either no electricity or v= ery costly electricity.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD, Thursday, May 24, 2001 The 'base load' question=20 This second extract from the Godbole Committe report highlight serious flaw= s in the basic design of the Dabhol project MSEB, in its affidavit in the Ramdas Nayak case, affirmed that: "protracted= negotiations and discussions took place between both the parties during th= e period August 1992 to December 1993". As a consequence of these negotiati= ons, "at 90% power availability the estimated total tariff in 1997 prices, = at an exchange rate of Rs. 32/- =3D $1 and distillate price of $4.3/mmbtu w= ill be Rs. 2.40/kwH". The quality of these "protracted negotiations" can be= judged by comparing this rate of 7.5 cents per kwH with 7.3 cents per kwH = in the original MoU Term Sheet and more significantly, with the price "prop= osed by Enron" two months later in the Power Purchase Agreement: Heads of T= erms, Draft 4, dated 29 August 1992 (revised), where the tariff structure w= as to be designed to achieve an "all-in price to MSEB of 6.91 cents per kwH= (at 1996 prices) assuming a natural gas cost...of US $4.91/mmbtu." That is= , at the start of negotiations, at a higher assumed fuel price, the all-in = cost was lower by nearly 0.6 cents per unit (an annual outgo of over $100 m= illion). The protracted negotiations seem to have led to an increase in pri= ce.=20 MSEB and the state government averred repeatedly before the Courts that thi= s project was intensively negotiated over a long period of 16 months and be= st possible terms were obtained from the foreign party, namely, Enron. The = very first document signed by MSEB with Enron and GE was the MOU, which was= signed within 5 days of their coming to India and within 3 days of coming = to Mumbai. The Enron team first arrived in New Delhi on 15 June 1992 and th= e MOU was signed on 20 June 1992. Though the MOU makes it clear that it is = not legally binding on the parties, it sets the tone for future negotiation= s of the project. Interestingly, all the main features of the project have = basically remained the same throughout the so-called intensive negotiations= that ensued after the signing of the MOU.=20 MSEB agreed, in principle, to a LNG based project of 2000 MW capacity being= put up as a base load station without going into the question of the absor= ption of this large power in the Maharashtra system and the cost implicatio= ns thereof. It agreed to orders for the plant and equipment being placed on= GE without going into the comparative costs thereof and without bothering = about the international competitive bidding. The contract was to be denomin= ated in dollars, payable in rupees. The only major difference was that the = power venture was to include the power plant but not gas facilities, which = were to be owned in a separate fuel venture, to be negotiated separately. S= ubsequently, this separation was offered as a concession in the renegotiati= on of the project in 1995 but later on retained as a part of the project to= avoid a fresh clearance from CEA.=20 As mentioned above, DPC has been designed as a base load project, right fro= m inception. The World Bank in its assessment of the project, in 1993, poin= ted out that "Dispatch[ing] the plant as a base load unit at 80-85% minimum= plant factor...would prevent the operational flexibility of a combined cyc= le plant". ... Maharashtra and MSEB need load-following capacity, not for m= eeting base load but for peak and intermediate load. The situation was the = same in 1993. It appears that the Planning Commission, at the CEA meeting h= eld to consider the project, also observed that from a "system operation po= int of view it would perhaps be advantageous to consider setting up of pump= ed storage schemes in the Western region" and that "The backing down of the= existing thermal generation capacity in Maharashtra due to this new capaci= ty addition would imply heavy additional economic costs imposed on the powe= r system of MSEB".=20 Furthermore, it appears that at the same meeting one of the representatives= of CEA observed that as "per the studies conducted by CEA, Dabhol CCGT pla= nt was not the least cost option...MSEB had other less costly options such = as Kaparkheda Unit 3 & 4 (2X210MW), Kaparkheda-Unit 5 & 6 (2x250MW), Unred = TPS-1000 MW, but these schemes were in the preliminary stages." The Committ= ee would like to point out at this stage that if MSEB had made efforts to s= eriously pursue these projects, they might not have remained in their "prel= iminary stages". Regardless of these apprehensions, the CEA found the techn= ical aspects of the scheme "to be generally in order". GoM went ahead with = the project as designed. Even though the execution of Phase-II was deferred= , the Phase I project continued to be considered as a base load project, an= d not as an intermediate load project, as evidenced by the calculation of t= ariff at 90% PLF.=20 If a lower level of dispatch was contemplated, as would be the case for a p= roject designed to meet intermediate loads, the estimated PLF would have be= en lower and consequently, the associate tariff would have been higher, sin= ce the same fixed costs would have been spread over a smaller base. The Com= mittee is of the opinion that MSEB and GoM erred seriously, based on inform= ation available at that time, in proceeding with DPC as a base load project= , even when it's capacity was reduced to 695 MW. It has been argued that th= ere were pending applications for power at that time. The World Bank in the= ir evaluation, considered this and rejected the argument because it was not= demonstrated that the load was additional to normal growth, that consumers= were willing to pay a higher price as would be needed for LNG power (indee= d, its surveys of willingness to pay showed otherwise), that they were will= ing to defer their demand until DPC came up and whether the load in questio= n was from continuous process industries, justifying a 90% PLF.=20 As the World Bank noted, "under (MSEB's) assumption industrial load would d= ouble, i.e. grow at an average rate of about 20% for 4 years, compared to C= EA's already respectable 8% average annual growth." As it happened, even CE= A's growth rate did not materialise ....Industrial consumption has hardly g= rown in the past few years.... The attitude of the CEA in according clearan= ce to this scheme is also questionable, especially given the record of disc= ussions in the meeting. Nowhere in the summary record are the issues relati= ng to the technical design of the project effectively addressed and yet, it= was decided that the technical aspects were "generally in order".=20 A loss-reduction fairy tale=20 What happens if MSEB actually buys all the Phase II power? Can it really af= ford it if the realisations are rationalised and losses are reduced? To und= erstand this it is useful to do two simple exercises, each of which has thr= ee parts.=20 In the first part of the first exercise, all of MSEB's power purchase is fr= om DPC at the relatively reasonable rate of Rs. 4.10 per unit (as submitted= by DPC to the Committee), but realisations for existing consumers (grouped= into four broad groups of HT [high tension] and Commercial consumers. Bulk= Supply Consumers, Agricultural Consumers and Domestic and Other Consumers)= remain at current levels. This leads to a deficit of Rs. 4293 crore. In th= e second part, agricultural realisations are increased to Rs. 1.00 per unit= and domestic realisations are adjusted so that MSEB's expenses are fully m= et (without any return). This implies a raise in average domestic realisati= ons of 193% to Rs. 5.27 per unit from the current realisations of Rs. 1.80 = per unit. Finally, in the third part, we ask what if there is an overnight = conversion of 10,000 MU of commercial losses into paying consumers (at an a= verage realisations of Rs. 2.75) i.e. an overnight additional revenue of Rs= . 2750 crore? Domestic realisations would still have to be increased by 58%= . So, the problem therefore is not just that of high commercial losses, tho= ugh it is a major problem. Even if the losses were fixed in the manner abov= e, there would remain a deficit of Rs. 1543 crore. The problem is that ther= e is not enough demand to absorb this power.=20 In the second part of this exercise, we project an overnight increase in de= mand of 13,350 MU, equal to DPC Phase II, which is distributed evenly acros= s all non-agricultural consumers, implying an overnight increase in consump= tion of 36%. If realisations stay at existing levels, this decreases the de= ficit to Rs. 3273 crore. In the second part, agricultural realisations are = again increased to Rs.. 1.00 per unit and domestic realisations are adjuste= d so that MSEB's expenses are fully met (without any return as before). Thi= s implies a lower raise of 117% in average domestic tariffs. In the third p= art, as before, there is an overnight conversion of 10,000 MU of commercial= losses into paying consumers, i.e. an overnight additional revenue of Rs..= 2750 crore. In this case, finally, domestic realisations do not have to be= increased.=20 This implies that if HT and Commercial realisations remain at their current= excessively high levels, agricultural realisations rise to Re. 1.00 per un= it, i.e. double the existing tariff, and 10,000 MU of commercial losses is = converted into paying consumption at an average realisations of Rs.. 2.75. = non-agricultural consumption rises by 36% and agricultural consumption does= not grow then it is possible for DPC to be absorbed without any increase i= n domestic realisations. However, even this fairy tale is too good to last.= As time goes on, DPC tariff will rise and if it were Rs.. 4.50 instead of = Rs.. 4.10, then domestic realisations would have to be increased by 26%.
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