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Enron Mail |
THE ECONOMIC TIMES
Wednesday, 23 May, 2001, http://www.economictimes.com/today/bn01.htm Godbole quits, protests Pawar's remarks, Aditya Chatterjee=20 The above article appeared in the following newspapers: Wednesday, 23 May, 2001,http://www.timesofindia.com/today/23busu1.htm Godbole quits Enron panel over Pawar's remarks, Aditya Chatterjee Wednesday, 23 May, 2001,http://www.asianageonline.com/ GODBOLE RESIGNS FROM ENRON PANEL MID DAY, Wednesday, 23 May, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&cat_code=3D2f5748415= 45f535f4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=3D11044 Godbole quits from Enron renegotiation panel ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- MID DAY, Wednesday, 23 May, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&art_id=3D11046&cat_c= ode=3D2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152 CM refuses to accept Godbole's resignation The above article appeared in the following newspaper: BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/news.asp?Men= u=3D67#3 Maharashtra CM asks Godbole to withdraw resignation (1230 hrs IST) ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in04.htm 'Govt should take a stand & stand by it', Aditya Chatterjee=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in03.htm Should India pull the plug on Enron?, Aditya Chatterjee & Pooja Kothari=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- FINANCIAL TIMES Wednesday, 23 May, 2001,http://globalarchive.ft.com/globalarchive/articles.= html?print=3Dtrue&id=3D010523001016 Enron may seek damages, JULIE EARLE ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in05.htm Comments not on behalf of Maharashtra govt: Pawar The above article appeared in the following newspapers: BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/news.asp?Men= u=3D67#7 Comments on Godbole not on behalf of Maharashtra govt, says Pawar (1500 hrs= IST) MID DAY,Wednesday, 23 May, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&art_id=3D11047&cat_c= ode=3D2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152 I was misquoted on Enron: Pawar ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in06.htm Enron renegotiation meet called off ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ02.htm Maharashtra may terminate DPC's services, Girish Kuber=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ21.htm MSEB employees to stage dharna at Dabhol on June 5 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus1.html DPC fracas: NPA problem stares at FIs, stocks fall, George Mathew ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus2.html Indian power firms not keen on buying DPC, Dev Chatterjee ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE INDIAN EXPRESS Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus4.html DPC's Indian lenders may skip June meet in Singapore The above article also appeared in the following newspaper: THE FINANCIAL EXPRESS Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/eco3.htm= l FIs may skip lenders meet in June=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/eco1.htm= l# Scrips of DPC lenders dip after termination notice , Aarti Shetty ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE FINANCIAL EXPRESS Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/news6.ht= ml State advocate general dubs MSEBs claim justified, Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/corp13.asp?M= enu=3D2 Enron goes for India business valuation ,P Vaidyanathan Iyer & Parul Gupta = in New Delhi ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/financ12.asp= ?Menu=3D5 DPC imbroglio: Rs 5,255 crore at stake for Indian lenders, Tamal Bandyopadh= yay in Mumbai ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/opinion5.asp= ?menu=3D8 'An inexcusable failure of governance' ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/economy6.asp= ?Menu=3D3 DPC tangle: Centre adopts wait & watch policy, Subhomoy Bhattacharjee & San= tosh Tiwary in New Delhi ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ19.htm DPC to attend Godbole panel meet tomorrow ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ20.htm DPC looks forward to Godbole panel's solutions ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/wl01.htm Enron pulls out of venture drilling in Qatar's waters ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------- THE ECONOMIC TIMES Wednesday, 23 May, 2001, http://www.economictimes.com/today/bn01.htm Godbole quits, protests Pawar's remarks, Aditya Chatterjee=20 DR MADHAV Godbole, chairman of the Godbole Committee, appointed by the Maha= rashtra government to renegotiate the power purchase agreement with Enron-= promoted Dabhol Power Company, has resigned after Nationalist Congress Part= y supremo Sharad Pawar implied that he was not the right person to head the= talks. In an apparent criticism of Godbole, Pawar had said on Tuesday he w= as apprehensive about the outcome of the renegotiations "as those leading t= he talks from the government side are working with a negative approach". Go= dbole's resignation was in protest of this allegation. "I have resigned due= to derogatory remarks made against me by Nationalist Congress Party chief = Sharad Pawar on Tuesday night," Godbole said here. Maharashtra has a coalit= ion government, comprising the Congress and the NCP. And as the chief of NC= P, Pawar has considerable clout in Maharashtra politics.=20 Pawar was the state's chief minister when Maharashtra first signed an agree= ment with US-based power major Enron. DPC is a joint venture, with Enron as= the majority shareholder. Enron has publicly said it was not willing to ac= cept the terms of the Godbole panel report, which had suggested a re-negoti= ation of PPA, among others. In the light of Godbole's resignation, it seems= that Enron may have scored a vital point in its negotiation with governmen= t authorities. It is not surprising that Enron is inimical to Godbole. The = Madhav Godbole-led Energy Review Committee's report on the DPC project in M= aharashtra had blamed DPC as well its major shareholders, Enron, General El= ectric and Bechtel, for a lack of due diligence to ensure the absorption of= the entire DPC power after phase II was complete. The report had also slam= med the role of financial institutions when it found they had exhibited poo= r judgement and lack of due diligence in accepting these projections with= out demur, and disbursing funds for the phase II of the DPC project. "The = decision of the financial institutions to fund this project seems to have b= een based primarily on the escrow account given by MSEB, the state governme= nt guarantee and the counter guarantee by the Central government for phase= I, rather than an independent and meticulous appraisal of the project," th= e Godbole report noted.=20 The same financial institutions are now vigorously lobbying with the Centr= e to ensure Enron does not pull out of India. The Godbole Committee had als= o expressed deep concern at the apparent failure of overnance that allowed = such decisions to be taken. "A government that takes decisions involving th= e incurring of liabilities to the extent of over Rs 6,000 crore a year (a= nd rising) for over 20 years, in so cavalier a fashion, cannot at the sam= e time, assert that the courts must presume it acts in the public interest= ," the report noted. The crux of India's problems with Enron lies on the is= sue of whether Enron is over-charging India. The Maharashtra government say= s that when the first PPA was signed in 1994, it was assumed that the DPC w= ould provide power at the rate of Rs 2.20 per unit, corresponding with th= e rate of dollar at Rs 30 and cost of LNG at Rs 4,300 prevailing at that t= ime. But that criterion, unfortunately, has not been considered, and now th= e state has to pay Rs 8.54 for every unit of power.=20 State chief minister Vilasrao Deshmukh has gone on record to say: ``Even if= we buy the entire power as per the agreement, the cost will be Rs 5.20 per= unit." Enron, of course, claims that the higher power tariff was on accoun= t of the depreciation of the rupee against the dollar and the increase in w= orld fuel prices. The negotiating committee, which comprises members of the= Godbole Committee, representatives of Enron, Maharashtra State Electricity= Board and the Centre, was supposed to meet on Wednesday, but the meeting w= as cancelled after Godbole put in his papers. It is not clear at this junct= ure whether the Maharashtra government will straight-away appoint a success= or to Godbole or request him to reconsider his decision to resign. MID DAY, Wednesday, 23 May, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&art_id=3D11046&cat_c= ode=3D2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152 CM refuses to accept Godbole's resignation In a significant development, CM Vilasrao Deshmukh has refused to accept th= e resignation of Madhav Godbole, who heads the Enron renegotiation panel, = saying that he (Godbole) need not react to comments made by persons "outsi= de the government".Deshmukh confirmed receiving Godbole's resignation but s= aid that he has not accepted it. " I told him that he need not react to the= comments made by persons outside the government. The panel was appointed b= y the state Government and we as the government are in total support of God= bole. I have requested him to continue and I hope that he will reconsider h= is decision". When asked if the crisis would pose any threat to the ruling = coalition Deshmukh said there was no immediate cause for worry. Meanwhile, a crucial meeting on re-negotiation of the Power Purchase Agree= ment (PPA) between Maharashtra State Eelectricity Board (MSEB) and Enron-pr= omoted Dabhol Power Company (DPC) for 2184 mw power plant at Guhaghar in Ra= tnagiri district has been cancelled following the resignation of Godbole. C= onfirming the cancellation of the meeting, the MSEB chairman and member of = re-negotiation commitee, Vinay Bansal said that in wake of the resignation = of committee chairman Dr Madhavrao Godbole the meeting has been cancelled. = Godbole chief of the committee appointed by the state Government to renego= tiate Power Purchase Agreement (PPA) with Dabhol Power Corporation (DPC) ha= d resigned this morning following criticism by the NCP president Sharad Paw= ar.Pawar had said that it was difficult to find any solution through a comm= ittee which was headed by a person having negative mind set. Though he did = not mention Godbole, his criticism was clearly directed towards him. THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in04.htm 'Govt should take a stand & stand by it', Aditya Chatterjee=20 NATIONALIST Congress Party chief Sharad Pawar said on Tuesday he was appreh= ensive about the outcome of Maharashtra government's renegotiations with Da= bhol Power Company "as those leading the talks from the government side are= working with a negative approach". Madhav Godbole, chairman of the negotia= ting committee, put in his papers in protest. Godbole spoke to Aditya Chatt= erjee of Times Internet Network about what led to his resignation. Excerpts= :=20 You were appointed the negotiating committee chairman by the Maharashtra go= vernment to renegotiate the power purchase agreement with the Enron-promote= d Dabhol Power Company. A key member of the government has now criticised = you. Do you feel being let down?=20 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 negotiati= ng the power purchase agreement with DPC. The government should try to give= all the support to the committee and help strengthen it. Tuesday's comment= s by the senior NCP leader is counter-productive in this light. I have resi= gned because if the state government is not able to place its full trust o= n my capabilities, there's no reason for me to stay on. Therefore, I sent = my resignation to the chief minister Vilasrao Deshmukh.=20 Sharad Pawar was the chief minister of Maharashtra when the state first sig= ned an agreement with US-based power major Enron in 1993-94. You were also = regarded as the thorn in Enron's flesh. In fact, Enron has publicly said it= was not willing to accept the terms of your committee report. Doesn't your= resignation, in effect, help out Enron and its supporters?=20 I would not like to comment on this. It's for you to decide. But, the outco= me of the negotiation will be decided by the kind of panel that the governm= ent constitutes. Hopefully, the committee will have a positive attitude thi= s time.=20 Is your decision to resign final or will you consider withdrawing the lette= r if the state government requests you to continue?=20 I haven't considered this issue at this point of time. Sharad Pawar did not= specifically name you in his statement. He actually blamed the entire comm= ittee for having a negative approach. Do you think other conscientious memb= ers of the Godbole committee will now follow your lead and put in their pap= ers? That is a possibility. But, it's for the other members to decide.=20 What is your future plan of action?=20 Well, I will continue working on the report which involves the phase-II of = the DPC project and the restructuring the operations of the Maharashtra St= ate Electricity Board. The report will be completed over the next 10 days. THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in03.htm Should India pull the plug on Enron?, Aditya Chatterjee & Pooja Kothari=20 THE Indian think-tank needs to quickly put their minds together in finding = an amicable solution to the current Enron-Dabhol Power Company-Maharashtra = government imbroglio and resolve the crisis which has risen over non-paymen= t of electricity bills. If the two sides reach an understanding, it will be= the best case scenario. If not, India has to think whether to continue w= ith a cancerous limb, or to simply cut it off to prevent further damage.=20 The Maharashtra government has entrusted the Madhav Godbole panel with the = responsibility of negotiating a new power purchase agreement with Enron. Th= e panel would do well, if it takes into account the following. If Enron doe= s pull the plugs on DPC, the central government will have to cough up a sum= of Rs 2,910 crore - which constitutes a penalty amount of Rs 1,500 crore f= or one year of electricity bill, and $300 million as termination fees (whi= ch, at $1=3DRs 47, is equal to Rs 1,410 crore). This is a one-time payment,= and the final figure of Rs 2,910 crore is certified by Union power secret= ary A K Basu.=20 Now, instead of terminating the DPC project, if India were to continue with= the present arrangement and keep paying Rs 1,500 crore per year for the ne= xt ten years to DPC, the net present value of this investment works out to = a whopping Rs 9,217 crore, which is nearly three times the price that India= pays - if DPC is terminated. The NPV was calculated on the basis of Rs 2,9= 10 crore being put in a fixed deposit for 10 years, and the deposit earnin= g an interest rate of 10 per cent every year. However, another issue that a= lso needs to be taken into account is the exposure of the Indian financial = institutions and banks. FIs, led by the Industrial Development Bank of Indi= a, have, in two phases, provided loans of $ 95 million and $ 333 million, m= aking their total exposure equal to $428 million (which, at $1=3DRs 47, is = equal to Rs 2,012 crore). This apart, SBI also underwrote the maximum porti= on of a $557 million cross-border loan, and have an exposure of about $175 = million (or Rs 823 crore).=20 Thus, the cumulative exposure of the Indian banks and financial institution= s in DPC works out to Rs 2,835 crore. However, since only 80 per cent of th= is amount has been disbursed so far and FIs have tightened their purse stri= ngs of late, the net exposure of Indian lenders in DPC works out to Rs 2,26= 8 crore. Since the Indian lenders are not covered by any counter-guarantee,= their bottomline would take a hit if Enron backed out of this project. The= government being a majority stakeholder in most of these institutions, wo= uld also take a hit on account of these losses. If all these loans are take= n into account, and added to the one-time payment of Rs 2,910 crore, the to= tal cost to government would be Rs 5,178 crore - which is still lower than = Rs 9,217 crore (the price India will pay to DPC, if the nation is to contin= ue with the present arrangement of paying Rs 1,500 crore per year over the = next ten years). Thus, going by the current scenario where a compromise see= ms like a very far-fetched option, the termination option will be a less co= stly one for the nation.=20 However, the question which arises then is what happens to the assets and t= he plant in case of a termination. Well, the government can sell it to pri= vate power players and re-negotiate the cost factor with them - this time = hopefully after doing a cost-benefit analysis! A sale of assets would also= lessen the load on the government. Who knows - the government may actually= strike a deal with another private sector player to sell the ownership of = DPC at a premium? Now, for our fears that cancelling the project might cost= us future foreign direct investment since Enron is the biggest investor in= India so far. Compare this - while Brazil raised $31 billion and China $49= billion last year alone in foreign direct investment, how much FDI can In= dia, with its annual inflow of about $4 billion, really lose? In short, it= 's a case of losing what you don't have in the first place. The Godbole pan= el would also do well to note that many developing nations, who were pushed= into signing expensive power projects by power MNCs, have successfully re= -negotiated their contracts with no serious financial consequences.=20 Many nations simply did not have the money to pay for the inflated bills, = some refused to pay even after losing international arbitration awards, whi= le some others like Costa Rica declared that the 15 contracts signed with I= ndependent Power Producers (like Enron) have no legal status or are bad in= law. There are others too.=20 * In July 1999, the Hungarian parliament declared that a PPA signed with mu= ltinational RWE was unconstitutional and void.=20 * In August 2000, the Croatian government insisted on tearing up a PPA sig= ned by Enron with a previous government. The contract was considered to be= unaffordable, and was allegedly signed in politically dubious circumstanc= es. Enron subsequently abandoned the original agreement.=20 * In September 2000, the Philippines government took a decision of not rene= wing contracts with IPPs. This was done to avert the excessive financial bu= rden caused by these deals.=20 The Enron project was always mired in controversy. One has seen how the Shi= v Sena-BJP combine had thundered during 1994 election campaigns that they w= ould "throw the Enron project in the Arabian Sea". Now, of course, the same= BJP-led government at the Centre is bending backwards to prevent Enron fro= m packing its bags. One can understand the predicament of the Indian politi= cians. The MNC was the biggest contributor to the campaign fund of US presi= dent George Bush and has the high profile former US ambassador to India, Fr= ank Wisner among its board of directors.=20 In a sense, the fondness of the government for Enron is not surprising at a= ll since the Sena-BJP government of Maharashtra had taken pride for `succes= sfully' negotiating with Enron to increase the total output of the project = where an additional 1,444 mw was added to the 740 mw DPC project. It's a di= fferent matter that as of date, neither Maharashtra can consume all of DPC'= s 740 mw produce, nor it has the money to pay the bills. The crux of India'= s problems with Enron lies on the issue of whether Enron is over-charging I= ndia.=20 The Maharashtra government says that when the first power purchase agreemen= t was signed in 1994, it was assumed that the Enron-sponsored DPC would pro= vide power at the rate of Rs 2.20 per unit, corresponding with the rate o= f dollar at Rs 30 and cost of LNG at Rs 4,300 prevailing at that time. But= that criteria, unfortunately, has not been considered, and now the state h= as to pay Rs 8.54 for every unit of power. In fact, the state chief ministe= r Vilasrao Deshmukh has gone on record to say: ``Even if we buy the entire= =20 power as per the agreement, the cost will be Rs 5.20 per unit."=20 Enron, of course, claims that the higher power tariff was on account of the= depreciation of the rupee against the dollar and the increase in world fue= l prices. Even during the first days of the Enron project, there were enou= gh warnings from sensible quarters. For instance, in August 1994, the then= Union finance secretary had written to the power secretary that that the = size of "the potential liability for a 1,000 MW plant, was around Rs 3,000 = crore per year". The department of economic affairs had also expressed a fe= ar that the "...risk of the counter guarantees being invoked was not unreal= , given that SEBs had been defaulting in payments...". Caution was thrown t= o the winds then. The least India can do now is to ask for a re-negotiation= . The question is does the Indian government have the guts to threaten a ca= ncellation and force Enron to re-negotiate? FINANCIAL TIMES Wednesday, 23 May, 2001,http://globalarchive.ft.com/globalarchive/articles.= html?print=3Dtrue&id=3D010523001016 Enron may seek damages, JULIE EARLE Enron, the US power company, warned yesterday it would move to recoup sign= ificant termination damages if it was unable to settle a dispute over unpai= d bills with the Maharashtra State Electricity Board(MSEB). It is understoo= d that Enron would seek damages of Dollars 3.5bn (Pounds 2.4bn) to Dollars = 5bn(Pounds 3.4bn). It has a 65 per cent stake in the Dabhol Power Company (= DPC), which operates the Bombay plant thathas supplied the MSEB. Julie Earl= e, New York For regional reports,=20 THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in05.htm Comments not on behalf of Maharashtra govt: Pawar REACTING to Madhav Godbole's resignation from the renegotiation panel, Nati= onalist Congress Party chief Sharad Pawar said on Wednesday that he was not= talking on behalf of Maharashtra government when he commented on Tuesday o= n the "negative approach" of those leading the talks with Dabhol Power Comp= any. Godbole's decision to resign from the committee is a"personal one", Pa= war told reporters. He said there is need for renegotiations with Enron to = reduce power tariff of DPC and the Godbole panel should complete its unfini= shed work. Godbole submitted his resignation to the chief minister in the m= orning after an adverse comment made Pawar at a public meeting on Tuesday n= ight. Pawar had said he was "apprehensive of the outcome of the discussion= s with Enron as those leading the talks from the government side are workin= g with a negative approach." (PTI) THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/in06.htm Enron renegotiation meet called off US-based Enron Power said on Wednesday a meeting with the expert panel set = up to renegotiate the controversy-hit electricity supply contract to Mahar= ashtra had suddenly been called off. "We went to attend the meeting and we= were told the meeting was called off. We were not assigned any reason for = that," a spokesman of Enron's Indian arm told AFP by telephone.=20 The state and Central governments last month decided to set up a panel to r= enegotiate the power purchaseagreement. The Enron-backed Dabhol Power Compa= ny has almost finished building a $3-billion two-part power plant in the we= stern state -- which is the single largest US investment project in India.= Part one of the plant began generating power in May 1999, but the project = has run into problems, with the Maharashtra government arguing it could not= afford the high electricity bills. Dabhol Power last Saturday issued a wa= rning notice threatening to terminate the electricity supply contract with = Maharashtra, due to the payments dispute. The "preliminary termination noti= ce" effectively gives six months to the state to sort out disputes over the= power purchase pact with Enron. Payments for electricity have been guaran= teed by the state and central governments.=20 Early in April, Dabhol Power served the state electricity board a notice of= political "force majeure," which is a legal manoeuvre that enables a party= to break a contract in the case of events beyond its control. The Dabhol p= roject has had a turbulent ride since initial contracts were signed in 1992= . Allegations of corruption and high costs led to the scrapping of the cont= ract in 1995, but it was re-negotiated the same year. In February a state = government panel recommended fresh re-negotiations to bring down the tariff= s and charged Enron with inflating costs. (Agencies) THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ02.htm Maharashtra may terminate DPC's services, Girish Kuber=20 THE DABHOL Power Company is likely to be served with a primary termination = notice from the Maharashtra government. Senior officials of the state's ene= rgy department and the Maharashtra State Electricity Board on Tuesday, sepa= rately, held a series of meetings with Maharashtra's Advocate-General to de= cide their strategy. "This is certainly the first option we are looking at = to tackle the situation after the Enron served a PTN to MSEB," sources from= the state's energy minister said.=20 The state government and MSEB will issue a primary termination notice to DP= C if Enron refuses to change its stand and 'non-cooperation' with the Godb= ole panel continues. "This could be the only option left with us to face t= he crisis," said sources. The decision to issue the termination notice will= be arrived at only after a meeting of the Godbole panel on Wednesday. The= meet will also be attended by A V Gokak, the Centre's nominee on the Godb= ole panel. This will be the first meeting being held after DPC issued the n= otice and also the first in which a Centres's nominee will be present. Mean= while, changing its earlier stand, US energy major Enron, DPC's promoter, h= as also decided to attend the meet. Enron said it was looking forward to "h= earing proposed solutions from the Godbole panel particularly related to cr= edit-worthy purchasers for the power". An Enron spokesman said they were "= specially interested in the Centre's presence and learning of their expecte= d role". THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ21.htm MSEB employees to stage dharna at Dabhol on June 5 EMPLOYEES' unions of the Maharashtra State Electricity Board will stage a d= harna in front of US energy major Enron's Dabhol Power Company's power proj= ect on June 5, demanding cancellation of the power purchase agreement with = DPC and and end to renegotiation. R Jadhav, zonal monitor (Nasik), Subordin= ate Engineers Association, said people from the Konkan region would also pa= rticipate in the protest against the power purchase agreement. Jadhav said = the DPC project had plunged Maharashtra into an economic crisis and its im= pact would be felt by the innocent consumers. (PTI) THE INDIAN EXPRESS Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus1.html DPC fracas: NPA problem stares at FIs, stocks fall, George Mathew The Dabhol fracas has started reflecting on Indian financial institutions. = Angry investors have been pressing sales in the counters of financial insti= tutions which have a huge exposure in $2.775 billion Dabhol power project. = Investors and fund managers are worried over the possibility of Dabhol loan= sbecoming non-performing assets (NPAs) in the books of Indian FIs.IDBI stoc= k has already fallen 8.47 per cent to Rs 24.85 and ICICI by 6.09 per cent t= o Rs 83.95 on the Bombay Stock Exchange in the last two days. "If the PPA i= s terminated, supply of power will also stop. This means further payments w= ill also stop. This can create problems for Indian institutions which are a= lready saddled with huge NPAs," institutional sources said. FIs and banks have already disbursed over Rs 1,700 crore out of its total c= ommitments of around Rs 2,000 crore. What has accentuated the problems for = Indian institutions is that they do not enjoy the comfort of their exposure= to Dabhol Power Company being covered under the counter-guarantee agreemen= t. On the other hand, foreign lenders have nothing to worry as their loans = are covered under the counter-guarantee agreement.Indian FIs have taken fur= ther exposure by guaranteeing some of the foreign loans. Besides the rupee = loans, IDBI has extended a guarantee for a $200-million credit extended to = DPC by the US Exim Bank. "The two different sets of loans are likely to com= plicate things for FIs. They should have taken counter-guarantee for their = loans... Why shouldn't Indian FIs also get cover for the loans? It's to be = seen whether it will help them if they run to the government now," sources = said.Foreign lenders who have committed around $ 1.6 billion have disbursed= around level of provisioning in case of an eventual termination of the pro= ject after DPC issued a preliminary termination notice under the power purc= hase agreement. "There's no wonder Indian FIs have been trying to prevent t= he pre-termination notice at any cost," sources said. Banking circles said the Finance Ministry has so far ignored the request of= domestic FIs to help protect their loan exposure. "Going by the turn of de= velopments, DPC loans may become a problem for Indian FIs and eventually tu= rn into NPAs. This may prove costly for lenders especially at a time when t= hey are trying to clean up their balance sheets and recover existing NPAs,"= said a banker, adding, "otherwise the government will have to come forwar= d and bail them out. This seems to be a remote possibility."Another alterna= tive for FIs would be to reschedule the loans on the lines of steel bailout= s. While NPAs of commercial banks have crossed the Rs 60,000 crore, Fis in = the country have not lagged behind. NPAs of ten leading institutions have r= eported a rise of 11.89 per cent, or Rs 1,929 crore, to Rs 18,146 crore dur= ing the year ended March 2000 from Rs 16,217 crore.=20 IDBI has topped the NPA list by notching up bad loans worth Rs 7675 crore b= y March 2000. In fact, its NPAs have gone up by Rs 1,185 crore from Rs 6,49= 0 crore. IFCI followed with NPAs of Rs 4,103 crore, but it reported fall of= Rs 134 crore from the previous year's level of Rs 4,237 crore. ICICI's NPA= s went up to Rs 3,959 crore from Rs 3,623 crore in the previous year, as pe= r the RBI figures. FIs had resorted to large scale loan reschedulements, in= terest waiver and bail-out packages in the last two years. "This is benefic= ial to both the FIs and borrowers. While FIs can report a smaller amount as= NPAs, borrowers (mostly big corporate houses) can avoid their names in the= NPA list," said a former IDBI official, adding, "had FIs included bail-out= s and reschedulements, the NPA figure would have gone up further." THE INDIAN EXPRESS Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus2.html Indian power firms not keen on buying DPC, Dev Chatterjee Leading Indian power companies have ruled out buying Enron Corp's stake in = Dabhol Power Company if the project comes up for sale. The reason, say powe= r company officials, is the high power tariff. ''None of the state governme= nt or consumer will buy power at the prevailing power tariff,'' say officia= ls of leading power companies. ''If the project is up for sale, there is no= question of us buying Enron's stake in Dabhol Power Corporation. We think = the power tariff of over Rs 7 is too high and it would be difficult for us = to find any buyers,'' said a top Tata Power official. ''The PPA has to be r= e-negotiated and tariff brought down,'' he added. Tata Power had taken over the Mangalore power project after US energy giant= , Cogentrix had withdrawn from the project. According to sources, the compa= ny will now invest its time and funds into 1000 mw coal-based Mangalore pow= er project instead of taking over new power projects like DPC. ''There are = reports that Karnataka government wants to have re-look at the Mangalore po= wer project PPA, we are busy with that,'' said Tata Power official. Tata Po= wer is one of India's largest power generation and distribution companies a= nd is considered a likely suitor for the DPC. Reliance Industries, which was setting up a 450 mw power project in Patalga= nga near Mumbai, has also expressed its reservations about taking over the = project. In its post-annual results news conference, Anil Ambani managing d= irector of RIL had said that the company is not keen on buying Enron's stak= e in DPC. RIL also owns 29.68 per cent equity in BSES which has its own dis= tribution and power generation capacity for Mumbai suburbs.Power sector an= alysts say only the cash-rich Union government utilities have the cash to t= akeover Enron power project but it would be difficult for them to sell powe= r to other States unless some solution is hammered out between Enron, and M= aharashtra government over the tariff. Already Karnataka and Madhya Pradesh= , though facing major power cuts, have ruled out buying power from MSEB at = the stiff rate. Similarly, Maharashtra is a power deficit project but it is unable to lift = power from Enron project as the state electricity board is unable to pay En= ron bills due to its bankrupt balance sheet.MSEB has said the power produce= d by $ 2.7 billion Dabhol power project is expensive and has refused to buy= the output from the second phase. The contract between the two signed in t= he mid-1990s had called for MSEB to buy the entire capacity of 2,184 MW. Th= e first phase of 740 MW began operations in May 1999 but MSEB is unable to = pay even the bills for first phase. THE INDIAN EXPRESS Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus4.html DPC's Indian lenders may skip June meet in Singapore The Indian lenders of the US energy major Enron-promoted Dabhol Power Compa= ny (DPC) may skip the forthcoming two-day global lenders meet from June 4-6= in Singapore to discuss the implication of the pre-termination notice (PTN= ) served by the former to MSEB. "We have discussed the crisis with the inte= rnational lenders on several occasions including at the April 25 London mee= t and the three-day tele-conferencing last week. Unless there is something = specific on the agenda, the Indian lenders are not too keen to attend the S= ingapore meet," fnancial institution sources said here today.=20 The Indian lenders, led by Industrial Development Bank of India, State Bank= of India and ICICI, have lent around $1.4 billion out of DPC's total $ thr= ee billion 2,184 MW project. The lenders have stopped disbursement of abou= t 20 per cent of the remaining funds of around $800 million for the phase-I= I, owing to the severing of ties between DPC and MSEB over non-payment of R= s 213 crore dues. They said the foreign lenders led by ABN-AMRO were in no = mood to comprehend the financial failure of MSEB and argued that the loss-= making board should abide by its contractual agreements as per the power p= urchase agreement. Meanwhile, the Indian lenders would once again knock the= Centre's doors next week to solve the issue.(PTI) THE FINANCIAL EXPRESS Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/eco1.htm= l# Scrips of DPC lenders dip after termination notice , Aarti Shetty Mumbai, May 22: SCRIP prices of the State Bank of India (SBI), ICICI and th= e Industrial Development Bank of India (IDBI) have dipped after the Dabhol = Power Corporation (DPC) gave its preliminary termination notice last Saturd= ay. On Tuesday, SBI's share price on the Stock Exchange, Mumbai (BSE) quote= d at Rs 228.10, down from Friday's level of Rs 236.20. The scrips of ICICI = and IDBI were seen at Rs 83.95 and Rs 24.80 down from Friday's quotes at Rs= 89.40 and Rs 27.15 respectively. SBI and local financial institutions have= both fund-based and non-fund based exposures to DPC. This is in main to th= e phase-2 of the project, which does not have a counter-guarantee from the = Centre. In the project is scrapped, only a new buyer can salvage the situat= ion on a reworked power purchase agreement (PPA). Domestic lenders have an = exposure in excess of Rs 4,000 crore to DPC. =20 The termination of the project is expected to reflect badly on loan-portfol= ios. This in turn has made markets wary of the stocks of these financial in= termediaries. It might be recalled that international lenders have already = started a review on the impact of the termination of the DPC project on the= ir loan-books, and the provisioning required. Local banksand financial inst= itutions have been lobbying hard to salvage the project. Domestic-lenders l= ed by IDBI are leaving no stone unturned to save the project. At the same t= ime, banks with exposure to both Phase-1 and Phase-2 are now examining the = extent to which they can limit their losses in the event of the project's t= ermination. It is widely believed that both SBI and IDBI will also post low= er net-profits for the last fiscal. SBI is seen posting a lower net-profit = on account of its VRS charges, and interest on IMDs with IDBI taking=20 a hit on higher provisioning as a result of its NPAs.=20 THE FINANCIAL EXPRESS Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/news6.ht= ml State advocate general dubs MSEBs claim justified, Sanjay Jog THE Maharashtra State Electricity Board (MSEB) has received a major boost, = as state advocate general Ghulam Vahanvati has remarked that the MSEB's cla= im towards rebate of Rs 401 crore charged on the Dabhol Power Company (DPC)= for misdeclaration and default on the availability of power on January 28 = is justified. "One would have to fall back on the basic principles of the law of contract= s, under which, if the MSEB has a legitimate claim against DPC, it would be= entitled to withhold payments to DPC. It cannot be that the MSEB should be= required to continue to make payments to DPC, merely because the latter ch= ooses to raise a dispute with regard to the rebate," Mr Vahanvati said in a= 22-page communication to the MSEB. Mr Vahanvati said that the DPC has solemnly undertaken to operate the Dabho= l plant in accordance with the dynamic parameters and it was binding on the= company to specify a variation in the Availability Declaration in the prep= aration time required to commence start-up procedure. "No such thing was do= ne in the Availability Declaration," he added.On January 28, 2001, although= DPC had declared the baseload capacity of 657 mw, the actual generation of= mere 156 mw against the MSEB's instructed capacity of 657 mw during 6 pm t= o 7 pm. During 7 pm to 8 pm, the actual generation was 325 mw, against the = declared baseload capacity and instructed capacities of 657 mw, during 9 to= 10 pm, the actual generation was 325 mw against the declared and instructe= d capacities of 657 mw and during 11 pm to 12 am, the actual generation was= 450 mw against the declared and instructed capacities of 657 mw."The momen= t there was a shortfall, apart from anything else, Clasue 10.2 of the power= purchase agreement (PPA), which deals with availability, rebates and bonus= es, came into operation," Mr Vahanvati opined. According to him, DPC in its communication on February 1 to MSEB, has conce= ded that it has breached its obligations, but "that it has not done so know= ingly." "One wonders how such a statement could be made, having regard to t= he confession that 180 minutes is insufficient to bring the plant to 657 mw= . If this was an obligation and if DPC gave its Availability Declaration co= ntrary to this, there could be no doubt that it did so knowingly," he added= .Mr Vahanvati said that the DPC could have made changes to the Availability= Declaration under article 3.4, but it did not do so. Clauses 6.1 and 6.2 o= f Schedule 6 also reiterate the importance of the dynamic parameters, since= they provide that the DPC could not be required to operate the plant other= wise than within the Availability Declaration or the Dynamic parameters. Th= e company in another letter on February 14, admitted that the actual perfor= mance capability of the Dabhol plant is not in accordance with what is stat= ed in the PPA. Mr Vahanvati said that the rebate has to be adjusted and the contract provi= des for billing in terms of payment in Clause 11. The billing statement has= to contain the computation of rebate in accordance with Clasue 10.2. BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/corp13.asp?M= enu=3D2 Enron goes for India business valuation ,P Vaidyanathan Iyer & Parul Gupta = in New Delhi In a move which may be a prelude to Enron's complete exit from India, the c= ompany has appointed Arthur Andersen and Jones Lang La Salle to undertake a= valuation exercise of all its business in the country, including the contr= oversial Dabhol Power Company. While Jones Lang La Salle will assess all th= e real estate investments of Enron in India, Arthur Andersen will value the= business worth of the Houston-based energy major's Indian set-up. When con= tacted, a company spokesperson declined to comment. "Nobody in Enron will t= alk about it," he said. However, sour- ces said the appointment of consulta= nts was in line with Enron's strategic decision of pulling out of the 2,144= mw power venture which has been mired in controversy from day one.=20 According to sources, Enron's real estate investments have taken a big hit.= "Enron invested in prime real estate during 1992-1995 when the prices were= at a peak. However, they have touched more realistic levels now," said a r= eal estate consultant.Jones Lang La Salle is, however, tight-lipped about s= uch a mandate from Enron. Meanwhile, sources said that Cushman & Wakefield = which had earlier finalised certain real estate investments for Enron was a= lso in the race.=20 CB Richard Ellis has also proposed certain clients to Enron for buying/leas= ing some of its property. Enron's Houston-based president Jeffrey Skilling = had in February said in an interview to Business Week that Enron "should no= t be in there (India) building $2 billion power plants. Our cost of capital= is too high for that." DPC had disregarded the contents of the Godbole Com= mittee report when it issued a preliminary termination notice to MSEB on Ma= y 19. The PTN gives DPC, MSEB, the state government and the Centre six mont= hs to resolve the issue amicably. If the talks fail, DPC would issue the fi= nal termination notice. Enron India had earlier this year also decided to a= bandon the proposed joint venture with MSEB and Global Telesystems for a br= oadband network in Maharashtra.=20 BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/financ12.asp= ?Menu=3D5 DPC imbroglio: Rs 5,255 crore at stake for Indian lenders, Tamal Bandyopadh= yay in Mumbai The three Indian lenders to the Dabhol Power Company -Industrial Developmen= t Bank of India, State Bank of India and ICICI-may take a hit of Rs 3,000 c= rore on account of the deferred payment guarantee (DPG), given to foreign l= enders in case they decide to trigger the accelerable guarantee clause in t= he wake of the preliminary termination notice (PTN). Also at stake is the I= ndian lenders' Rs 2,255 crore in term loans outstanding for both phases of = the controversial $3 billion project. Bankers are lobbying hard with the finance ministry to defuse the crisis. I= f the ministry continues with its "indifference," banks may collectively st= ay away from core sector lending in future. Indian banks have also decided = not to attend the lenders' meet in Singapore, called in the first week of J= une to take stock of the situation.In phase I of the project, the outstandi= ng US Exim loan is $221 million, backed by the guarantees of IDBI, ICICI an= d SBI. In rupee terms (exchange rate of Rs 47 per dollar), it works out to = Rs 1,039 crore.=20 For phase II, IDBI, ICICI and SBI have given guarantees to OND's (a Belgian= bank) $64 million, Miti's $143 million and J-Exim's $210 million (Rs 1,960= crore).If the accelerable guarantee is invoked, Indian financial intermedi= aries will face a massive cash flow problem. Their capital adequacy ratio (= CAR) will go down as the risk weightage to loans is 100 per cent, against 5= 0 per cent risk weightage of guarantees. The outstanding rupee loans on Ind= ian lenders' books for phase-I is around $53 million (Rs 249 crore) with ID= BI taking the lead with $26 million, ICICI, SBI and Industrial Finance Corp= oration of India $7 million each and Canara Bank $3 million.=20 BankAm's Indian office also has a $3 million exposure to phase I. SBI has d= isbursed $141 million worth of foreign exchange loans for phase-II and Cana= ra Bank $40 million. The rupee loan for this phase is pegged at $246 millio= n (Rs 1,156 crore). Here, ICICI has the highest exposure ($93 million), fol= lowed by IDBI ($83 million), SBI ($37 million), Canara Bank ($17 million) a= nd IFCI ($16 million)."It is too early to speculate on the fate of our expo= sure. This is backed by assets," said an institutional source. Bankers said= the company can pay the dues up to September but if DPC's activities come = to a halt, problems could surface later. Indian lenders are not covered by = the Centre's counter-guarantee.=20 BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/opinion5.asp= ?menu=3D8 'An inexcusable failure of governance' An extract from the first part of the Godbole Committee report on Dabhol Po= wer Company suggests that the project was based on questionable assumptions= The Dabhol project has generated a lot of controversy in the past and till = the date of the constitution of the committee, there have been a number of = public interest litigations filed against DPC [Dabhol Power Company] on var= ious counts. Even during the tenure of the Committee, fresh petition have b= een admitted and are under consideration of the Bombay High Court.=20 However, none of the earlier petitions have found favour with the courts. E= ven the one case that is still pending before the Supreme Court, has been r= etained because of the conduct of the GoM [Government of Maharashtra] in fi= rst filing an affidavit and then disclaiming it. Whenever the history of pu= blic interest litigation is written, this will be recognised as one of the = failures of the process. One would presume that with such judicial scrutiny= , all the issues in the project would have been examined thoroughly. Unfort= unately,...this is far from true. The fault does not lie with the court but= with inexcusable failure of governance... The case against DPC was argued = extensively at least in two major writ petitions before the Bombay High Cou= rt. In these two critical cases, viz, the Ramdas Nayak case and the CITU ca= se, various Government agencies argued forcefully...that DPC was in the pub= lic interest; that the contract could not have been awarded through competi= tive bidding but it was negotiated hard and long in order to obtain a benef= icial outcome, that the design and size of the project was appropriate, and= that the tariff was competitive and below the norms set by the Government = of India and that all these issues had been examined by the appropriate aut= horities as required under law.=20 The various agencies submitting affidavits and arguments to this effect inc= luded GoM, MSEB [Maharashtra State Electricity Board], Ministry of Power, G= oI [Government of India] and the CEA [Central Electricity Authority]. In bo= th these cases as also several other cases filed against DPC, the Court did= not consider it appropriate to intervene. In the Ramdas Nayak case, the co= urt observed that, "It is well accepted legal position today that judicial = review is not an appeal from a decision but a review of the manner in which= a decision was made. ...The function of the Court is to see that lawful au= thority is not abused; while doing so, it should arrogate itself the task e= ntrusted to that authority...The Court should not enter into the merits of = Government actions, more so in economic matters unless the same is unreason= able and is not in public interest... But at the same time the Court can ce= rtainly examine whether a decision making process was reasonable, rational,= not arbitrary and violative of Article 14 of the Constitution."=20 The Committee believes that this report brings out these very concerns and = shows in no uncertain terms that the decision-making process violated all t= hese salutary principles, i.e, it was neither reasonable [nor] rational....= The Committee is surprised at the breadth of governance failure , which ha= s occurred across time, across governments and across agencies, right from = 1992 till as late as 1999...This chapter will show that every one of the as= sertions, relating to the benefits from the project, viz., the effectivenes= s of negotiations, its design and size, the need for power and competitiven= ess of tariff, for both Phase I and Phase II, have proven to be false and i= ndeed, were based, at the time of the assertions on extremely questionable = assumptions.=20 The Committee, in the short time allocated to it, is unable to determine re= asons for this consistent lapse in governance but is extremely concerned at= it. Two members of the Committee, namely Dr Godbole and Dr Sarma, felt tha= t, prima facie, the manner in which each and every opportunity was exploite= d by those favouring the entry of DPC at different points of time, against = the interests of MSEB, the interests of the Maharashtra consumer and the pe= ople of Maharashtra raises doubts about a concerted effort to exercise undu= e influence at every stage in this project. ... One of the persistent issue= s has been the lack of competitive bidding. ... The GoM had chosen consciou= sly to enter into negotiations, instead of going by the competitive bidding= route and it justified this course of action and insisted that it had cond= ucted intense negotiations before signing the contract. Both the justificat= ion and quality of these negotiations are suspect. ...[O]n the issue of com= petitive bidding, it was affirmed (by GoM through MSEB) that this was not r= elevant, counter-productive and inappropriate. Perhaps the only accurate st= atement was it was not unlawful. For reasons detailed below, the Committee = finds each of these reason to be deficient and suspect. "Not relevant": GoM= said that the "competitive bidding procedure [was] relevant when the Gover= nment or public authority [was] either disposing of or purchasing property = or services. It [had] no relevance to cases where a private party chooses t= o set up a project on its own with its own resources" [affidavit by MSEB in= Ramdas Nayak dated 25 July 1994].=20 This depiction of DPC as an investment with no obligation on either the "Go= vernment or public authority" to purchase services was patently in error. T= he GoM resolution extending a guarantee to DPC dated 10th February 1994 cle= arly mentions that "As MSEB will purchase power from DPC, it has to execute= an agreement, namely Power Purchase Agreement (PPA)". "Counterproductive":= This is a very interesting statement, which suggests that "major companies= should not be asked to compete for projects. The Committee believes that t= he vacuity of such an argument is self-evident and does not merit further c= onsideration. Inappropriate": This is a surprising statement, for it admits= that GoM's "expert knowledge and experience" for evaluating bids is "not s= ufficiently up to the mark" and that its "knowledge of risk identification = and allocation...is also not sufficiently developed." At the same time, how= ever, GoM argues that it has the expertise, experience and knowledge to neg= otiate a contract.=20 It is apparent to the Committee that if a body is not qualified to evaluate= bids, which are submitted on standard terms, it is evidently less qualifie= d to negotiate minute details of a similar project. This dissonance between= the two bodies of knowledge as perceived by GoM is inexplicable. If the ar= gument is that the MSEB had engaged international financial and legal advis= er to assist it in its negotiation with DPC, the same could have been done = with respect to preparation and evaluation of bid documents.=20 'Enron revisited, Enron saw and Enron conquered'=20 The Bombay High Court, in writ petition No 2416 of 1996 in CITU and Abhay M= ehta vs DPC and others, observes the following regarding the renegotiations= of the project in 1995: " But once it [GOM] decided to revive the project,= it acted in the very same manner in which its predecessor in office had do= ne. It forgot all about competitive bidding and transparency. The only tran= sparency it claims is the constitution of the negotiating group. The speed = with which the negotiating group studied the project, made a proposals for = renegotiations which was accepted by Dabhol, and submitted its reports is u= nprecedented.The negotiating group was constituted by the Government of Mah= arashtra on 8th November 1995. It was asked to submit its report to the sta= te governmentby 7th December 1995. The committee, we are told, examined the= project, collected data on various similar other projects as well as inter= nal bids including data on a similar project executed by Enron in the UK, h= eld considerable negotiations, settled the terms of revival of the project,= got the consent of Enron and Dabhol to the same on 15th November 1995, jus= t within a week of its constitution and submitted its exhaustive report ...= on 19th November, 1995, just 11days after its formation, much before the 7= th December....The speed at which the whole thing was done by the negotiati= ng group is unprecedented. What would stop one to say, as was said by the C= hief Minister in the context of the original PPA, "Enron revisited, Enron s= aw and Enron conquered - much more than=20 it did earlier"."=20 (To be continued tomorrow)=20 BUSINESS STANDARD Wednesday, 23 May, 2001,http://www.business-standard.com/today/economy6.asp= ?Menu=3D3 DPC tangle: Centre adopts wait & watch policy, Subhomoy Bhattacharjee & San= tosh Tiwary in New Delhi The Centre will await the outcome of the conciliation proceedings before de= ciding on its next step about the Dabhol Power Company. Talking to Business= Standard senior finance ministry officials said the central government rep= resentative AV Gokak has already been suitably briefed about the affair, an= d the centre is looking forward to the outcome of the proceedings. The sour= ces said since the preliminary termination notice (PTN) has been sent by DP= C to the Maharashtra government the Centre cannot take a stand on the issue= without the state asking it to intervene.=20 They also said since there is a mandatory time period of six months between= the serving of a PTN and the implementation of the same, the conciliation = can proceed. Officials of the finance and power ministries have meetings wi= th Gokak last week to sieve through the entire legal position between the c= ompany, the state and the central governments. However, they agreed that th= e conciliation proceedings cover a very small portion of the dispute involv= ing only the pending bills of DPC for December amounting to Rs 103 crore an= d will not solve the entire issue of electricity purchase between the compa= ny and the Maharashtra State Electricity Board. Since the bills for the successive months have also run into problems it ha= s created the possibility that the project may be terminated. Though the so= urces said that since the company has already invested a substantial sum fo= r the second phase, it will not be very keen to withdraw from India abruptl= y.Incidentally the Godbole committee for renegotiating the power purchase a= greement with DPC is slated to meet tomorrow in Mumbai.The officials also s= aid that though the lenders to the project, which includes IDBI have approa= ched the finance ministry to enquire about the stand of the centre, they ha= ve been told that the Centre can do very little about it.This is because th= e contract as drawn up is between the Maharashtra government and the DPC wi= th the Centre only standing as a counter guarantor. The wait and watch policy of the Centre is also dictated by the political c= ompulsions, with the centre deciding to let the state government do all the= talking. The total amount of guarantee that will come into play if the pro= ject is terminated is about $300 million. Since the second phase of the pro= ject does not involve any further counter guarantee the liability for the g= overnment will not rise. The sources also said no letter has been sent to e= ither Enron or DPC till now.=20 THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ19.htm DPC to attend Godbole panel meet tomorrow DESPITE serving the preliminary termination notice on Maharashtra State Ele= ctricity Board, Enron-promoted Dabhol Power Company has agreed to attend th= e Godbole Renegotiations Committee meeting to be held here on Wednesday. "= In an official intimation, DPC has informed the state government that their= representatives will attend the committee meeting slated for Wednesday", = state government sources said here.=20 With regard to payment of the Rs 139 crore April bill, sources said MSEB wo= uld soon make a "protest payment" to DPC. "There have also been reports of = DPC stalling operations at Dabhol, but this is not true. The power station= is working and its Phase-II will be fired on June 7", sources added. Conf= irming MSEB's decision to slap yet another Rs 400 crore penalty on DPC, the= state government officials said it was likely to be issued by the month-en= d. "In this post-PTN stage, currently MSEB is seeking legal opinion whether= to challenge the PTN", they added.=20 Sources also said the Centre's representative A V Gokak would at the meetin= g. Once a nine-member committee, the Godbole panel has now been reduced to = six with three of its members,Rajendra Pachauri, Kirit Parekh and E A S Sar= ma, having opted out of it on personal grounds. At the May 11 meeting, DPC= officials including Enron India chief K Wade Cline and president Neil Mcgr= egor had expressed readiness to renegotiate the power purchase agreement an= d a possible reduction in its high tariff. (PTI) THE ECONOMIC TIMES Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ20.htm DPC looks forward to Godbole panel's solutions =20 IN AN unexpected move, US energy major Enron-promoted Dabhol Power Company = on Tuesday said it was looking forward to hear the proposed solutions from = the Godbole Renegotiations Committee, pa
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