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Enron Mail |
BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy3.as= p?Menu=3D3 Centre seeks 60 days extension in Dabhol conciliation period , Santosh Tiwa= ry=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- BUSINESS STANDARD Wednesday, May 30, 2001, http://www.business-standard.com/today/economy8.as= p?Menu=3D3 MERC stays DPC arbitration ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- BUSINESS STANDARD Wednesday, May 30, 2001, http://www.business-standard.com/today/economy7.as= p?Menu=3D3 Centre's fresh offer to solve DPC row=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE FINANCIAL EXPRESS Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/top2.htm= l MSEB stops power purchase from Dabhol Power ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE FINANCIAL EXPRESS Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/eco1.htm= l DPC's foreign lenders may invoke FI guarantees to pare counterparty limits = , Raghu Mohan ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE FINANCIAL EXPRESS Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/eco14.h= tml MERC restrains DPC from operating escrow=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE FINANCIAL EXPRESS Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/news1.ht= ml Centre submits proposals to resolve Dabhol imbroglio=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE FINANCIAL EXPRESS Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news2.h= tml DPC offers to hold talks with MSEB on tariff reduction , Sanjay Jog ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE FINANCIAL EXPRESS Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news3.h= tml Dabhol Power's Indian lenders to meet today=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE INDIAN EXPRESS Wednesday, May 30, 2001, http://www.indian-express.com/ie20010530/bus1.html MSEB versus Enron, advantage MSEB ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30home4.htm Endgame Enron, at least for now=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi17.htm MSEB stops taking DPC power=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi18.htm MERC restrains DPC from activating Escrow account=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi19.htm Centre rejects proposal to buy power from Dabhol=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi20.htm Govt offers proposals to solve DPC-MSEB crisis=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE ECONOMIC TIMES Wednesday, May 30, 2001, http://www.economictimes.com/today/30lead01a.htm MSEB stops buying power from DPC ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE ECONOMIC TIMES Wednesday, May 30, 2001, http://www.economictimes.com/today/30infr01.htm Enron, govt panel make no progress on power row, Sriram Ramakrishnan=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- THE ECONOMIC TIMES Wednesday, May 30, 2001, http://www.economictimes.com/today/30infr02.htm Centre not to buy power from Dabhol project ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- MID DAY =20 Wednesday, May 30, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id= =3D29&art_id=3D11316&cat_code=3D2F574841545F535F4F4E5F4D554D4241492F5441415= A415F4B4841424152 State stops arbitration with Enron, Yogesh Naik ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- MID DAY Wednesday, May 30, 2001,=20 http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&cat_code=3D2f5748415= 45f535f4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=3D11308 MERC restrains Enron from approaching Intl court ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- MID DAY Wednesday, May 30, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&art_id=3D11319&cat_c= ode=3D2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152 MSEB wins first round of battle against DPC, Deepak Lokhande ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= -------- BUSINESS STANDARD Wednesday, May 30, 2001, http://www.business-standard.com/today/economy3.as= p?Menu=3D3 Centre seeks 60 days extension in Dabhol conciliation period , Santosh Tiwa= ry=20 The Centre has asked Dabhol Power Company (DPC) to extend the conciliation= period for settling the issue of payment of the December 2000 bill by Maha= rashtra State Electricity Board (MSEB).Top government sources told Business= Standard that the request seeks to extend the date by two months beyond th= e present deadline of June 7 as the conciliators have decided to conduct pr= oceedings on three consecutive days beginning July 23. They added that in t= he absence of an extension of the conciliation period, the whole process wo= uld come to a cropper even before starting. The delay in proceeding was mai= nly on account of the differences in the appointment of a third conciliator= , officials said.=20 After a delay of more than a month, the two parties have now agreed to appo= int David AR Williams QC, a former judge of the New Zealand High Court as t= he third conciliator. The conciliation between DPC and the central governme= nt started on April 9, after DPC agreed to accept the Centre's stress on co= nciliation instead of arbitration, in response to its notice. While pointi= ng out that the reason for delay in the conciliation process was the absenc= e of a third conciliator, the Centre has now said that in order to allow th= e conciliators to complete their job, it was necessary to extend the period= of conciliation. Sources said that the central government has asked DPC to= respond at the earliest, so that the government's conciliator could be inf= ormed accordingly. Earlier, DPC had appointed Laurence Street as its concil= iator for resolving the issue of non-payment of the December bill of Rs 102= crore with the central government. Street is a former Chief Justice of New= South Wales, Australia.=20 The Centre has appointed chairman Law Commission Justice BP Jeevan Reddy as= its conciliator. The notice to the Centre, on April 4, was issued by DPC a= fter the former conveyed to the company that until the availability of the = penalty issue was resolved, it did not intend to pay the December bill unde= r the counter-guarantee. The MSEB has slapped a Rs 402-crore availability p= enalty on DPC and has demanded adjustments for it against the outstanding b= ills for December 2000 and January 2001. BUSINESS STANDARD Wednesday, May 30, 2001, http://www.business-standard.com/today/economy8.as= p?Menu=3D3 MERC stays DPC arbitration=20 The Maharashtra Electricity Regulatory Commission (MERC) on Tuesday evening= issued an injunction restraining the Dabhol Power Company (DPC) from proce= eding with the arbitration process till June 14. Granting another ad-interi= m relief to the Maharashtra State Electricity Board (MSEB), the MERC has al= so restrained DPC from operating the board's escrow account till June 14, w= hen the next hearing is scheduled. The MERC conference room was packed with= reporters and anti-Enron groups, in addition to the counsel for DPC and MS= EB. The proceedings, for most part of the day, revolved around the jurisdic= tion of the MERC to adjudicate and arbitrate in the DPC imbroglio. The MSEB= on Friday petitioned the regulator over the apparent unavailability of pow= er from DPC in violation of the power purchase agreement (PPA). Advocate general Golham Vanhavatti, counsel for MSEB, said: "Under clauses= 6 and 7 of the PPA, DPC had represented that it would set up a power plan= t under specific characteristics and parameters. The DPC in its presentatio= n to us had assured of a 180 minutes ramp up time from a cold start on the = basis of which the availability declaration was made. On three occasions MS= EB did not receive power from the DPC within this stipulated time frame." H= e added that while DPC claimed that the MSEB could not give it despatch ins= tructions according to agreed convention, any such convention to be enforce= able would have to be in the form of an agreement signed by both the partie= s, as per the PPA. DPC's counsel Atul Setalvad sought two weeks'time from t= he commission to study the petition, which he claimed was effectively avail= able to the DPC counsel only on Monday. Setalvad, however, said he was not = in a position to give an assurance to the commission that DPC would not ope= rate the escrow.=20 MSEB stops taking DPC power=20 MSEB stopped drawing power from DPC on Tuesday. Confirming the same, MSEB c= hairman Vinay Bansal said: "DPC had written to our banks to activate the es= crow. From 12 noon on Tuesday we have stopped drawing power from DPC. While= there is a clause for arbitration in the PPA with DPC, the law of the land= has superceded the same. We are beyond the agreement now." Senior MSEB off= icials and those in the Maharashtra government felt that the interim MERC r= uling has effectively placed DPC and MSEB on a level playing field. A senio= r government official said: "The escrow freeze imposed on DPC by MERC means= that the former will not be able to divert around Rs 400 crore from the MS= EB account in Canara bank." Canara bank is the sole receptor of the Rs 5,50= 0-odd crore collected annually by six other receiving banks of MSEB.=20 BUSINESS STANDARD Wednesday, May 30, 2001, http://www.business-standard.com/today/economy7.as= p?Menu=3D3 Centre's fresh offer to solve DPC row=20 The Union government has come out with a set of proposals for solving the p= roblems posed by the high tariffs of the Enron-promoted Dabhol Power Compan= y (DPC), said Madhav Godbole, chairman of the committee to renegotiate a ne= w deal with DPC. Godbole, however, refused to spell out what these proposal= s were. He was speaking to newspersons after the second round of discussion= s with representatives of Enron and DPC. Asked whether the company had agre= ed to a reduction in tariffs, Godbole said, "It is too early to talk of spe= cifics at this stage." He added that the two sides had decided to meet agai= n but the date had not been fixed as yet. The second round of discussions a= ssume importance as this was the first time that the Centre had deputed its= representative A VGokak for the meeting. Gokak said that the Centre was ke= en on resolving the issue and it would play an "active role" in solving the= problem.=20 The solution should take into account the interest of all four sides, MSEB,= the state government, the Union government and DPC. Well-placed sources sa= id that Gokak had made it clear that the Centre will not buy power from the= project but will function as a facilitator. Enron India managing director = K Wade Cline said, "We had a very good meeting and a variety of issues were= discussed. We have not submitted any proposal. This is an ongoing process.= " State energy secretary V M Lal told reporters that discussions were held = on all issues that hindered the progress of the project. He refused to elab= orate further saying "renegotiations cannot be conducted through the press= ".=20 The meeting was attended by the six members who constitute the Godbole pane= l comprising, Madhav Godbole, Sudhir Shrivastava, HDFC chairman Deepak Pare= kh, MSEB chairman Vinay Bansal, state energy secretary V M Lal and AV Gok= ak. The DPC side which was led by Enron India managing director Wade Cline = comprised DPC president and chief executive officer Neil McGregor; Paul Kr= aske, general counsel and senior DPC executives, Mukesh Tyagi, S Mohan Guru= nath, and Sanjeev Khandekar. A senior executive of Bechtel which holds a 10= per cent stake in DPC P J Nagarawala also attended the meeting.=20 THE FINANCIAL EXPRESS Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/top2.htm= l MSEB stops power purchase from Dabhol Power THE Maharashtra State Electricity Board (MSEB) has stopped power purchase = from Dabhol Power Company (DPC) from 12 noon on Tuesday. This decision come= s in the wake of its May 23 decision to rescind the power purchase agreeme= nt (PPA) with DPC. MSEB has been purchasing only 180 mw of power from Dabho= l phase-I. MSEB has made it clear that discontinuation of power purchase w= ill not affect the supply situation in the state. With Tuesday's decision,= the proposed commissioning of block B (722 mw) of Dabhol phase-II from Ju= ne 7 hangs in the balance as there is no buyer for the power generated. MS= EB, in a communication to DPC, said it was convinced that the company's co= nduct was not bonafide and as such it has rescinded the PPA, it would not l= ike to continue to purchase power. MSEB chairman Vinay Bansal told reporters that as the PPA had been rescinde= d through its "avoidance" notice, the question of payment of fixed charges = to DPC does not arise in the changed circumstances. MSEB, in its communicat= ion, strongly criticised the DPC for initially turning down a cheque of Rs = 136 crore towards April bill "under protest" and later demanding it.MSEB ma= de it clear that it will make the monthly payments under protest or not pay= it at all as it was not inclined to accept any conditions from the DPC. A= t the hearing before the Maharashtra Electricity Regulatory Commission (MER= C) on Tuesday, the advocate general Ghulam Wahanvati, while making a strong= plea for the admission of MSEB's petition on rescinding of PPA also referr= ed to the MSEB's decision in this regard. MSEB, in its "avoidance" notice, said it had agreed to continue the present= arrangement of power purchase and payment till disputes were resolved by = the appropriate forum, so as to minimise loss and inconvenience. For such = supply, MSEB had agreed to make payments to DPC as provided under the PPA,= "but such payments would be subject to adjustments on the basis of determi= nation of reasonable compensation and quantum merit by a competent forum". = However, MSEB stopped power purchase as DPC denied the charges of material = misrepresentation and questioned the present arrangement to continue when t= he PPA had been rescinded.=20 THE FINANCIAL EXPRESS Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/eco1.htm= l DPC's foreign lenders may invoke FI guarantees to pare counterparty limits = , Raghu Mohan FOREIGN lenders to the Dabhol Power Company (DPC) are veering around to the= view that they will have little choice, but to invoke the guarantees issue= d by domestic term financing institutions to pare counterparty limits to t= hese entities if the covenants under "events of default" are triggered.Whi= le it has been gathered that DPC has not defaulted in loan servicing to its= clutch of lenders, this is just one of the covenants. There are other poin= ts on which a reneging can be construed as an "event of default". Charges a= nd counter-charges emanating from DPC and the Maharashtra State Electricity= Board (MSEB), and talk of "adjustable claims" have been cause enough for t= hese lenders, in general, to slam brakes on fresh disbursements to DPC over= the last month. A loose consensus among the foreign bankers/lenders is now gaining ground t= hat it is better to invoke the guarantees. Well placed sources in foreign b= anks said that their exposure to DPC backed by financial institutions (FIs)= amounted to them jamming their counterparty lines to these bodies, and act= ed as a hindrance in taking on fresh credit exposure - be it fund-based or = non-fund based."What is the point in having non-remunerative counterparty l= imits? We could as well have taken on a direct exposure on DPC," a senior f= oreign banker said while pointing out that the irony in corporate banking i= s that guarantees are issued with a "tacit understanding" that they will ne= ver be called up. FIs have been prevailing upon international lenders not to invoke the guara= ntees, citing "relationship reasons" as part of their overt efforts to curt= ail the looming threat of non-performing assets (NPAs) well in excess of Rs= 5,000 crore. Pressure though is mounting on foreign banks to take a stand = one way or the other over the issue of FI guarantees. Many with an exposure= to DPC, and having local presence seem to be of the view that "they cannot= hold on indefinitely" hoping that there will be a way out of the current i= mbroglio. While such a move will increase the fund-based exposure of FIs to DPC, and = lead to an even bigger NPA situation, foreign banking sources said that "co= mmercial interests will force us to invoke these guarantees", while adding= that pressure is now on to look at new business avenues. These woes, sour= ces explained, will also influence their decision to finance DPC's cost-ove= rruns with disbursements now on hold. The flip side to any decision by foreign banks to invoke FI guarantees is t= hat such covers may not be made available when they lead-arrange cross-bord= er loans to domestic corporates. Top-of-the-line corporates may well secure= a stand-alone cover from a foreign bank, but the remaining will have to lo= ok elsewhere.A recent move on the part of by the Reserve Bank of India (RBI= ) that forex loans are not be calculated as part of foreign banks Tier-1 ca= pital while drawing up exposure limits to corporates from fiscal 2002 may a= lso catalyse a decision to invoke FI guarantees. Many a foreign bank will b= e forced to revisit their country-limits or sell assets to comply with the = RBI diktat. THE FINANCIAL EXPRESS Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/eco14.h= tml MERC restrains DPC from operating escrow=20 THE Maharashtra Electricity Regulatory Commission (MERC) on Tuesday, in an= ad interim relief for the Maharashtra State Electricity Board (MSEB) "in t= he larger public interests", restrained the Dabhol Power Company (DPC) to o= perate an escrow account of Rs 5,000 crore annually and take any steps or m= easures to implement its arbitration process under clause 20.3 of the power= purchase agreement (PPA).However, the DPC is likely to challenge the MERC = order in the Mumbai High Court. MERC chairman P Subrahmaniam and members, V= enkat Chary and Jayant Deo, in their ruling said that they are convinced t= hat MSEB has disputes against the DPC and prima facie they are of the view = that the MERC has a jurisdiction to adjudicate upon such disputes and diffe= rences between utilities. The board, in its petition filed on May 24, had said that the DPC be restra= ined from taking any steps or measures in furtherance of any of the escrow = agreements/notices including amended and restated escrow agreement and the = collection of agreements from reactivating the escrow account or from in an= y manner drawing, utilising, enjoying, or accessing funds in the escrow acc= ount. MSEB had pleaded that in the event that escrow account has been activ= ated the status quo ante be restored by appropriate mandatory direction.Fur= ther, MSEB, in view of commencement of arbitration proceedings shortly at L= ondon after the appointment of third arbitration by the DPC, had pleaded th= at the DPC be restrained by a temporary injunction from taking any steps in= that regard. State advocate general Ghulam Wahanvati, appearing on behalf = of the MSEB, strongly pleaded that the MERC should not only give an ad inte= rim relief but also admit its petition as it has the jurisdiction under sec= tion 22 (2) (n) of the Electricity Regulatory Commission Act, 1998 to adjud= icate upon disputes and differences between utilities and if required refer= it for arbitration. "Parliament through the 1998 Act has created central electricity regulatory= commission and state electricity regulatory commission as dispute resolut= ion bodies. They have exclusive jurisdiction and thus the question of arbit= ration does not arise," Mr Wahanvati said. He added that the DPC has misdec= lared and defaulted on the availability of power on January 28, February 13= and March 29 and thus was entitled to pay rebate of Rs 401 crore only for = January 28 default. However, DPC made a turnaround on an agreed formula by = a curve on the availability of power. Mr Chary wanted to know whether the DPC had provided a substandard plant. M= r Wahanvati, in his submission, said that the power plant is not of the sta= ndard which the board had proposed and thus, it was not mere "misdeclaratio= n but a fraud". At the outset, DPC counsel Ashok Setalwad questioned the au= thority and jurisdiction of MERC to entertain MSEB petition and sought two = weeks time to thoroughly go through the MSEB petition to consider its posit= ion. The company also claimed that the MERC has no jurisdiction to enterta= in any dispute between the DPC and the escrow agent/bank, arising out of th= e escrow agreement. At one point of time, the DPC counsel remarked that the= y were constrained to leave today's hearing as they are of the view that ME= RC has no jurisdiction. However, after a snub from the MERC chairman and me= mbers, the DPC counsel withdrew his remarks. THE FINANCIAL EXPRESS Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/news1.ht= ml Centre submits proposals to resolve Dabhol imbroglio=20 THE BJP-led government at the Centre, which has come under severe attack fo= r being a silent observer in the ongoing Dabhol crisis, on Tuesday submitte= d a set of proposals to find a way out. The Centre also made it categorical= ly clear that it was in favour of resolving the issue and would "play an ac= tive role to make it happen." The Centre's nominee and former bureaucrat A= V Gokak, after his maiden appearance at theMadhave Godbole renegotiation co= mmittee, told reporters that the Centre would like to take care of interes= ts of all sides while reaching an acceptable solution. "The Centre will pla= y an active role. I am an optimist," he added. Mr Gokak, however, declined= to further divulge the details on the nature of proposals submitted on beh= alf of the Centre at the meeting. It is believed that the Centre has prepar= ed nearly 36 proposals to find a way out. He said that the meeting would yi= eld good results. To a question whether DPC was keen to cut the tariff, Mr = Gokak said anybody's intentions cannot be questioned at this point of time.= =20 Gokak, committee chairman Dr Madhav Godbole, state principal secretary VM L= al and Enron India managing director K Wade Cline on Tuesday spoke the same= language and said that "they had good discussions and the meeting was quit= e positive." The committee was also represented by Mr Deepak Parekh, Mr SK = Shrivastava, in addition to Dr Godbole, Mr Lal and Maharashtra State Electr= icity Board chairman Vinay Bansal. Dr Godbole, who withdrew his resignation= on May 23, after the state cabinet's unanimous decision affirming faith an= d confidence in him, admitted the Centre on Tuesday gave a set of proposals= for the resolution of the issue. He said it would not be proper to go into= the specifics at this juncture. To a question whether the DPC has submitte= d any proposal of how it would cut tariff by 10 per cent, he declined to co= mment. He informed that various issues and positions were discussed at the = meeting which was quite positive. Dr Godbole said that the date of the next meeting has yet to be decided. Mr= Lal said that the committee had a good discussion at Tuesday's meeting and= added that the negotiations would continue in future. On DPC's proposal to= reduce tariff by 10 per cent, he declined to comment and quipped that the = "negotiations cannot be done through the media." Cline said that the compan= y would continue to participate at the negotiations and added that the "mee= ting was good." "We had good discussion, no concrete proposals were submitt= ed to the committee," he added. Mr Cline was accompanied by the DPC preside= nt Neil McGregor, senior vice-presidents Mukesh Tyagi and Sanjeev Khandekar= , chief financial officer Mohan Gurunath, general counsel Paul Kraski, Rajesh Shivraman and Bechtel representative = Phiroze Nagarwala. THE FINANCIAL EXPRESS Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news2.h= tml DPC offers to hold talks with MSEB on tariff reduction , Sanjay Jog THE Dabhol Power Company (DPC), which had issued a preliminary termination= notice, on Tuesday has gone one step backward and offered to hold talks wi= th officials of the Maharashtra State Electricity Board (MSEB) for carrying= out 10 per cent tariff reduction. The meeting will take place on Wednesday= . DPC is likely to be represented by its chief financial officer Mohan Guru= nath and another official Rajesh Shivaraman while MSEB's accounts' member A= Krishna Rao would lead its team at the talks. MSEB sources told The Financial Express that DPC submitted this proposal on= Tuesday at the meeting of Madhave Godbole renegotiations committee for the= Dabhol project. "DPC stuck to its proposal of 10 per cent reduction, which= was made at the committee's meeting held on May 11. The company said that = it was prepared to hold talks with MSEB officials on the methodology to be = adopted for tariff cut," sources added.The DPC, which expressed its desire = to continue its participation during renegotiations, said that it would als= o submit the necessary data while carrying out an exercise of tariff reduct= ion. The company is believed to have told the committee that it would seek = a nod from lenders and shareholders before giving a concrete proposal on th= is front. "We are quite keen to know what is the basis for the tariff cut = and thus have agreed to meet DPC officials on Wednesday. During the course = of time, DPC will finally submit a concrete proposal to the committee," so= urces said. Once DPC would comes out with a concrete proposal, the committ= ee has agreed to hold its next meeting. According to sources, the Centre's nominee and former bureaucrat AV Gokak w= as asked to take a "holistic" view and not restricted to "sectional" one t= o overcome the ongoing Dabhol crisis. The committee members were surprised = over Mr Gokak's statement that "he does not have any substantial authority = as the proposal on resolution of the issue will be put forward subject to t= he Government of India approval." Dr Godbole and other members are believe= d to have asked Mr Gokak to request the centre to take holistic view and no= t concentrate only on the protection of interests of Union finance and powe= r ministries. "We call upon Mr Gokak to impress upon the committee's feelin= gs before the Centre," sources added. Mr Gokak did not make any concrete pr= oposal but suggested that the MSEB and DPC should sit together to find a wa= y out and the centre would provide necessary assistance. Mr Gokak also call= ed for reforms in the functioning of MSEB. THE FINANCIAL EXPRESS Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news3.h= tml Dabhol Power's Indian lenders to meet today=20 INDIAN lenders to the Dabhol project, led by Industrial Development Bank of= India (IDBI), have decided to meet on Wednesday here with the main objecti= ve of persuading offshore lenders against precipitating matters and to requ= est them to show restraint. The lenders are expected to chalk out a common = strategy in the wake of the Maharashtra State Electricity Board's (MSEB) de= cision to scrap the power purchase agreement (PPA) with Dabhol Power Compa= ny (DPC).Domestic lenders have an exposure to the tune of Rs 6,000 crore to= the Dabhol project. IDBI, with an exposure of Rs 2,158 crore in the projec= t and a guarantee for Rs 1,528 crore to the offshore lenders, has taken the= initiative to convene the May 30 meet. Unlike the foreign lenders to the p= roject, Indian financial institutions (FIs) do not have any guarantee cover= for their exposure. The domestic lenders meeting on Wednesday precedes a meeting by foreign len= ders, who have convened a meeting in Singapore on June 5 and 6 to decide on= the future course of action on the DPC-MSEB imbroglio. The meet is expecte= d to be attended by the representatives of IDBI, ICICI, State Bank of India= , Industrial Finance Corporation of India (IFCI) and Canara Bank.The FIs fe= el that if Enron ultimately decides to pull out at this stage, terminating = the PPA, it will have serious consequences with regard to the investments = made by the FIs in the project. It is widely held that domestic non-fund-b= ased exposure of local FIs will go up if international lenders were to invo= ke the guarantees extended by them. This is expected to enhance the corpus = of non-performing loans and thereby, require more provisioning in their res= pective balance sheets. THE INDIAN EXPRESS Wednesday, May 30, 2001, http://www.indian-express.com/ie20010530/bus1.html MSEB versus Enron, advantage MSEB The Maharashtra State Electricity Board (MSEB) got an upper hand today in i= ts tug-of-war with Enron's Dabhol Power Company (DPC) after the first reneg= otiation meeting. The MSEB stopped drawing power on the grounds that it con= sidered the Power Purchase Agreement (PPA) void. It's action was further bo= lstered when the Maharashtra Electricity Regulatory Commission (MERC) gave = it an interim relief restraining the DPC from activating the escrow account= or going ahead with the international arbitration proceedings.=20 Almost as if giving the state a helping hand, the Centre finally moved prop= osals to resolve the dispute. This marks a departure from the earlier hands= -off approach of the Centre and may work out favourably for the state. ''We= have stopped taking power from noon today,''a top MSEB official said after= the meeting of the renegotiation committee. The Board's action follows May= 25 letter of DPC managing director K Wade Cline in which the latter had as= ked the MSEB 'to make up its mind that either it rescinds the PPA or if it = continues to buy power, the PPA would be considered still valid'. ''We have= decided to stop purchase of power from today noon as is in line with our s= tand over the PPA,''the official pointed out. Continuing purchase of power = would have meant that the MSEB considered the PPA valid,he added. In anoth= er significant development, the MERC today issued an ad-interim relief to t= he board restraining the DPC from activating the escrow account and stoppi= ng further steps in the arbitration proceedings. Appearing for the MSEB, Advocate General Goolam Vahanvati had sought the ad= -interim relief. Since, the DPC had sought two week's time to decide on its= reply to the petition by the board before the commission. DPC's legal coun= sel, Atul Setalvad had raised doubts over the jurisdiction of the MERC to t= ake decision on the disputes arising between the board a= nd DPC over the PPA. Earlier, Vahanvati had stressed that the MERC had excl= usive jurisdiction to hear the petition over the dispute between two power = utilities. Although the PPA between DPC and board was an international agre= ement, the law of the land was supreme and the MERC, formed under an act en= acted by the parliament had jurisdiction to deal with the petition, he asse= rted. Further hearing of the petition will be held on June 14. The renegoti= ation talks also made some headway today with the Centre finally showing it= s willingness to take an active interest in the process. In the meeting of the Godbole panel, Centre's representative A V Gokak pres= ented some proposals to resolve the dispute. ''In today's meeting the Centr= e clarified its stand over the issue and mooted some proposals to resolve t= he dispute,''Godbole told reporters after the meeting. Gokak struck an opti= mistic note over the fate of the renegotiation and said that the Centre wil= l play an active role in the process. He hoped that the panel will be able= to come out with a workable solutions. Cline, who also attended the meetin= g with DPC officials, said the company will participate in the next meeting= of the Godbole renegotiation panel. THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30home4.htm Endgame Enron, at least for now=20 Despite negotiations, it's still rough weather for Enron. The Maharashtra S= tate Electricity Board (MSEB) has asked the Dabhol Power Company (DPC) to s= hut down its plant from 12 noon on Tuesday as it has decided to stop buying= power from it.In a letter dispatched to DPC officials Tuesday morning, the= MSEB board has stated that the decision to stop buying power from DPC is t= he immediate fallout of the May 23 rescission notice slapped on DPC to canc= el the contract, citing differences that occurred with the company on the p= ayment adjustments. MSEB chairmanVinay Bansal confirmed this move. Following this development, the Phase II project, which was expected to com= mence operations from June 7, is also temporarily put off, MSEB sources sai= d. MSEB officials said that the plant would be shut down until a final deci= sion is reached by an appropriate authority to solve this vexed issue.Meanw= hile, the renegotiation meeting that took place, led by Madhav Godbole was = termed `successful', with the state government proposing various tariff red= uction measures. The tariff renegotiation committee will now meet on Wednes= day to discuss the issue of tariffs. Apart from MSEB and DPC, representativ= es of CRISIL and the Infrastructure Development Finance Corporation will al= so attend the meeting. ``In the second round, our discussions were good and the dialogue will cont= inue. However, the next date of the meeting will be fixed later,'' state en= ergy secretary V M Lal said. DPC managing director Wade Cline also echoed t= he sentiment and said, ``We discussed a variety of issues.'' Asked if DPC h= ad agreed to a possible ten per cent tariff cut, Cline said that no proposa= l had been submitted before the committee and discussions were on. Lal adde= d that the committee discussed all issues which were hindering the progress= of the project. THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi17.htm MSEB stops taking DPC power=20 Maharashtra State Electricity Board (MSEB) has stopped taking power from Da= bhol Power Company (DPC) from noon on Tuesday as the former considered the = power purchase agreement (PPA) void. At the hearing of MSEB's petition at = the Maharashtra Electricity Regulatory Commission (MERC) here, state advoca= te general Goolam Vahanvati, appearing on behalf of MSEB, referred DPC's le= tter of May 25 to MSEB and said the state power utility has decided to stop= buying power from the Enron-promoted company as it considered the PPA void= .=20 Enron India managing director, K Wade Cline, in the May 25 letter had said,= "MSEB has to make up its mind that either it rescinds the PPA or if it con= tinues to buy power, the PPA would be considered still valid". MSEB has als= o sought an ad-interim relief for restraining DPC from activating the Escro= w account and to stop further steps leading to international arbitration, V= ahanvati added. DPC, through their senior counsel Atul Setalvad, expressed = doubts over MERC's jurisidiction to decide or = solve the ongoing disputes with MSEB. "We are appearing under pro= test and without prejudice to our right to contest the jurisdiction of MERC= ", DPC counsel submitted before the commission. DPC has demanded two week's= time to position themselves under the law and consult their shareholders = and lenders, he added. (PTI) THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi18.htm MERC restrains DPC from activating Escrow account=20 The Maharashtra Electricity Regulatory Commission (MERC) on Tuesday restrai= ned Enron-promoted Dabhol power company from activating the Escrow account.= Passing an ad interim order, MERC has also given a temporary injunction ov= er the arbitration proceedings against the Maharastra State Electricity Boa= rd under clause 20.3 of the power purchase agreement. (PTI) THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi19.htm Centre rejects proposal to buy power from Dabhol=20 The Centre said on Tuesday that it would not buy costly power from the cont= roversial Enron promoted Dabhol Power Company, currently engaged in a legal= battle with Maharashtra authorities over power purchase agreement, despit= e a proposal from the state government. "How can central utilities buy pow= er from DPC and sell it elsewhere when it is not possible for Maharashtra g= overnment to buy it," power minister Suresh Prabhu said in an interview. "= A solution has to be found out which will have to be both in the national i= nterest as well as acceptable to the investors... By asking the National Th= ermal Power Corporation to buy power we can't have a solution," he said.=20 Stating that he had made his stand clear to the Maharashtra chief minister = Vilasrao Deshmukh when hecame with the proposal to meet him and finance min= ister Yashwant Sinha, Prabhu said, "What appears a solution can prove to b= e a precursor to a problem later." In the wake of the ongoing fight between= DPC and Maharashtra State Electricity Board over the payment issue and leg= alities of power purchase agreement, Deshmukh had asked the Centre to bail = out the state by instructing NTPC and Power Trading Corporation (PTC) to b= uy power from the second phase of DPC, to be commissioned later this year.= =20 Prabhu said states were the users of the electricity and not the Centre, wh= ich was only playing the role of a facilitator by generating and supplying= power. Asked if Enron controversy would affect foreign investment in the p= ower sector, Prabhu said "though there are apprehensions amongst foreign in= vestors and lenders, but there are a= lso countries which have shown keen interest in India's power sector."=20 On inter-state rading of power through PTC, the minister said the corporati= on had not yet started functioning and modalities for the same were being w= orked out by the two ministries of power and finance. Secretary, power, A k= Basu would hold discussions with his counterpart in the finance ministry s= oon to decide the structure of PTC, Prabhu said. Though Enron's local unit = chief K Wide Cline had sought Centre's intervention in the ongoing feud wit= h MSEB, when he met Basu last week, he has not yet formally made a case wit= h the minister.=20 Prabhu said Centre's role in the entire issue was very limited as Dabhol Po= wer Project was a state promoted project and it was for Maharashtra governm= ent and DPC to resolve the issue. He however, declined to predict eventuali= ties arising out of the DPC's preliminary termination notice and MSEB's cou= nter termination notice. Stating that the final proposal has to be acceptab= le to the parties in dispute, MSEB and DPC, Prabhu said a quick settlement = of the dispute was essential for the power sector of Maharashtra. (PTI) THE TIMES OF INDIA Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi20.htm Govt offers proposals to solve DPC-MSEB crisis=20 The union government on Tuesday offered a "set of proposals" for solving th= e ongoing dispute between Enron-promoted Dabhol Power Company and the Maha= rashtra State Electricity Board. The offer was made at the second meeting o= f the renegotiating committee, headed by Madhav Godbole,held on Tuesday to = resolve the DPC-MSEB crisis. Godbole later said the meeting was "positive" = and the committee discussed and tried to know the position of the two sides= . However, he declined to reveal the set of proposals put forth by the Cent= re for resolving the issue. "Centre's representative A V Gokak told Enron I= ndia managing director K Wade Cline that the National Thermal Power Corpo= ration will not be able to buy power from DPC," an official who attended t= he meeting said.=20 Asked whether DPC had made any reference to a 10 per cent cut in its tariff= , Godbole said, "It was too early for any comment on specifics of the discu= ssions." Gokak, former telecom secretary, said the Uniongovernment was quit= e keen on resolving the matter and "will definitely play an active role" in= the entire process. "In the second round of our meeting, our discussions w= ere good and the dialogue will continue. However, the next date of the mee= ting will be fixed later," state energy secretary V M Lal said. Wade Cline= , too, echoed the sentiment saying, "We discussed a variety of issues." Ask= ed if DPC had agreed for a possible 10 per cent tariff cut, Cline said, "No= proposal has been submitted before the committee and discussions were on."= Lal said the committee discussed all issues which "were hindering the prog= ress of the project".=20 However, he refused to divulge further details of the discussions, saying, = "It has been made clear time and again that renegotiations cannot be done t= hrough the media". The DPC delegation included president Neil McGregor, vi= ce-presidents Sanjeev Khandekar and Mukesh Tyagi and chief financial office= r Mohan Gurunath and Bechtel India managing director Feroze Nagarwala. The = other committee members who attended the meeting were MSEB chief Vinay Bans= al, HDFC chairman Deepak Parekh, and state principal finance secretary S K = Srivastava. (PTI) THE ECONOMIC TIMES Wednesday, May 30, 2001, http://www.economictimes.com/today/30lead01a.htm MSEB stops buying power from DPC THE MAHARASHTRA State Electricity Board has stopped taking power from Dabho= l Power Company from noon on Tuesday as the former considered the power pur= chase agreement void. At the hearing of MSEB's petition at the Maharashtra = Electricity Regulatory Commission here, state advocate general Goolam Vahan= vati, appearing on behalf of MSEB, referred DPC's letter of May 25 to MSEB = and said the state power utility has decided to stop buying power from th= e Enron-promoted company as it considered the PPA void. Enron India managin= g director, K Wade Cline, in the May 25 letter had said, "MSEB has to make = up its mind that either it rescinds the PPA or if it continues to buy power= , the PPA would be considered still valid." MSEB has also sought an ad-inte= rim relief for restraining DPC from activating the Escrow account and to st= op further steps leading to international arbitration, Vahanvati added.=20 DPC, through their senior counsel Atul Setalvad, expressed doubts over MERC= 's jurisidiction to decide or solve the ongoing disputes with MSEB. "We are= appearing under protest and without prejudice to our right to contest the = jurisdiction of MERC", DPC counsel submitted before the commission. DPC ha= s demanded two week's time to position themselves under the law and consult= their shareholders and lenders, he added. (PTI) THE ECONOMIC TIMES Wednesday, May 30, 2001, http://www.economictimes.com/today/30infr01.htm Enron, govt panel make no progress on power row, Sriram Ramakrishnan=20 TALKS between US energy giant Enron Corp's Indian unit and a government pan= el ended on Tuesday without resolving a contentious dispute over a giant $2= .9-billion power project, officials said. But they said the talks would co= ntinue. Participants at the meeting, which lasted an hour, discussed the is= sue of a reduction in tariff rates charged by Enron's unit for the power it= sells to Maharashtra State Electricity Board, government and company offic= ials said. Also discussed was the option of a third entity, apart from the = sole buyer MSEB, purchasing the power from the second phase of the project.= =20 "We had a good meeting. We discussed a lot of issues. But no proposals were= submitted," K Wade Kline, chief operating officer, Enron India, told repor= ters. V M Lal, principal secretary to the Maharashtra government, said the = discussions will continue with Dabhol Power Company, which is 65 per cent = owned by Houston-based Enron. "We are negotiating on the various issues th= at are coming in the way of the project," he told reporters, adding that no= date has been fixed for the next meeting. Enron and MSEB have been sparrin= g for over six months on the 2,184 mw project, which was originally slated = to sell its entire output to MSEB at a fixed price. The row is seen as a te= st case of India's ability to attract foreign investment in the power secto= r, which needs 100,000 mw over the next 10 years to meet growing demand.=20 MSEB began buying the 740 mw of power produced by the the project's first p= hase in May 1999, but late last year, it started to default on payments say= ing the tariffs were too high. It also decided against buying the 1,444 mw = of power produced by the project's second phase, which is expected to be de= layed from its scheduled completion next month. Dabhol issued a notice this= month to cancel its power purchase deal over this issue and said the cost = of power will drop when the second phase is completed and the plant switche= s over to a cheaper natural gas fuel. THE ECONOMIC TIMES Wednesday, May 30, 2001, http://www.economictimes.com/today/30infr02.htm Centre not to buy power from Dabhol project THE CENTRE on Tuesday said it would not buy costly power from the controver= sial Enron-promoted Dabhol Power Company, currently engaged in a legal batt= le with Maharashtra authorities over power purchase agreement, despite a pr= oposal from the state government. "How can central utilities buy power from= DPC and sell it elsewhere when it is not possible for the Maharashtra gove= rnment to buy it," power minister Suresh Prabhu said. "A solution has to be= found out which will have to be both in the national interest as well as a= cceptable to the investors... By asking the National Thermal Power Corporat= ion to buy power we can't have a solution," he said. Saying he had made his= stand clear to Maharashtra chief minister Vilasrao Deshmukh when he came = with the proposal to meet him and finance minister Yashwant Sinha, Prabhu s= aid, "What appears a solution can prove to be a precursor to a problem lat= er."=20 In the wake of the ongoing fight between DPC and Maharashtra State Electric= ity Board over the payment issue and legalities of power purchase agreement= , Deshmukh had asked the Centre to bail out the state by instructing NTPC a= nd Power Trading Corporation to buy power from the second phase of DPC, to = be commissioned later this year.=20 Prabhu said states were the users of the electricity and not the Centre, wh= ich was only playing the role of a facilitator by generating and supplying = power. Asked if the Enron controversy would affect foreigninvestment in the= power sector, Prabhu said, "Though there are apprehensions amongst foreign= investors and lenders, but there are also countries which have shown keen = interest in India's power sector." On inter-state rading of power through = PTC, the minister said the corporation had not yet started functioning and = modalities for the same were being worked out by the two ministries of powe= r and finance.=20 Secretary, power, A K Basu would hold discussions with his counterpart in = the finance ministry soon to decide the structure of PTC, Prabhu said. Thou= gh Enron's local unit chief K Wide Cline had sought the Centre's interventi= on in the ongoing fued with MSEB, when he met Basu last week, he has not ye= t formally made a case with the minister. Prabhu said the Centre's role in= the entire issue was very limited as the Dabhol power project was a state= promoted project and it was for the Maharashtra government and DPC to re= solve the issue. He, however, declined to predict eventualities arising out= of DPC's preliminary termination notice and MSEB's countertermination noti= ce. Stating that the final proposal has to be acceptable to the parties in = dispute, MSEB and DPC, Prabhu said a quick settlement of the dispute was es= sential for the power sector of Maharashtra. (PTI) MID DAY =20 Wednesday, May 30, 2001,=20 State stops arbitration with Enron, Yogesh Naik The state Cabinet has decided not to proceed with Enron arbitration matters= in London till the Maharashtra Electricity Regulatory Commission (MERC) gi= ves its ruling. Deciding its policy for the tussle with Enron at a meeting= last week, the state Cabinet also decided to allow Maharashtra State Elect= ricity Board (MSEB) to settle all disputes with the Enron-promoted Dabhol P= ower Corporation (DPC) through the MERC. The state Government kept the deci= sion a secret from the media. The case, filed with MERC on May 23, was hear= d yesterday.=20 A senior state Government official said, " MERC was formed in August 5, 19= 99. As per the notification issued on October 10, 2000, it was empowered to= give judgements on matters of dispute related to power generation, distrib= ution and transmission. These powers were empowered under the Electricity R= egulatory Act. The state advocate-general has informed the Cabinet that as = per Section 52 of the Electricity Regulatory Commission Rules, 1998, all co= ntracts made between parties become null and void and the only body which c= an give judgement on power-related disputes is MERC."=20 The official added that international settlement is costly and lawyers cha= rge up to 400 an hour for representing a case. " The easiest option was to = drag Enron before MERC and settle the dispute in Mumbai. However, Enron in= sists that it be solved under the International Arbitration Act (IAA).'' H= owever, Energy Secretary V M Lal said, ''MERC was formed under a Government= of India Act, which states all power-related disputes should be solved by = it. The clauses in the Power Purchase Agreement (PPA) about arbitration wer= e automatically superseded after the act came into force. After the formati= on of MERC, IAA is not a concern.'' MID DAY Wednesday, May 30, 2001,=20 MERC restrains Enron from approaching Intl court The Maharashtra Electricity Regulatory Commission (MERC) on Tuesday restrai= ned Enron promoted Dabhol Power Company (DPC) from approaching the Internat= ional Court of Arbitration proceedings till the final hearing on the petiti= on was filed by the Maharashtra State Electricity Board (MSEB) before MERC.= While passing an interim-order the commssion has also warned the DPC offic= ial not to activate Escrow account. Maharashtra Advocate General Goolam Vah= anvati, who appeared on behalf of MSEB stressed that since DPC was register= ed in India, all legal proceeding should be held in the country and nowhere= else. He further argued that though the company was promoted by the foreig= n energy major giant it did not mean that the arbitration proceeding should= be held in any other foreign countries. Vahanvati has also argued that the commission was set up in 1998 and had p= owers for adjudicating disputes and differences between licensees and utili= ties. The DPC counsel Atul Setalvad in his submission before MERC stated t= hat the energy major had doubts over Regulatory's Jurisdication to decide t= he fate of several on-going dispute between DPC and MSEB. The next date of = hearing has been fixed on June 1 MID DAY Wednesday, May 30, 2001, MSEB wins first round of battle against DPC, Deepak Lokhande Maharashtra State Electricity Board (MSEB) yesterday won the first round of= battle against Dabhol Power Corporation (DPC) as the Maharashtra Electrici= ty Regulatory Commission (MERC) passed an ad interim order restricting DPC = from activating the Escrow account with MSEB or furthering arbitration proc= eedings against it. MSEB had approached MERC on the grounds its Power Purch= ase Agreement (PPA) with DPC has became void as the latter could not fulfil= its condition of supplying MSEB power within three hours of placement of d= emand. Sparks flew as DPC senior counsel Atul Setalvad and state Advocate = General Gollam Mahanvati defended their respective clients tooth and nail a= t the MERC yesterday. Setalvad contested the jurisdiction of the MERC whi= le Vahanvati insisted that the MERC is within its jurisdiction as the dispu= te is between affected public policies and not private interests of two com= panies.=20 He also cited two Supreme Court judgements on exclusive jurisdiction. Seta= lvad said his clients did not have enough time to study the notice served o= n them by the MSEB and sought two weeks to prepare for the case. When the = MERC chairman asked him if his client would give an assurance, as requested= by MSEB, that during this period DPC would not activate its Escrow arrang= ement with MSEB or further its rbitration, DPC representatives present ther= e refused. Vahanvati prayed for an ad interim relief on both counts, which = was granted by the commission. During the hearing, it was revealed that MS= EB had stopped buying power from DPC from 12 pm onwards yesterday. MSEB cha= irman Vinay Bansal later told mediapersons that MSEB, in its notice to DPC,= had conveyed that though the PPA was void, MSEB would continue to draw pow= er and make payments subject to adjustments in tariff by concerned authorit= ies. " However, DPC objected to this saying if MSEB bought power from DPC,= it would deem that the PPA was still valid." The next hearing will be held= on June 14.
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