BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy3.asp?Menu=3
Centre seeks 60 days extension in Dabhol conciliation period , Santosh Tiwary 
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BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy8.asp?Menu=3
MERC stays DPC arbitration
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BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy7.asp?Menu=3
Centre's fresh offer to solve DPC row 
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THE FINANCIAL EXPRESS
Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/top2.html
 MSEB stops power purchase from Dabhol Power
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THE FINANCIAL EXPRESS
Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/eco1.html
DPC's foreign lenders may invoke FI guarantees to pare counterparty limits ,   Raghu Mohan
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THE FINANCIAL EXPRESS
Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/eco14.html
MERC restrains DPC from operating escrow 
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THE FINANCIAL EXPRESS
Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/news1.html
Centre submits proposals to resolve Dabhol imbroglio 
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THE FINANCIAL EXPRESS
Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news2.html
DPC offers to hold talks with MSEB on tariff reduction ,  Sanjay Jog
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THE FINANCIAL EXPRESS
Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news3.html
Dabhol Power's Indian lenders to meet today 
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THE INDIAN EXPRESS
Wednesday, May 30, 2001, http://www.indian-express.com/ie20010530/bus1.html
MSEB versus Enron, advantage MSEB
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THE TIMES OF INDIA
Wednesday, May 30, 2001, http://www.timesofindia.com/today/30home4.htm
Endgame Enron, at least for now 
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THE TIMES OF INDIA
Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi17.htm
MSEB stops taking DPC power 
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THE TIMES OF INDIA
Wednesday, May 30, 2001,  http://www.timesofindia.com/today/30busi18.htm
MERC restrains DPC from activating Escrow account 
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THE TIMES OF INDIA
Wednesday, May 30, 2001, http://www.timesofindia.com/today/30busi19.htm
Centre rejects proposal to buy power from Dabhol 
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THE TIMES OF INDIA
Wednesday, May 30, 2001,  http://www.timesofindia.com/today/30busi20.htm
Govt offers proposals to solve DPC-MSEB crisis 
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THE ECONOMIC TIMES
Wednesday, May 30, 2001, http://www.economictimes.com/today/30lead01a.htm
MSEB stops buying power from DPC
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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 
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THE ECONOMIC TIMES
Wednesday, May 30, 2001, http://www.economictimes.com/today/30infr02.htm
Centre not to buy power from Dabhol project
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 MID DAY                                              
Wednesday, May 30, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=29&art_id=11316&cat_code=2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152
State stops arbitration with Enron, Yogesh Naik
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MID DAY
Wednesday, May 30, 2001, 
http://www.chalomumbai.com/asp/article.asp?cat_id=29&cat_code=2f574841545f535f4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=11308
MERC restrains Enron from approaching Intl court
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MID DAY
Wednesday, May 30, 2001,
http://www.chalomumbai.com/asp/article.asp?cat_id=29&art_id=11319&cat_code=2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152
MSEB wins first round of battle against DPC, Deepak Lokhande

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BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy3.asp?Menu=3
Centre seeks 60 days extension in Dabhol conciliation period , Santosh Tiwary 

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 Maharashtra State Electricity Board (MSEB).Top government sources told Business Standard that the request seeks to extend the date by two months beyond the present deadline of June 7 as the conciliators have decided to conduct proceedings on three consecutive days beginning July 23. They added that in the absence of an extension of the conciliation period, the whole process would come to a cropper even before starting. The delay in proceeding was mainly on account of the differences in the appointment of a third conciliator, officials said. 

After a delay of more than a month, the two parties have now agreed to appoint David AR Williams QC, a former judge of the New Zealand High Court as the third conciliator. The conciliation between DPC and the central government started on April 9, after DPC agreed to accept the Centre's stress on conciliation  instead of arbitration, in response to its notice. While pointing out that the reason for delay in the conciliation process was the absence of a third conciliator, the Centre has now said that in order to allow the 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 informed accordingly. Earlier, DPC had appointed Laurence Street as its conciliator 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. 

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 after 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 under the counter-guarantee. The MSEB has slapped a Rs 402-crore availability penalty on DPC and has demanded adjustments for it against the outstanding bills for December 2000 and January 2001.


BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy8.asp?Menu=3
MERC stays DPC arbitration 

The Maharashtra Electricity Regulatory Commission (MERC) on Tuesday evening issued an injunction restraining the Dabhol Power Company (DPC) from proceeding with the arbitration process till June 14. Granting another ad-interim relief to the Maharashtra State Electricity Board (MSEB), the MERC has also restrained DPC from operating the board's escrow account till June 14, when 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 MSEB. The proceedings, for most part of the day, revolved around the jurisdiction of the MERC to adjudicate and arbitrate in the DPC imbroglio. The MSEB on Friday petitioned the regulator over the apparent unavailability of power 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 plant under specific characteristics and parameters. The DPC in its presentation 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 MSEB did not receive power from the DPC within this stipulated time frame." He added that while DPC claimed that the MSEB could not give it despatch instructions according to agreed convention, any such convention to be enforceable would have to be in the form of an agreement signed by both the parties, as per the PPA. DPC's counsel Atul Setalvad sought two weeks'time from the commission to study the petition, which he claimed was effectively available 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 operate the escrow. 

MSEB stops taking DPC power 

MSEB stopped drawing power from DPC on Tuesday. Confirming the same, MSEB chairman Vinay Bansal said: "DPC had written to our banks to activate the escrow. 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 officials and those in the Maharashtra government felt that the interim MERC ruling has effectively placed DPC and MSEB on a level playing field. A senior 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 MSEB account in Canara bank." Canara bank is the sole receptor of the Rs 5,500-odd crore collected annually by six other receiving banks of MSEB. 


BUSINESS STANDARD
Wednesday, May 30, 2001, http://www.business-standard.com/today/economy7.asp?Menu=3
Centre's fresh offer to solve DPC row 

The Union government has come out with a set of proposals for solving the problems posed by the high tariffs of the Enron-promoted Dabhol Power Company (DPC), said Madhav Godbole, chairman of the committee to renegotiate a new deal with DPC. Godbole, however, refused to spell out what these proposals were. He was speaking to newspersons after the second round of discussions with representatives of Enron and DPC. Asked whether the company had agreed to a reduction in tariffs, Godbole said, "It is too early to talk of specifics at this stage." He added that the two sides had decided to meet again but the date had not been fixed as yet. The second round of discussions assume 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 keen on resolving the issue and it would play an "active role" in solving the problem. 

The solution should take into account the interest of all four sides, MSEB, the state government, the Union government and DPC. Well-placed sources said 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 elaborate further saying  "renegotiations cannot be conducted through the press". 

The meeting was attended by the six members who constitute the Godbole panel comprising, Madhav Godbole, Sudhir Shrivastava, HDFC chairman Deepak Parekh, MSEB chairman  Vinay Bansal, state energy secretary V M Lal  and AV Gokak. The DPC side which was led by Enron India managing director Wade Cline comprised DPC  president and chief executive officer Neil McGregor; Paul Kraske, general counsel and senior DPC executives, Mukesh Tyagi, S Mohan Gurunath, and Sanjeev Khandekar. A senior executive of Bechtel which holds a 10 per cent stake in DPC P J Nagarawala also attended the meeting. 


THE FINANCIAL EXPRESS
Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/top2.html
 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 comes in  the wake of its May 23 decision to rescind the power purchase agreement (PPA) with DPC. MSEB has been purchasing only 180 mw of power from Dabhol phase-I.  MSEB has made it clear that discontinuation of power purchase will 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 June 7 hangs in the balance as there is no buyer for the power generated.  MSEB, in a communication to DPC, said it was convinced that  the company's conduct was not bonafide and as such it has rescinded the PPA, it would not like to continue to purchase power.

MSEB chairman Vinay Bansal told reporters that as the PPA had been rescinded through its "avoidance" notice, the question of payment of fixed charges to DPC does not arise in the changed circumstances. MSEB, in its communication, strongly criticised the DPC for initially turning down a cheque of Rs 136 crore towards April bill "under protest" and later demanding it.MSEB made 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.  At the hearing before the Maharashtra Electricity Regulatory Commission (MERC) on Tuesday, the advocate general Ghulam Wahanvati, while making a strong plea for the admission of MSEB's petition on rescinding of PPA also referred 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 determination 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 the PPA had been rescinded. 

THE FINANCIAL EXPRESS
Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/eco1.html
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 issued by domestic term  financing institutions to pare counterparty limits to these entities if the covenants under "events of  default" are triggered.While 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 points on which a reneging can be construed as an "event of default". Charges and counter-charges emanating from DPC and the Maharashtra State Electricity Board (MSEB), and talk of "adjustable claims" have been cause enough for these 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 that it is better to invoke the guarantees. Well placed sources in foreign banks said that their exposure to DPC backed by financial institutions (FIs) amounted to them jamming their counterparty lines to these bodies, and acted 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 limits? We could as well have taken on a direct exposure on DPC," a senior foreign banker said while pointing out that the irony in corporate banking is that guarantees are issued with a "tacit understanding" that they will never be called up.

FIs have been prevailing upon international lenders not to invoke the guarantees, citing "relationship reasons" as part of their overt efforts to curtail 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 imbroglio.

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 "commercial interests will force us to invoke  these guarantees", while adding that pressure is now on to look at new business avenues. These  woes, sources explained, will also influence their decision to finance DPC's cost-overruns with disbursements now on hold.

The flip side to any decision by foreign banks to invoke FI guarantees is that such covers may not be made available when they lead-arrange cross-border 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 look 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 capital while drawing up exposure limits to corporates from fiscal 2002 may also catalyse a decision to invoke FI guarantees. Many a foreign bank will be 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.html
MERC restrains DPC from operating escrow 

THE Maharashtra Electricity Regulatory Commission (MERC) on Tuesday, in  an ad interim relief for the Maharashtra State Electricity Board (MSEB) "in the larger public interests", restrained the Dabhol Power Company (DPC) to operate an escrow account of Rs 5,000 crore annually and take any steps or measures 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, Venkat Chary and Jayant Deo, in their ruling said  that they are convinced that 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 differences between utilities.

The board, in its petition filed on May 24, had said that the DPC be restrained 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 any manner drawing, utilising, enjoying, or accessing funds in the escrow account. MSEB had pleaded that in the event that escrow account has been activated the status quo ante be restored by appropriate mandatory direction.Further, MSEB, in view of commencement of arbitration proceedings shortly at London after the appointment of third arbitration by the DPC, had pleaded that 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 interim relief but also admit its petition as it has the jurisdiction under section 22 (2) (n) of the Electricity Regulatory Commission Act, 1998 to adjudicate 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 resolution bodies. They have exclusive jurisdiction and thus the question of arbitration does not arise," Mr Wahanvati said. He added that the DPC has misdeclared 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. Mr Wahanvati, in his submission, said that the power plant is not of the standard which the board had proposed and thus, it was not mere "misdeclaration but a fraud". At the outset, DPC counsel Ashok Setalwad questioned the authority and jurisdiction of MERC to entertain MSEB petition and sought two weeks time to thoroughly go through the MSEB petition to consider its position.  The company also claimed that the MERC has no jurisdiction to entertain any dispute between the DPC and the escrow agent/bank, arising out of the escrow agreement. At one point of time, the DPC counsel remarked that they were constrained to leave today's hearing as they are of the view that MERC has no jurisdiction. However, after a snub from the MERC chairman and members, the DPC counsel withdrew his remarks.


THE FINANCIAL EXPRESS
Wednesday, May 30, 2001,http://www.financialexpress.com/fe20010530/news1.html
Centre submits proposals to resolve Dabhol imbroglio 

THE BJP-led government at the Centre, which has come under severe attack for being a silent observer in the ongoing Dabhol crisis, on Tuesday submitted a set of proposals to find a way out. The Centre also made it categorically clear that it was in favour of resolving the issue and would "play an active role to make it happen."  The Centre's nominee and former bureaucrat AV Gokak, after his maiden appearance at theMadhave Godbole renegotiation committee, told reporters that the Centre would like to take care  of interests of all sides while reaching an acceptable solution. "The Centre will play 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 behalf of the Centre at the meeting. It is believed that the Centre has prepared nearly 36 proposals to find a way out. He said that the meeting would yield 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. 

Gokak, committee chairman Dr Madhav Godbole, state principal secretary VM Lal 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 quite positive." The committee was also represented by Mr Deepak Parekh, Mr SK Shrivastava, in addition to Dr Godbole, Mr Lal and Maharashtra State Electricity Board chairman Vinay Bansal. Dr Godbole, who withdrew his resignation on May 23, after the state cabinet's unanimous decision affirming faith and 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 submitted any proposal of how it would cut tariff by 10 per cent, he declined to comment. 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 company would continue to participate at the negotiations and added that the "meeting was good." "We had good discussion, no concrete proposals were submitted to the committee," he added. Mr Cline was accompanied by the DPC president 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.html
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 with 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 Gurunath 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 also submit the necessary data while carrying out an exercise of tariff reduction. 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 this 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," sources said.  Once DPC would comes out with a concrete proposal, the committee has agreed to hold its next  meeting.

According to sources, the Centre's nominee and former bureaucrat AV Gokak was asked to take a  "holistic" view and not restricted to "sectional" one to 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 the Government of India approval."  Dr Godbole and other members are believed to have asked Mr Gokak to request the centre to take holistic view and not concentrate only on the protection of interests of Union finance and power ministries. "We call upon Mr Gokak to impress upon the committee's feelings before the Centre," sources added. Mr Gokak did not make any concrete proposal but suggested that the MSEB and DPC should sit together to find a way out and the centre would provide necessary assistance. Mr Gokak also called for reforms in the functioning of MSEB.


THE FINANCIAL EXPRESS
Wednesday, May 30, 2001, http://www.financialexpress.com/fe20010530/news3.html
Dabhol Power's Indian lenders to meet today 

INDIAN lenders to the Dabhol project, led by Industrial Development Bank of India (IDBI), have decided to meet on Wednesday here with the main objective of persuading offshore lenders against precipitating matters and to request 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) decision to scrap the power purchase agreement (PPA) with Dabhol  Power Company (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 project 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 project, Indian financial institutions (FIs) do not have any guarantee cover for their exposure.

The domestic lenders meeting on Wednesday precedes a meeting by foreign lenders, 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 expected to be attended by the representatives of IDBI, ICICI, State Bank of India, Industrial Finance Corporation of India (IFCI) and Canara Bank.The FIs feel 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-based exposure of local FIs will go up if international lenders were to invoke the guarantees extended by them. This is expected to enhance the corpus of non-performing loans and thereby, require more provisioning in their respective 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 its tug-of-war with Enron's Dabhol Power Company (DPC) after the first renegotiation meeting. The MSEB stopped drawing power on the grounds that it considered the Power Purchase Agreement (PPA) void. It's action was further bolstered 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. 

Almost as if giving the state a helping hand, the Centre finally moved proposals 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 asked 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 stand over the PPA,''the official pointed out. Continuing purchase of power  would have meant that the MSEB considered the PPA valid,he added. In another significant development, the MERC today issued an ad-interim relief to the board  restraining the DPC from activating the escrow account and stopping 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 counsel, Atul Setalvad had raised doubts over the jurisdiction of the MERC to take decision on                    the disputes arising between the board and DPC over the PPA. Earlier, Vahanvati had stressed that the MERC had exclusive jurisdiction to hear the petition over the dispute between two power utilities. Although the PPA between DPC and board was an international agreement, the law of the land was supreme and the MERC, formed under an act enacted by the parliament had jurisdiction to deal with the petition, he asserted. Further hearing of the petition will be held on June 14. The renegotiation talks also made some headway today with the Centre finally showing its willingness to take an active interest in the process.

In the meeting of the Godbole panel, Centre's representative A V Gokak presented some proposals to resolve the dispute. ''In today's meeting the Centre clarified its stand over the issue and mooted some proposals to resolve the dispute,''Godbole told reporters after the meeting. Gokak struck an optimistic note over the fate of the renegotiation and said that the Centre will 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 meeting 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 

Despite negotiations, it's still rough weather for Enron. The Maharashtra State Electricity Board (MSEB) has asked the Dabhol Power Company (DPC) to shut 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 the immediate fallout of the May 23 rescission notice slapped on DPC to cancel the contract, citing differences that occurred with the company on the payment adjustments. MSEB chairmanVinay Bansal confirmed this move.

Following this development, the Phase II project, which was expected to commence operations from June 7, is also temporarily put off, MSEB sources said. MSEB officials said that the plant would be shut down until a final decision is reached by an appropriate authority to solve this vexed issue.Meanwhile, the renegotiation meeting that took place, led by Madhav Godbole was termed `successful', with the state government proposing various tariff reduction measures. The tariff renegotiation committee will now meet on Wednesday to discuss the issue of tariffs. Apart from MSEB and DPC, representatives of CRISIL and the Infrastructure Development Finance Corporation will also attend the meeting.

``In the second round, our discussions were good and the dialogue will continue. However, the next date of the meeting will be fixed later,'' state energy secretary V M Lal said. DPC managing director Wade Cline also echoed the sentiment and said, ``We discussed a variety of issues.'' Asked if DPC had agreed to a possible ten per cent tariff cut, Cline said that no proposal had been submitted before the committee and discussions were on. Lal added 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 

Maharashtra State Electricity Board (MSEB) has stopped taking power from Dabhol 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 advocate general Goolam Vahanvati, 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 the Enron-promoted company as it considered the PPA void. 

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 continues to buy power, the PPA would be considered still valid". MSEB has also sought an ad-interim relief for restraining DPC from activating the Escrow account and to stop further steps leading to international arbitration, Vahanvati 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 protest 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 

The Maharashtra Electricity Regulatory Commission (MERC) on Tuesday restrained Enron-promoted Dabhol power company from activating the Escrow account. Passing an ad interim order, MERC has also given a temporary injunction over the arbitration proceedings against the Maharastra State Electricity Board 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 

The Centre said on Tuesday that it would not buy costly power from the controversial Enron promoted Dabhol Power Company, currently engaged in a legal battle with Maharashtra authorities over power  purchase agreement, despite a proposal from the state  government. "How can central utilities buy power from DPC and sell it elsewhere when it is not possible for Maharashtra government 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 interest as well as acceptable to the investors... By asking the National Thermal Power Corporation to buy power we can't have a solution," he said. 

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 minister Yashwant Sinha, Prabhu said, "What appears a solution  can prove to be 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 legalities of power purchase agreement, Deshmukh had asked the Centre to bail out the state by instructing NTPC and Power Trading Corporation  (PTC) to buy power from the second phase of DPC, to be commissioned later this year. 

Prabhu said states were the users of the electricity and not the Centre, which was only playing the role of a  facilitator by generating and supplying power. Asked if Enron controversy would affect foreign investment 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 power and finance. Secretary, power, A k Basu would hold discussions with his counterpart in the finance ministry soon 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 with MSEB, when he met Basu last week, he has not yet formally made a case with the minister. 

Prabhu said Centre's role in the entire issue was very limited as Dabhol Power Project was a state promoted project and it was for Maharashtra government and DPC to resolve the issue. He however, declined to predict eventualities arising out of the DPC's preliminary termination notice and MSEB's counter termination notice. 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 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 

The union government on Tuesday offered a "set of proposals" for solving the ongoing dispute between Enron-promoted Dabhol Power Company and  the Maharashtra State Electricity Board. The offer was made at the second meeting of 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 Centre for resolving the issue. "Centre's representative A V Gokak told Enron India  managing director K Wade Cline that the National  Thermal Power Corporation will not be able to buy  power from DPC," an official who attended the meeting said. 

Asked whether DPC had made any reference to a 10 per cent cut in its tariff, Godbole said, "It was too early for any comment on specifics of the discussions." Gokak, former telecom secretary, said the Uniongovernment was quite 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 were good and the dialogue will continue. However, the  next date of the meeting will be fixed later," state energy  secretary V M Lal said. Wade Cline, too, echoed the sentiment saying, "We discussed a variety of issues." Asked if DPC had agreed for a possible 10 per cent tariff cut, Cline said, "No proposal has been submitted before the committee and discussions were on." Lal said the committee discussed all issues which "were hindering the progress of the project". 

However, he refused to divulge further details of the discussions, saying, "It has been made clear time and again that renegotiations cannot be done through the  media". The DPC delegation included president Neil McGregor, vice-presidents Sanjeev Khandekar and Mukesh Tyagi and chief financial officer Mohan Gurunath and Bechtel India managing director Feroze Nagarwala. The other committee members who attended the meeting were MSEB chief Vinay Bansal, 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 Dabhol Power Company from noon on Tuesday as the former considered the power purchase agreement void. At the hearing of MSEB's petition at the Maharashtra Electricity Regulatory Commission here, state advocate general Goolam Vahanvati, 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  the Enron-promoted company as it considered the PPA void. 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 continues to buy power, the PPA would be considered still valid." MSEB has also sought an ad-interim relief for restraining DPC from activating the Escrow account and to stop further steps leading to international arbitration, Vahanvati 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 protest 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 ECONOMIC TIMES
Wednesday, May 30, 2001, http://www.economictimes.com/today/30infr01.htm
Enron, govt panel make no progress on power row, Sriram Ramakrishnan 


TALKS between US energy giant Enron Corp's Indian unit and a government panel ended on Tuesday without resolving a contentious dispute over a giant $2.9-billion  power project, officials said. But they said the talks would continue. Participants at the meeting, which lasted an hour, discussed the issue of a reduction in tariff rates charged by Enron's unit for the power it sells to Maharashtra State Electricity Board, government and company officials said. Also discussed was the option of a third entity, apart from the sole buyer MSEB, purchasing the power from the second phase of the project. 

"We had a good meeting. We discussed a lot of issues. But no proposals were submitted," K Wade Kline, chief operating officer, Enron India, told reporters. 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 that are coming in the way of the project," he told reporters, adding that no date has been fixed for the next meeting. Enron and MSEB have been sparring 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 test case of India's ability to attract foreign investment in the power sector, which needs 100,000 mw over the next 10 years to meet growing demand. 

MSEB began buying the 740 mw of power produced by the the project's first phase in May 1999, but late last year, it started to default on payments saying 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 delayed 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 switches 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 controversial Enron-promoted Dabhol Power Company, currently engaged in a legal battle with Maharashtra authorities over power purchase agreement, despite a proposal from the state government. "How can central utilities buy power from DPC and sell it elsewhere when it is not possible for the Maharashtra government 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 acceptable to the investors... By asking the National Thermal Power Corporation 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 said, "What appears a solution can prove to  be 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 legalities of power purchase agreement, Deshmukh had asked the Centre to bail out the state by instructing NTPC and Power Trading Corporation to buy power from the second phase of DPC, to be commissioned later this year. 

Prabhu said states were the users of the electricity and not the Centre, which 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 power and finance. 

Secretary, power, A K Basu would hold discussions with  his counterpart in the finance ministry soon to decide the structure of PTC, Prabhu said. Though Enron's local unit chief K Wide Cline had sought the Centre's intervention in the ongoing fued with MSEB, when he met Basu last week, he has not yet 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 resolve the issue. He, however, declined to predict eventualities arising out of DPC's preliminary termination notice and MSEB's countertermination notice. 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 essential for the power sector of Maharashtra. (PTI)

 MID DAY                                              
Wednesday, May 30, 2001, 
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) gives its ruling.  Deciding its policy for the tussle with Enron at a meeting last week, the state Cabinet also decided to allow Maharashtra State Electricity Board (MSEB) to settle all disputes with the Enron-promoted Dabhol Power Corporation (DPC) through the MERC. The state Government kept the decision a secret from the media. The case, filed with MERC on May 23, was heard yesterday. 

 A senior state Government official said, " MERC was formed in August 5, 1999. As per the notification issued on October 10, 2000, it was empowered to give judgements on matters of dispute related to power generation, distribution and transmission. These powers were empowered under the Electricity Regulatory Act. The state advocate-general has informed the Cabinet that as per Section 52 of the Electricity Regulatory Commission Rules, 1998, all contracts made between parties become null and void and the only body which can give judgement on power-related disputes is MERC." 

 The official added that international settlement is costly and lawyers charge 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 insists that it be solved under the International Arbitration Act (IAA).''  However, 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 were automatically superseded after the act came into force. After the formation of MERC, IAA is not a concern.''

MID DAY
Wednesday, May 30, 2001, 
MERC restrains Enron from approaching Intl court

The Maharashtra Electricity Regulatory Commission (MERC) on Tuesday restrained Enron promoted Dabhol Power Company (DPC) from approaching the International Court of Arbitration proceedings till the final hearing on the petition was filed by the Maharashtra State Electricity Board (MSEB) before MERC. While passing an interim-order the commssion has also warned the DPC official not to activate Escrow account. Maharashtra Advocate General Goolam Vahanvati, who appeared on behalf of MSEB stressed that since DPC was registered 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 foreign 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 powers for adjudicating disputes and differences between licensees and utilities.  The DPC counsel Atul Setalvad in his submission before MERC stated that the energy major had doubts over Regulatory's Jurisdication to decide the 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 Electricity Regulatory Commission (MERC) passed an ad interim order restricting DPC from activating the Escrow account with MSEB or furthering arbitration proceedings against it. MSEB had approached MERC on the grounds its Power Purchase 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 demand.  Sparks flew as DPC senior counsel Atul Setalvad and state Advocate General Gollam Mahanvati defended their respective clients tooth and nail at  the MERC yesterday.  Setalvad contested the jurisdiction of the MERC while Vahanvati insisted that the MERC is within its jurisdiction as the dispute is between affected public policies and not private interests of two companies. 

 He also cited two Supreme Court judgements on exclusive jurisdiction. Setalvad said his clients did not have enough time to study the notice served on 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 arrangement with MSEB or further its rbitration, DPC representatives present there refused. Vahanvati prayed for an ad interim relief on both counts, which was granted by the commission.  During the hearing, it was revealed that MSEB had stopped buying power from DPC from 12 pm onwards yesterday. MSEB chairman 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 power and make payments subject to adjustments in tariff by concerned authorities.  " 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.