THE HINDU BUSINESSLINE, Friday, October 19, 2001
DPC petition change allowed
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THE DECCAN HERALD, Friday, October 19, 2001
HC to hear Dabhol Corp plea from Dec 11

Similar story also appeared in the following publications:

THE INDIAN EXPRESS, Friday, October 19, 2001
HC to hear DPC's plea

THE TIMES OF INDIA, Friday, October 19, 2001
HC to hear DPC's plea 

THE FINANCIAL EXPRESS, Friday, October 19, 2001
Bombay HC to look into MERC's jurisdiction in DPC row on Dec 11

BUSINESS STANDARD,  Friday, October 19, 2001
High court to hear DPC petition on December 11
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THE HINDU BUSINESS LINE, Friday, October 19, 2001
Maharashtra cautioned on Dabhol stand-off
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THE INDIAN EXPRESS, Friday, October 19, 2001
ICRA downgrades MSEB over Dabhol fracas
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THE HINDU BUSINESS LINE, Friday, October 19, 2001
'SCI can invest more in Greenfield', P. Manoj 
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THE TIMES OF INDIA, Friday, October 19, 2001
Enron Q3 net loss at $618m 

Similar story also appeared in the following publications:

THE FINANCIAL EXPRESS, Friday, October 19, 2001
Enron Q3 net loss at $618 million
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THE HINDU, Friday, October 19, 2001
Deshmukh Govt. completes a difficult two years, Mahesh Vijapurkar 
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THE HINDU BUSINESSLINE, Friday, October 19, 2001
DPC petition change allowed

A division bench of the Mumbai High Court today allowed amendments to the Dabhol Power Company's (DPC) petition alleging bias in the Maharashtra Electricity Regulatory Commission (MERC). The two-judge bench headed by Mr Justice A.P. Shah posted the matter for hearing on December 11. DPC had moved the court saying that MERC does not have jurisdiction over disputes between it and the State electricity board. 
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THE DECCAN HERALD, Friday, October 19, 2001
HC to hear Dabhol Corp plea from Dec 11

Mumbai high court today decided to hear from December 11 a petition filed by Enron's Dabhol Power Company (DPC), challenging the jurisdiction of Maharashtra Electricity Regulatory Commission (MERC) to adjudicate US-based multinational's dispute with state electricity board (MSEB) A bench headed by justice Ajit Shah decided to hear the matter for a week at a stretch and allowed MERC members Mr P Subrahmanyam and Mr Venkat Chary to be impleaded as respondents. They have been asked to file affidavits by November nine.Another MERC member Mr Jayant Deo urged the court that he would like to recluse himself from the proceedings as DPC had levelled allegations of bias against him.The court also allowed the chamber summons moved by DPC urging for permission to amend the main petition in view of allegations of bias against Mr Deo. The judges have asked the petitioner to carry out amendments within a week. The court had earlier asked Mr Deo to file by September 27 his response to allegations of bias made by DPC. He filed an affidavit denying bias against DPC and justified his neutral stand as a MERC member.As regards two intervening applications filed by US Exim Bank and a consortium of 11 offshore lenders of DPC, the judges had held that they would not be allowed to make any pleadings. However, they were permitted to assist the court by making oral submissions. DPC had filed chamber summons alleging that Mr Deo had on earlier occasions espoused views which were critical of the 2,184 MW power project and PPA
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THE HINDU BUSINESS LINE, Friday, October 19, 2001
Maharashtra cautioned on Dabhol stand-off

THE financial standing of the Maharashtra Government would be certainly impaired if the power purchase agreement (PPA) between Dabhol Power Company and the State Electricity Board is not successfully renegotiated, according to rating agency CARE. Commenting on the State finances while rating a Rs 600-crore bond issue of the Maharashtra Krishna Valley Development Corporation (MKVDC), CARE said fiscal reforms assume greater urgency because the credit quality of the State would be impacted if there is a devolution of liabilities guaranteed by it in the PPA. Ballpark estimates place the size of the States' immediate liabilities at Rs 17,000 crore. If the worst case scenario is realised, the Government's liquidity position and financial flexibility will be acutely impaired. 

However, the Maharashtra State Electricity Board (MSEB), to which the assets would stand transferred if the State decides to take over the project, will have the option of inviting third parties to participate in the venture minimising the State's liabilities. A CARE official said even if a third party is involved in the project, the State would have to take a sizeable hit on capital employed. He put the loss burden on Maharashtra at around Rs 8,000-9,000 crore. CARE said the guarantees given by the Government to its special purpose vehicles' borrowings have risen substantially. The total outstanding liabilities of Maharashtra as a proportion of the net State domestic product have increased to 29.1 per cent (estimated) in 2000-01 from 19 per cent in 1996- 97.The State's financial position calls for fiscal consolidation through improvement in revenue performance and restructuring of expenditure, it said. Meanwhile, the agency has assigned a rating of A+(SO) to the MKVDC issue. The long-term taxable bonds have a bullet payment at the end of 10 years. MKVDC has, so far, raised about Rs 1,100 crores in debt issues. This is the first issue in the current year.
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THE INDIAN EXPRESS, Friday, October 19, 2001
ICRA downgrades MSEB over Dabhol fracas

Rating agency ICRA has downgraded the rating assigned to Maharashtra State Electricity Board's (MSEB's) bond programmes aggregating to Rs 2,015 crore, from 'LAA-' (SO) to 'LA+' (SO). The rating has been placed under rating watch. "The revised rating indicates adequate safety. The rating is based on the unconditional and irrevocable guarantee by Government of Maharashtra (GoM)," ICRA said. The revised rating reflects the continued uncertainty on the timing and likely manner of settlement of MSEB's payment dispute with Dabhol Power Company (DPC), and its impact on the financial position of MSEB and GoM. Though MSEB had stopped making payments to DPC, the latter had been sending monthly bills to the board. DPC had recently sent the August and September bills totalling Rs 209 crore. It had sent the bill arguing that the capacity payments will accrue every month. The downgrade has come at a time when the High Court decided to hear from December 11 a petition filed by DPC challenging the jurisdiction of Maharashtra Electricity Regulatory Commission (MERC) to adjudicate its dispute with MSEB. ICRA has revised the rating asigned to the Rs 150 crore non-convertible debenture programme of Jindal Iron & Steel Company Limited (JISCO) to LA- (SO) from LAA- (SO). The rating has been placed under 'Rating Watch'. The revised rating indicates adequate safety. The rating is based and irrevocable guarantee from IFCI Limited for payment of principal and interest on the debentures. 
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THE HINDU BUSINESS LINE, Friday, October 19, 2001
'SCI can invest more in Greenfield', P. Manoj 

THE Shipping Ministry has no reservations on Shipping Corporation of India (SCI) investing another $11 million as its share to bridge the $55-million gap in the project cost of Greenfield Shipping Company. With less than a month left to take possession of the LNG tanker on the scheduled delivery date of November 15, the board of SCI has not been able to take a final view on sinking a further $11 million in proportion to its equity holding of 20 per cent in the joint venture consortium. Professional members on the board of SCI are not convinced by the arguments put forward by the company management on investing an extra $11 million and save the project from going into payment default..

These members have counter-argued that the project has turned unviable due to the uncertainty surrounding the Dabhol Power Company (DPC), making the prospect of earning the original charter hire rate of $98,600 per day look bleak. The Shipping Ministry, which controls the SCI, feels that the State-owned company has no other option but to invest the additional amount of $11 million and bail out the tanker from the clutches of the lenders. ``The SCI has two worst choices before it. One is to pump in another $11 million to save the project from going into default and earn a return of 4 to 5 per cent. The second option is to refuse further investment and earn no returns at all besides running the risk of losing its equity investment of $11 million. The SCI will have to make the best of the two worst choices,'' Government sources told Business Line. 

While the SCI will not invest the extra $11 million immediately, it is planning to issue a letter of comfort to Mitsui O.S.K.Lines, the lead partner in the consortium, stating that it was prepared to accept the liability in future. This will pave the way for Mitsui to put in the entire $55 million to bridge the gap in project cost and proceed with taking delivery of the LNG carrier. The amount given by Mitsui towards the share of the other two partners totalling $22 million ($11 million each for SCI and Atlantic Commercial Inc) will be in the form of a loan. In future, this amount will have to be reimbursed to Mitsui with interest. The Shipping Ministry feels that allowing bankers to confiscate the LNG vessel due to non-payment of the last tranche of project cost of $55 million would render SCI's equity investment of $11 million infructuous. On confiscation of the vessel, the bankers would immediately go about selling the vessel for recovering its investment of $110 million alongwith interest which otherwise would have been paid by the promoters over a period of time. ``Significantly, when you approach the market for selling a confiscated vessel, you won't even get the prevailing market price and would have to go for a distress sale,'' the sources said. 

So, for an LNG tanker ordered for $220 million, the bankers would not be able to realise even the prevailing price for new buildings which is hovering at around $160 to $170 million. Consequently, the bankers will recover their loan liability of $110 million with interest but the balance would be insufficient for the three promoters to recoup their equity investment in full. ``Given this scenario, there is no point in looking at whether the extra investment of the SCI would fetch the mandatory 12 per cent internal rate of return as stipulated by the Government for projects involving State-funding,'' the sources said. After providing $110 million for the project out of a total loan commitment of $165 million, the bankers led by ANZ Investment Bank had suspended the last tranche of the project loan of $55 million, declaring an event of default due to the controversy surrounding the project. The promoters of Greenfield Shipping Company can now take possession of the tanker only on paying the remaining $55 million. The tanker is being built to ferry LNG from Oman to DPC. 
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THE TIMES OF INDIA, Friday, October 19, 2001
Enron Q3 net loss at $618m 

US energy major Enron, which has decided to quit India after facing trouble in the $2.9-billion Dabhol Power Project, on Thursday reported a $618-million net loss for the third quarter this year. Announcing the results in Houston, Enron CEO Kenneth Lay said the non-recurring charges totalling $1.01 billion after tax were recognised during the quarter which resulted in in a net loss of $618 million. "After thorough review of our business, we have decided to take these charges to clear away issues that have clouded the performance and earnings of our core energy business," Lay said. The company's total recurring net income increased to $393 million in third quarter against $292 million a year ago. "Our 26 per cent increase in recurring earnings per diluted share shows the very strong results of our core and retail energy businesses and our natural gas pipeline," Lay said, affirming that the company was on the track to continue strong earnings growth and achieve its targets.( PTI ) 
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THE HINDU, Friday, October 19, 2001
Deshmukh Govt. completes a difficult two years, Mahesh Vijapurkar 

To the Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, two years of running an eight-party coalition, despite a numerically strong over-anxious Opposition snipping at his heels, is in itself an achievement. The arrangement, in which the Congress(I) and the NCP are major partners, completes two years in office today. The key constituents of the Democratic Front (DF) had actually begun to show strains of running a coalition. At one point, the NCP, despite its mature leadership, dissociated itself from a Cabinet decision on the sensitive issue of setting up a probe against the Enron deal. To it, the timing was inappropriate. The Congress(I) couldn't hide its glee at the Government's discomfiture. 

The Congress(I) too is not averse to backing out from decisions. It agreed to the move to reconsider enforcing higher rates for water - irrigation, drinking, industrial and when water is a raw material, as in mineral water production - at the coordination committee meeting of all ruling parties, because of pressure from within and from the NCP. The NCP and the Congress(I) are aware of the limitations of coalition politics and would like to be in the driver's seat. The two have often said it was their duty to form a partnership to keep the BJP-Shiv Sena out of power. Or else, the State would have seen the saffron parties consolidate. Battling such odds is tough for all players, each with its own agenda on which they are unwilling to compromise. The Opposition scorns at the Government. Says Mr. Gopinath Munde, BJP leader: ``How can a Government backtrack on decisions like these? Can such a Government be considered credible? I think it is all in poor taste. Disowning collective responsibility is unconstitutional. I am saddened at this situation. This is no Government.'' 

Mr. Deshmukh says the Government is trying to limit the damage done to the State's finances by the predecessor dispensation of the BJP and the Shiv Sena. Once it became known that the Government was almost bankrupt, investment arrivals ceased. There has been no major investment for two years. To its credit, the Government has taken some brave decisions in two years: not paying bonus to Government employees whose salary accounts for Rs. 1,300 crores, cutting DA, banning the SIMI despite a coalition partner's objections and not budging when Enron rattled its sabre and, in fact, ceasing to buy power from it. But, unfortunately, it is the inter-party rivalry that draws the attention of the newspapers.