Gentlemen -

A few brief updates:

The hearing before the Bombay High Court regarding MERC jurisdiction is still 
on for Monday.  We are still not sure whether or not there will be anything 
substantive discussed at the hearing.  Gail Brownfeld and Christopher Walker 
are flying to Bombay just in case.  I just spoke with Jim McCartney and he is 
planning to try to attend as well.  

There was no unified "message" from the lenders at the conclusion of the 
Singapore lenders meetings.  Our Finance guys are pretty confident that the 
offshore lenders will not cure the construction contract defaults this 
month.  The Indian banks may or may not cure.  If no one cures, the 
construction contracts will terminate in mid-June. 

We received a copy of a very interesting letter from the Chairman of MSEB to 
the India Central Electricity Authority and copied to GOM dated January 11, 
2001 (less than three weeks before we were first accused of misdeclaring).  
The Chairman states:  

"The high price of Dabhol power today was perhaps not accurately anticipated. 
. . .DPC Phase II trial runs are to commence shortly. . . .It is a fact that 
we have not been able to fully absorb even DPC phase I power at 90% PLF. . . 
.[O]nly on MSEB projections and certification DPC have invested a huge sum in 
Phase II.  Can we ask them to stop now?  Poor off-takes of DPC power are not 
just because of low demand, but also on account of the high price and the 
poor financial condition of MSEB.  We would be grateful for Government advice 
in the matter."

It appears to me that the "advice" was to charge that DPC was misdeclaring 
its availability and to demand huge offsets as a result.

Bruce