-----Original Message-----
From: 	Kohli, Sandeep  
Sent:	Tuesday, August 28, 2001 8:08 AM
To:	Raymond, Maureen
Cc:	Kaminski, Vince J
Subject:	FW: From The Enron India Newsdesk - August 28th Newsclips

Maureen,

You will find articles 1 & 2 very pertinent to your mail yesterday.  We will meet today at 1.00 p.m. as planned to discuss further.

Regards,
Sandeep.

 -----Original Message-----
From: 	Varma, Nikita  
Sent:	Tuesday, August 28, 2001 6:24 AM
To:	Varma, Nikita
Subject:	From The Enron India Newsdesk - August 28th Newsclips

THE FINANCIAL EXPRESS, Tuesday, August 28, 2001
Enron impact takes its toll, FI lenders scrips plunge on bourses, Sharad Mistry & Laxmikant Khanvilkar 
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THE ECONOMIC TIMES, Tuesday, August 28, 2001
FIs initiate search for buyers for Enron stake, Samik Dasgupta & Soma Banerjee 
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THE ECONOMIC TIMES, Tuesday, August 28, 2001
Dabhol dispute unfortunate: Govt
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THE FINANCIAL EXPRESS, Tuesday, August 28, 2001
Omar terms Dabhol 'unfortunate experience'
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THE TIMES OF INDIA, Tuesday, August 28, 2001
Power Play (Editorial)
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THE TIMES OF INDIA, Tuesday, August 28, 2001
Enron denies seeking sanctions over Dabhol, Sanjay Dutta 
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THE TIMES OF INDIA, Tuesday, August 28, 2001
'Enron has not discussed Dabhol with Bush', Vidyadhar Date 
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THE FINANCIAL EXPRESS, Tuesday, August 28, 2001
Enron impact takes its toll, FI lenders scrips plunge on bourses, Sharad Mistry & Laxmikant Khanvilkar 

THREE major financial institutions - ICICI, IDBI and IFCI - are witnessing an increased selling wave on the bourses over the past few trading sessions, thanks to their collective exposure in the controversial Enron-promoted $3 billion Dabhol Power Company (DPC). The total exposure in DPC of these FIs, and a few banks like the State Bank of India and Canara Bank, including foreign currency guarantees, works out to over Rs 5,500 crore. Little wonder, therefore, that investors fear more red ink splashed over the balance sheets of the FIs and are hurrying to move out of their investments in these FIs. 

The stock prices of all the three FIs have been sliding. While the stock price of IDBI and IFCI have touched new lows of Rs 16 and Rs 2.90, respectively, that of ICICI is still holding at around Rs 50-55 levels. Early this month, IDBI was quoted at Rs 19.90, IFCI at Rs 3.60 and ICICI at Rs 59.30. ICICI, however, had touched Rs 51 on August 9, a new low from previous levels. This clearly indicates that, plagued by the rising share of non-performing loans (NPLs) to total assets of all the three FIs, the share prices of these FIs have came under severe pressure. 

Analysts tracking the banking and FI counters say that the sliding trend is feared to be continued over the days and weeks ahead, especially because of the tightening of the non-performing assets guidelines by the Reserve Bank of India (RBI). Moreover, the kind of trading activity witnessed at these counters is alarming. While the volume of share trade is substantial, there is a sharp fall in the stock prices of these stocks. Quite clearly, these are no good indicators, at least for the time being. However, these companies disbursal/approvals to DPC are well within the stipulated RBI norms, i.e., 15 per cent of total disbursal/ approvals. 

For example, ICICI's gross NPL as of March 2001, stands at a whopping Rs 5,988 crore. Power sector leads the approval and disbural list of ICICI at Rs 6,424 crore and Rs 2,400 crore, respectively. Its exposure in the power sector, which stood at Rs 8,531 crore or 11 per cent of the total exposure of Rs 77,279 crore, has been on the decline. Last year they stood at 11.6 per cent of Rs 65,495 crore. On the other hand, IDBI's stock price is on the slide since the beginning of this month. It is currently quoting at Rs 16. The counter is experiencing heavy volumes with daily volumes being in the range of 35,000 plus. The situation is worse for IFCI which is quoting below par for quite sometime now. Further, the scrip has been losing steam since August 2, when it was quoting at Rs 4. Currently, it is quoting below Rs 3. 
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THE ECONOMIC TIMES, Tuesday, August 28, 2001
FIs initiate search for buyers for Enron stake, Samik Dasgupta & Soma Banerjee 

THE SEARCH for getting a buyer for Enron's equity in the Dabhol power project has started with financial institutions initiating discussions with potential buyers. FIs have been entrusted with the responsibility of preparing a roadmap for Enron's exit and finding a solution to pending MSEB payments. The first job for FIs is to determine the actual cost required to complete the Dabhol project. Although, about 96 per cent of the project is complete, the stoppage of work for the past few weeks has led to cancellation of contracts and possibilities of the cost escalating. With Enron having already announced its unwillingness to pump in additional resources, the new investor will not only have to pay for the equity but also fund the project's completion. Speaking to ET, finance secretary Ajit Kumar said: "FIs have been told to work out details about the prices that each of the interested buyer can offer for the Dabhol project. Since it is totally buyer driven, FIs will have to take this into account while holding their discussions with the potential buyers. Enron may demand any price but there have to be takers for that too.'' Tata Power, Hindujas and some other leading industrial houses are interested in buying out Enron. FIs are going to talk individually to all the interested companies, and the equity will be sold to the highest bidder, Kumar said. 

According to FI sources involved with the Dabhol negotiations several angles are being looked into as the matter is now complicated with Enron invoking legal provisions. "The aim is to work out an out- of-court settlement to the issue. Valuation is not an issue as the project has a 25-year life cycle,'' an official said. FI sources claimed that their role is that of a facilitator where they will try and bring the buyer and seller at a common point.FIs are also discussing with the Centre if it is possible for them to get a cover for the second phase of the project. As of now, the first phase of the project has been given the counter-guarantee while the promoters are pushing for a similar cover to ensure payments. 
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THE ECONOMIC TIMES, Tuesday, August 28, 2001
Dabhol dispute unfortunate: Govt

THE GOVERNMENT on Monday described the dispute over the Enron-promoted Dabhol Power Project as an `unfortunate' experience in foreign investment in the country's infrastructure sector. ``Enron is a very unfortunate episode in our experience with regard to inviting foreign investment in the crucial infrastructure sector and I wish it had never happened,'' minister of state for external affairs, Omar Abdullah said here. Nevertheless, the country's judiciary has decided a large number of cases in Enron's favour thereby proving its fair and independent nature, he added. Speaking after launching the Confederation of Indian Industries International, the international arm of the chamber, he said Indian industry has had enough protection and should not ask for more. ``Unless we start looking outwardly and start tapping new markets abroad, our economy may not be able to achieve and grow to its potential,'' Abdullah said.Indian missions abroad have to realise that their role is changing, he said it is now clear that economic diplomacy is integral to foreign policy and a key determinant of a country's political and strategic influence. He said the ministry of external affairs had also started working on these lines and would make every possible effort to provide necessary support to the country's business chambers and industry to position itself as a global player in the emerging global scenario. 
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THE FINANCIAL EXPRESS, Tuesday, August 28, 2001
Omar terms Dabhol 'unfortunate experience'

THE Centre has called the Enron-promoted Dabhol power project controversy as an 'unfortunate' experience. "Enron is a very unfortunate episode in our experience with regard to inviting foreign investment in the crucial infrastructure sector and I wish it had never happened," minister of state for external affairs Omar Abdullah said here on Monday. Nevertheless, the country's judiciary has decided a large number of cases in Enron's favour, thereby, proving its fair and independent nature, he said, while launching Confederation of Indian Industry's (CII) international arm, 'CII International (CIII)'. Stating that there is no alternative to globalisation, Mr Abdullah said, "Indian industry has had enough protection and should not ask for more." "Unless we start looking outwardly and start tapping new markets abroad, our economy may not be able to achieve and grow to its potential," he added. The new outfit, CIII, created to facilitate the process of internationalisation of domestic companies, will have a budget of Rs 50 crore, which is almost 50 per cent of the Confederation's total budget, CII president Sanjiv Goenka said. 

Institutionalisation of CIII is part of the value addition exercise of the Confederation to accelerate the process of globalisation, he said, adding that CII will leverage its 191 partners in 92 countries to the process. CIII will be headed by Arun Bharat Ram. Piyush Bahal has been appointed head of the CIII secretariat. Speaking on the occasion, Arun Bharat Ram said, "CIII will take proactive initiatives to enhance the country's share in international trade." He said that CII already has a dedicated WTO cell to facilitate the process of internationalisation of domestic companies. Write to the Editor 
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THE TIMES OF INDIA, Tuesday, August 28, 2001
Power Play (Editorial)

With emotions running high over the Dabhol issue, Enron chairman Kenneth Lay understandably showed great alacrity in denying reports that he has threatened India with sanctions. In a letter to prime minister A B Vajpayee, Mr Lay clarified that Enron has not asked the US government to take any such action, and "is far from suggesting that we have decided to pursue these mechanisms". Fair enough. But are the remarks as innocuous as Enron is making them out to be? Consider the facts. In the course of the controversial interview, Mr Lay said that if Enron was "squeezed'' to accept less than the cost incurred by it on building the power plant, that would amount to "expropriation" by the Indian government. He added, for good measure, that US laws prevent Washington from assisting countries which expropriate the property of American companies. Significantly, an Enron team is slated to negotiate with Indian lenders this week. One of the proposals doing the rounds is that the financial institutions (FIs) buy out Enron's stake in Dabhol Power Company (DPC) and `warehouse' the shares till they can find another buyer. The FIs, on their part, have indicated their willingness to slash interest rates on the loans to DPC in a bid to make the project viable. But they're not willing to be the only ones to make a sacrifice. So, they're expected to ask Enron to accept a discount of 25 to 35 per cent on its asking price. The bargaining is likely to be tough, and savvy negotiators routinely try to `psyche' the opposition beforehand. Mr Lay is known to be close to the Bush administration. In the light of all this, is the timing of his remarks pure coincidence? 

Mr Lay, of course, has his own compulsions. While the Dabhol imbroglio has undoubtedly hurt India, Enron's armour is not without some chinks  which Indian negotiators would do well to note. The company faces accusations, which it denies, that it manipulated power prices in California. Its share price has fallen more than 55 per cent since the start of the year, and chief executive officer Jeffrey Skilling recently quit abruptly, forcing Mr Lay to take over the CEO's job as well. Unfortunately, Indian negotiators are unlikely to use what should be their trump card  the Godbole Committee's observation that the Dabhol deal was a failure of governance at every step of the decision-making process. Because doing so could embarrass too many prominent people on both ends of the political spectrum. Even so, the Indian side should hang tough. There have been suggestions that the LNG plant be spun off as a separate power centre, Enron let out its harbour facilities to other LNG importers, and the foreign currency loans be converted into rupee loans. These could form the basis of a fair deal that would allow both India and Enron to move on from the mess they have landed in. Hopefully, the Dabhol debacle will also send out warning signals to both Indian politicians and multinationals about the perils of non-transparent, negotiated deals, as opposed to a genuinely free market. If it does, and if India gets its act together on power sector reforms, we may yet see some light at the end of the long, long tunnel.
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THE TIMES OF INDIA, Tuesday, August 28, 2001
Enron denies seeking sanctions over Dabhol, Sanjay Dutta 

US energy trading major Enron Corp has denied approaching Washington seeking sanctions against India over the dispute with the Maharashtra government over the $2.9 billion Dabhol power project, even as domestic financial institutions hinted at increasing their exposure in the project by about $483 million (Rs 2,270 crore) for its completion. In a letter to Prime Minister Atal Bihari Vajpayee on Saturday, a copy of which was available with The Times of India, Enron CEO Kenneth said: "A recent story in the Financial Times, which mischaracterised discussions with me, appears to have caused significant, unintended concern. Counter to the impression given in the story, I have not asked anyone in the US government to consider imposing sanctions." 

Lay said in his letter that Enron's approach was to settle the issue amicably by selling its stake. "Furthermore, I did not say that the Dabhol power plant had been expropriated. Upon questioning from the publicator (publisher) I did factually explained the several possible options available, including how one might get to expropriation and about the US laws in place to protect its businesses. However, that is far from suggesting that we have decided to pursue these mechanisms," Lay said. "Our preferred approach approach continues to be to resolve this issue amicably by selling our stake to Indian governmental and financial institutions," Lay said. 

However, Lay tempered his conciliatory stand by adding, "Without agreement on that, we have little choice but to follow the termination procedures jointly agreed under the power purchase agreement." Lay also sent copies of the letter to finance minister Yashwant Sinha and power minister Suresh Prabhu. PTI ADDS: The IDBI-led FIs' consortium may increase their exposure to enable the project to be completed and negotiate Daphol Power Company's equity at a 25 per cent discount to its face value. The FIs are exploring a possibility of taking out offshore equity by investment institutions and utilities after 12-18 months from Phase-II completion, the report said.

 If this proposal was accepted by the joint committee of the FIs, then IDBI's revised exposure would be at Rs 2,742 crore from existing Rs 2,121 crore, ICICI Rs 1,904 crore from Rs 1,473 crore, SBI Rs 2,261 crore from Rs 1,749 crore, IFCI Rs 587 crore from Rs 454 crore and Canara Bank Rs 526 crore from Rs 407 crore. "Even in the best case, the exposure requirements from domestic institutions exceed the prudential exposure norms," the report quoted FI sources as saying. Subsequent participation by all other FIs and banks like IDFC, PFC, PNB, Union Bank, Bank of India among others would be accrued through syndication. FIs may also seek a guarantee from the Centre as a backup for their exposure, the report quoted the sources as saying. Last week, the FIs had made a presentation to the finance ministry on a possible bailout package for Dabhol. The proposals envisage concessions from stakeholders, around 22.38 per cent concessional duty on the energy major's liquefied natural gas plant, a mega power project status and offset of custom duties on LNG supply. 
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THE TIMES OF INDIA, Tuesday, August 28, 2001
'Enron has not discussed Dabhol with Bush', Vidyadhar Date 

Enron has denied that it had approached the U.S. government in an effort to obtain sanctions against India in its dispute over the Dabhol power project. The denial came in the wake of a report in the Financial Times of Thursday which carried an interview with Enron chairperson Kenneth Lay. The report quoted Mr Lay as saying there are U.S. laws that could prevent the U.S. government from providing any aid or assistance to India if it expropriated properties of U.S. companies. An Enron spokesperson said Mr Lay had not discussed the Dabhol dispute with President George Bush. 

Meanwhile, the legal tussle between energy activists, the Maharashtra government and Enron continues in India. The state government is preparing a fresh affidavit with strong arguments against Enron in the case filed in the supreme court by the Centre for Indian Trade Unions (CITU), which is the labour wing of the Communist Party of India (Marxist), and activist Abhay Mehta against the Dabhol project. The affidavit will make a strong case against Enron unlike the previous statement filed by the earlier Shiv Sena-BJP dominated state administration which was seen to be favourable to the controversial multinational. 

The case has been pending in the supreme court for the past four years and since then major changes have taken place on the Enron front with more and more evidence emerging against the project. The government will rely substantially on the M.D. Godbole committee report which found a number of infirmities in the project and expressed serious concern over the irregularities. In the petition, CITU and Abhay Mehta, author of the book Power Play, which gives a detailed account of the the Enron drama, have challenged the clearance given to the project by the Central Electricity Authority. They argued that since the project had been renegotiated, it required a fresh review by the CEA. They described as false the claim of the previous government that by holding renegotiations it had secured a good deal with lower tariff. 

Anti-Enron activists feel that their stand has been vindicated by the recent setbacks received by the company. Regarding the explosion in Enron's Teeside plant in England which left three workers dead, Mr Pradyumna Kaul, energy activist, said Enron should have prepared a disaster management plan for the Dabhol plant.Enron suffered a serious setback last week with the resignation of chief executive Jeffrey Skilling, the drastic fall in stocks and the explosion in the Teeside plant. Mr Kenneth Lay, the company's chairperson, is now trying to limit the damage by travelling in the U.S., explaining the events to company divisions and trying to improve sentiment on Wall Street. While Enron wants to exit from its operations in India, it is also reported to be trying to wind up the wind turbine manufacturing business Activists are also encouraged by protests against privatisation of electricity being voiced in other parts of the world. Anti-privatisation activists invaded the legislature building in the Brazilian state of Parana last week, protesting against the move to privatise the state's electric generation, transmission and distribution utility.