Mark -

I thought that I would keep you informed of major decisions or analysis on 
Dahbol from time to time.

I was pleased to see the quality of our lawyers in India.  I think that it is 
a solid internal team and we will be relying on the same external lawyers 
that we have used throughout the life of the project.

Bruce

---------------------- Forwarded by Bruce Lundstrom/ENRON_DEVELOPMENT on 
12/13/2000 06:01 AM ---------------------------


Bruce Lundstrom
12/11/2000 11:39 AM
To: James A Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rebecca 
McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Rob Walls/NA/Enron@Enron 

Subject: Dahbol - PPA and Permits/Approvals Compliance

Rebecca/Jim -

The India legal team has completed two important reviews:

Permits/Approvals Review.  Sandeep Katwala led a group reviewing our permits 
and approvals.  They feel pretty good about our compliance with these 
permits/approvals.  As you have heard on previous phone calls, the day tank 
seepage some time ago makes us the most nervous.  It seems to us that a 
release from the site resulting in substantial groundwater contamination 
plays pretty well in the court of public opinion given DPC's failure to "come 
forward" on the issue (even though it was advised at the time of the release 
that it had no legal obligation to do so).  Sandeep's note is below.

PPA Review.  Paul Kraske led a group reviewing the PPA.  His memo on this 
issue is also below.  He feels pretty good about our ongoing compliance with 
the PPA.  The instances of the non-compliance are not particularly material 
and none would appear to play well in the court of public opinion.  I should 
also note that it would be very difficult for MSEB to lawfully terminate the 
PPA -- that remedy is not readily available to MSEB under the PPA terms.

Both review efforts have relied somewhat on the representations of DPC 
personnel.  The India legal team was able to "tie down" many significant 
issues with written documentation but in many cases have relied on the oral 
representations of our own employees to confirm compliance with our 
obligations.

There are a number of other legal review efforts underway and I will keep you 
apprised as these reviews progress.

Bruce
---------------------- Forwarded by Bruce Lundstrom/ENRON_DEVELOPMENT on 
12/11/2000 10:21 AM ---------------------------


Sandeep Katwala
12/11/2000 07:43 AM
To: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: jinman@linklaters.com, niyer@linklaters.com, kthakore@linklaters.com, 
Lauren Hagerty/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Re: PPA Compliance - Attorney Client Priviledged  

Bruce,
Lauren, Narayan and Kunal have completed their review of DPC compliance with 
clearances. Based on discussions with DPC personnel and a review of 
correspondence where relevant, no material non-compliance issues have 
surfaced which I feel would pose a problem under the PPA. There are two 
instances under the Reserve Bank of India approvals DPC has failed to submit 
reports to the Ministry of Finance within the time frame indicated; these are 
however minor issues. We have to accept that there may be practical instances 
where there may not be strict compliance at the site (eg the actual 
construction of physical assets is not strictly as per the layout approved by 
the authorities) but, from the discussions with DPC personnel none of these 
have come to light. On the environment approvals DPC has submitted compliance 
statements to the Maharashtra State Pollution Control Board which confirm 
that DPC is in compliance with the conditions in the relevant approvals. We 
have relied on these statements as being accurate. 

With respect to the water pollution issue, as we saw on Saturday, DPC has 
notified MPCB pursuant to the show cause notice of the measures taken to 
mitigate the pollution off the site. That correspondence seemed to indicate 
that there should be no further problems with this issue. However, my sense 
is that we have not seen the end of this issue and in particular, the report 
currently being prepared by GSDA has not yet surfaced in final form. There is 
no guarantee that it will be positive. Shobhan's view that it is difficult to 
see how a Court would support an injunction of some sort shutting down the 
plant "permanently" given the remedial measures taken by DPC is persuasive - 
you can however see that it provides excellent ammunition for PR purposes.

Sandeep



Paul Kraske
12/11/2000 06:23 PM
To: Sandeep Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce 
Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: jonathan.inman@linklaters.com, Pancharatnam 
Ramaswamy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Suhas 
Tuljapurkar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: PPA Compliance - Attorney Client Priviledged

Gentlemen-
Attached is a short note we prepared summarizing our conclusions after an 
initial review of PPA compliance.  Please feel free to call if you have any 
questions regarding the attached.  Regards,
Paul