FYI news articles from Indian press.
---------------------- Forwarded by Sandeep Kohli/ENRON_DEVELOPMENT on 
04/27/2001 08:24 AM ---------------------------


Nikita Varma
04/27/2001 07:51 AM
To: Nikita Varma/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  (bcc: Sandeep Kohli/ENRON_DEVELOPMENT)

Subject: From The Enron India Newsdesk - April 27th newsclips



Friday Apr 27 2001, http://www.economictimes.com/today/cm03.htm
DPC board empowers MD to cancel MSEB contract


Friday Apr 27 2001,  http://www.economictimes.com/today/27comp11.htm
MSEB pays Rs 134cr under 'protest' to DPC


Friday, April 27, 001, 
http://www.businessstandard.com/today/economy4.asp?Menu=3
Enron India MD authorised to terminate PPA


Friday, April 27, 2001,http://www.financialexpress.com/fe20010427/top1.html
Foreign lenders slam brakes on disbursements to DPC , Sanjay Jog & Raghu Mohan
Global banks comfortable with Enron pull-out


Friday, April 27, 2001, http://www.indian-express.com/ie20010427/nat23.html
Enron: Dabhol chief gets powers to end deal with the MSEB


Friday, April 27, 2001, http://www.the-hindu.com/stories/0227000d.htm
Offer of renegotiation 'too late': Enron, By Mahesh Vijapurkar 


Friday ,27 April 2001, http://www.timesofindia.com/today/27home2.htm
Enron ready to pull out, but lenders say wait 


Friday, April 27, 2001, http://www.hindubusinessline.com/stories/142756dh.htm
DPC board authorises MD to issue PPA termination notice 


Friday, April 27, 2001, 
http://www.dailypioneer.com/secon2.asp?cat=story7&d=FRONT_PAGE
Enron testing Maharashtra's nerves, T N Raghunatha


Friday, April 27, 2001,http://www.telegraphindia.com/
ENRON SIGNAL TO SWITCH OFF DABHOL POWER 
 

Friday, April 27, 2001, 
http://www.thestatesman.org/page.news.php3?id=13026&type=Pageone&theme=A
Enron threatens to pull out


Friday, April 27, 2001, 
http://www.chalomumbai.com/asp/article.asp?cat_id=29&art_id=10006&cat_code=2F5
74841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152
'DPC may not wind up'


Friday, April 27, 2001, 
http://www.chalomumbai.com/asp/article.asp?cat_id=29&cat_code=2f574841545f535f
4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=9953
Enron offers 'no comment' on renegotiation, H S Rao
 

 http://www.afternoondc.com/
'ENRON'S ON!' 
State govt. to renegotiate Dabhol Power Project , By Hubert Vaz 


THE ECONOMIC TIMES, Friday Apr 27 2001
DPC board empowers MD to cancel MSEB contract

THE ENRON power project crisis on Thursday deepened with the board of Dabhol 
Power Company authorising the management to issue a termination notice to the 
Maharashtra State Electricity Board even while international lenders to the 
project asked Enron to renegotiate power purchase agreement signed with the 
MSEB.
The decision to authorise managing director Neil McGregor to issue "notice of 
termination on the contract to sell 740 MW of power" was taken after the 
board prevented MSEB from voting on the ground that it was an interested 
party. The decision was taken with six votes in favour and the single 
opposition vote was cast by IDBI, sources said. 

According to reports, financial institutions such as ANZ Investment Bank, 
Credit Suisse First Boston, Citibank, ABN-Amro and the State Bank of India 
have on Wednesday advised Enron against terminating its PPA with MSEB. MSEB 
chairman Vinay Bansal, who with two other directors attended the meeting on 
Wednesday representing Maharashtra,s 15 per cent stake in the near $3-billion 
project, said: "The Indian side told them that it would be unfortunate if 
Enron broke the contract." While Bansal declined comment on the board 
decision, the sources said the Indian side had expressed its interest to 
holds talks on the issue rather than terminating the project and there were 
possibilities of a fresh power purchase agreement between the company and the 
state. (PTI)


THE ECONOMIC TIMES, Friday Apr 27 2001
MSEB pays Rs 134cr under 'protest' to DPC

 DESPITE the threat of a possible termination notice hanging on its head, 
Maharashtra State Electricity Board on Thursday made a "protest payment" of 
Rs 134 crore disputed amount, towards March bill of Rs 146.64 crore to 
Dabhol. "We were ready with the payment on Wednesday itself, but DPC 
officials could not collect the cheque due to the statewide bandh", a senior 
MSEB official said. "We have disputed payment of Rs 12.64 crore and it would 
be now taken up at the disputes resolution forum, of which Enron India 
managing director K Wade Cline and Krishna Rao are members", MSEB sources 
said. 

Last week, DPC had dashed off a communication to the government and MSEB that 
it would not accept "protest payments" anymore. Cline had said the energy 
major shall treat such payments as an election to pay the sums, which MSEB in 
fact owed DPC in full and that the company would also not recognise the 
"purported protest or reservation". MSEB had paid a Rs 113.5 crore February 
bill in protest last month. On April 23 last, both domestic and international 
lenders of DPC had met in London and held exhaustive discussions the 
multinational's move to issue a termination notice to MSEB and state 
government. (PTI) 

BUSINESS STANDARD, Friday, April 27, 001
Enron India MD authorised to terminate PPA

The board of the Enron-promoted Dabhol Power Company (DPC), at its meeting in 
London on Wednesday, authorised the managing director of Enron India to issue 
a notice for terminating the power purchase agreement to the Maharashtra 
State Electricity Board and the state government. &The board has authorised 
Wade Cline to serve the termination notice. However, this does not mean that 
the termination notice will be served immediately. It is only an enabling 
provision and will be used only if the situation arises,8 a state government 
source told Business Standard from London. He said DPC was under pressure 
from its lenders. 
The DPC spokesperson here refused to comment on the issue. The hardening of 
the board,s stand is in sharp contrast to the advice of DPC's lenders, who 
had warned Enron not to precipitate matters by issuing a termination notice. 
The lenders had arrived at a consensus that the termination notice need not 
be served at this stage. Serving of the notice requires a nod from the 
lenders, who have an exposure of about $2 billion in the project. Sources 
said given the lenders' strong opposition to termination of the contract, the 
Enron board's "enabling resolution" did not have much significance beyond 
conveying a hardening of its stand with regard to the current imbroglio. The 
Maharashtra Chief Minister had warned Enron not to scuttle the process of 
crisis resolution by issuing a termination notice. The state government is to 
nominate an expert group to renegotiate the terms of the Dabhol contract. 
Enron holds 65 per cent in DPC, while US-based GE and Bechtel hold 10 per 
cent each. The balance 15 per cent is held by MSEB through a special purpose 
vehicle, Maharashtra Power Development Corporation. The MSEB representatives 
were not allowed to vote at the meeting since they were an interested party. 
The IDBI representative protested against the board's decision. The meeting 
was attended by state energy secretary VM Lal. The meeting was held against 
the backdrop of a dispute between MSEB and DPC over payment of bills. 
After MSEB failed to pay Rs 102 crore towards the December 2000 bill, DPC 
invoked the state government's guarantee and then the Union government's 
counter guarantee. When payment of the Rs 127-crore January bill became 
overdue, DPC again invoked the state government's guarantee. MSEB retaliated 
on January 28, 2001 by slapping a Rs 401-crore penalty for non-supply of 
electricity at adequate levels. It demanded that DPC adjust the bills against 
this penalty. "This stand of MSEB was explained to DPC at the board meeting", 
a state government official said. The Centre also supported MSEB's stand and 
refused to honour the counter guarantee. The power company then invoked the 
political force majeure clause. A process of conciliation and arbitration 
between the Centre and DPC is currently on. 
THE FINANCIAL EXPRESS, Friday, April 27, 2001
Foreign lenders slam brakes on disbursements to DPC , Sanjay Jog & Raghu Mohan
Global banks comfortable with Enron pull-out
Lenders to the Dabhol Power Company (DPC) are a sharply divided lot. 
International lenders, in direct contrast to the stand taken by local ones 
led by the the Industrial Develoment Bank of India (IDBI), are categorical 
that additional assistance to DPC,s phase-II will be held in abeyance despite 
the completion of 92 per cent of the project work.The stage is also set for a 
preliminary termination notice to be served by DPC to the Maharashtra State 
Electricity Board (MSEB) within the next four weeks.This follows the 
authorisation given to Enron India,s managing director K Wade Cline and DPC 
president & CEO Neil McGregor to serve the termination notice, and transfer 
notices to MSEB, following Wednesday,s DPC board meeting in London.
The essence of the message from the international lenders following the 
London meeting with DPC board is: Emotions do not work. Contractual 
obligations and payments have to be met. We are convinced that the MSEB has 
failed to meet its obligations. There is no point in Enron continuing with 
the project and the company should get out of it.The structuring of DPC,s 
debt has created two classes of lenders. In phase-I, international lenders 
are covered by a sovereign guarantee while in phase-II, no lender is. 
However, all lenders have a parri passu charge, making attachment of assets a 
messy affair.
Sources in international banks were quick to point out that local lenders to 
phase-II of the project are worried that an awry DPC project will affect 
their interests more given that they have no security * other than assets * 
like a sovereign cover. &It was this desperation that made local lenders like 
IDBI slash the interest rates a few months back to 16.5 per cent from 21.5 
per cent,8 a leading foreign banker pointed out.Three points that were made 
clear and stressed in no uncertain terms by international lenders were: a) 
there are contractual obligations b) MSEB was not punctual in its payments to 
DPC and c) MSEB adopted a confrontational position by slapping a Rs 401 crore 
rebate charge on DPC for misdeclaration and default on the availability of 
power.
While local lenders led by IDBI * with MSEB parroting the same * were of the 
view that the current situation is a temporary one, international lenders 
were steadfast that pulling out of the project is the only way out. This is 
despite the stance taken by IDBI and MSEB that authorisation for termination 
given to Mr Cline and Mr McGregor was not called for. International bankers 
pointed out that they will now have to look at the issue of charges and 
protection for their loans in the event of the power project being scrapped 
in its present form.The points of contention are: a) that phase-I of DPC is 
backed by a sovereign guarantee b) phase-II is not and c) to the extent that 
phase-II is covered by assets, cancellation of phase-II may see all assets * 
even those under phase-I * getting attached. Therefore, an examination on the 
segregation of assets under phase-I and phase-II is now warranted.
PTI adds: In a significant move, DPC board has empowered its management to 
sever power supply agreement with MSEB, a move that could inflict a financial 
liability of about Rs 2840 crore on the Centre. A decision to authorise DPC 
president Neil McGregor to issue a termination notice to MSEB for sale of 
power was taken by the board at its meeting on Wednesday. 
THE INDIAN EXPRESS, Friday, April 27, 2001
Enron: Dabhol chief gets powers to end deal with the MSEB

THE BOARD of Dabhol Power Company, a subsidiary of Houston-based Enron Corp, 
has decided to warn the Maharashtra State Electricity Board (MSEB) that it 
intends to pull the plug on its Guhagar-based project.In a board meeting held 
in London on Wednesday, the board decided to authorise DPC President and CEO 
Neil McGregor and Enron India,s managing director K Wade Cline to serve a 
++preliminary,, termination notice for sale of power to the MSEB within the 
next four weeks.The Dabhol project has been mired in disputes since MSEB 
began missing payments last year. MSEB owes Dabhol Power $48 million for 
power delivered in December and January. The payment ran into a dispute after 
MSEB slapped penalty notices of Rs 401 crore on DPC for its failure to supply 
power within three hours of the demand being placed.But MSEB has paid $24 
million for February. And a payment of $31 million was made for March on 
Thursday.
The $3 billion Dabhol project is the largest foreign investment made in India 
to date. Issuing the preliminary termination notice could enable Dabhol to 
suspend deliveries as it negotiates payment disputes.While a preliminary 
termination notice is the first of three steps that could potentially lead to 
the abandonment of the project by Enron, analysts have described the decision 
as a ++procedural,, move consistent with DPC,s negotiating strategy to 
recover overdue payments from the MSEB.
After the company issues the preliminary termination notice, step two would 
be an official termination notice, and step three would be a notice that the 
company is surrendering control of the project. If the project is terminated, 
the government of India will have to take a hit of $300 million besides 
paying bills of Rs 1,500 crore for the next one year to Enron as penalty. 
++Our (Centre,s) liability, if Dabhol power project is terminated, would be 
one year,s electricity bill and a termination fee of $300 million,,, Power 
Secretary A K Basu said.++Contractually, the Centre will have to pay one year,
s electricity bill, totalling at present prices about Rs 1,400-1,500 crore, 
and take over DPC,s debt, which stands at around $300 million, if the project 
was terminated,,, Basu said in Delhi. Dabhol Power is in the process of 
completing the second phase of the 2,184-megawatt power-plant project, which 
is 95 per cent through.
While the international lenders to the project are pressurising the company 
to get out of the project, Indian lenders, led by IDBI, are asking the 
company to reconsider its decision on its termination notice. During the 
meeting in London, MSEB which holds a 15 per cent stake in the project, had 
strongly opposed DPC,s move to authorise Cline and McGregor to issue notices 
for termination.
MSEB Chairman Vinay Bansal and technical director Prem Paunikar * both 
directors on the DPC board * and the state principal secretary (energy) VM 
Lal, an invitee to the board, raised the issue at the board meeting in 
London. MSEB claimed that DPC was needlessly ++threatening,, to issue various 
arbitration notices and thereby interpreting the clauses of PPA in 
isolation.In recent weeks, Dabhol has raised the stakes in its spat with the 
MSEB, delivering a notice of political force majeure to Maharashtra * a step 
typically invoked to dissolve a contract in case of an emergency like a war, 
coup, or a similar radical political event. In this case, DPC,s move was 
viewed as a threat to stop providing electricity.DPC has come under fire 
because of the relatively high cost of its power. Critics object to the 
company charging Rs 7.1 a kilowatt-hour for its power, compared with around 
Rs 1.5 a kilowatt-hour charged by other suppliers.
THE HINDU, Friday, April 27, 2001
Offer of renegotiation 'too late': Enron, By Mahesh Vijapurkar 
MUMBAI, APRIL 26. The Enron-sponsored Dabhol Power Company, which last night 
authorised its local management to issue a notice of termination of its Power 
Purchase Agreement (PPA) with the Maharashtra State Electricity Board, has 
decided to keep a stiff upper lip. This, in turn, has stoked speculation that 
the switching off of power from its Phase I plant was imminent, while in 
reality, a lengthy procedure has to be followed as prescribed within the PPA. 
As one source familiar with the PPA told The Hindu, ``it is not sudden death 
of the project'' and in all probability, the DPC, vexed with the 
developments, including sharp and pointed observations by the Godbole 
Committee, has chosen to only arm itself with a serious option. ``This would 
only eventually come into effect. It is not an overnight operation and a lot 
of legal work is involved''. Apparently, the DPC intends to do some 
arm-twisting. 
At the board of directors meeting in London, which Maharashtra was initially 
disinclined to attend but later used the forum to put across its contentions 
on the project, the DPC squarely told the MSEB nominees on the board that the 
offer of renegotiation had come rather ``too late''. It also said it did not 
see any room for optimism about the outcome. It did not, however, rule out 
the option of talks, thus underscoring the possibility that the decision to 
authorise termination was a new weapon. 
The Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, had hoped that DPC 
would not take any ``harsh step'' which would cause lot of damage to the 
interests of both the independent power producer and the Government and today 
he expressed his dismay. In fact, the mandate of the team that went, on the 
strength of its stake in the DPC, was to put across the idea that negotiation 
was the requirement and not confrontation. 
Echo in LS 
The Enron issue also echoed in the Lok Sabha today where the Power Minister, 
Mr. Suresh Prabhu, said that scrapping of the agreement would cost the Centre 
Rs. 2,840 crores, whose liability in the project agreement was limited. The 
Centre's liability in case of termination is one year's electricity bill and 
a termination fee of $300 million. 
Blow to FIs 
The termination could prove to be a serious blow to the Indian Financial 
Institutions (FIs) which, under the leadership of the IDBI, were trying to 
convince the other lenders of the project against the notice. The exposure of 
Indian FIs in the project is understood to be not covered by any guarantee 
either of the Centre or the State. 

THE TIMES OF INDIA, Friday ,27 April 2001
Enron ready to pull out, but lenders say wait 

The Dabhol Power Company board, which met on Wednesday in London, authorised 
the company management to issue a termination notice to the Maharashtra State 
Electricity Board. The company, however, may not pull out of the project yet, 
considering its lenders, who met on Monday, opposed such a move and favoured 
renegotiations. Sources present during both the meetings said that though 
foreign lenders supported Enron on the termination issue, domestic financial 
institutions, led by the Industrial Development Bank of India, prevailed over 
the deliberations to oppose any such drastic move. Enron needs the lenders' 
consent to file a pre-termination notice for pulling out from the project. 
The decision to empower DPC chief Wade Cline to issue a termination notice 
was taken with six votes in favour against a single IDBI vote against such a 
move. 
Another significant development during the entire proceedings was that the 
financial institutions made it clear that further funding of Phase II of the 
project will depend on the Government of India assuring payment mechanisms. 
Institutions are yet to disburse about 30 per cent of the sanctioned package, 
which is crucial for completing the Phase II expansion project. ``The board 
has given powers to Wade Cline to issue a pre-termination notice. But the 
meeting quite unanimously felt the need of the hour is not to terminate the 
project but to initiate serious re-negotiation proceedings,'' said MSEB 
Chairman Vinay Bansal, who attended the board meeting. ``MSEB presented their 
views to the board members and it was understood by Enron which also included 
the Rs 401 crore penalty issue which is heading for arbitration proceedings. 
``We have also made it clear that the tariff structure of Enron is quite high 
and a downward revision of tariffs is unavoidable," Bansal added. 
``They cannot issue a termination notice without our consent since our 
exposure in the project is quite large and the lenders should approve any 
plans in that direction,'' said a top banker who was present during the 
lenders' meet. ``There is a general consensus that the project must be 
completed and the proposal to terminate the PPA should be kept in abeyance,'' 
he added. The global arrangers for the DPC include ANZ Investment Bank, 
Credit Suisse First Boston, ABN-AMRO, Citibank and the State Bank of India, 
where all these parties conducted separate meetings with the company 
officials. However, some bankers said the company can file a termination 
notice even if one lender with a minimum 5 per cent exposure on the project 
favours such proceedings. 
Meanwhile, in a clear reversal of roles, Maharashtra Chief Minister Vilasrao 
Deshmukh said that the state government was not keen on terminating the PPA. 
``We will ask them to refrain from taking any such harsh steps since that 
would be bad news for all of us, including DPC,'' Deshmukh said. Deshmukh was 
echoing Union Power Minister Suresh Prabhu's sentiments, who said that the 
government wanted an amicable settlement of the payment row. He, however, 
added that termination of the project would not hurt foreign investments, and 
dismissed warnings by analysts that winding up the $2.9 billion project would 
be a blow to India's efforts to woo foreign investors. 
The DPC has already slapped one conciliation notice on the Centre and three 
arbitration notices on the state government over non-payment of dues 
amounting to Rs 213 crore and interest towards the bills due for December 
2000 and January 2001. Meanwhile, MSEB officials said in Mumbai that the 
March bills amounting to Rs 134 crore was paid on Thursday as protest 
payment, despite the dispute over the amount. 
When asked on the future course of action, Bansal said it was up to the DPC.

THE HINDU BUSINESSLINE, Friday, April 27, 2001
DPC board authorises MD to issue PPA termination notice 
THE board of directors of Dabhol Power Company (DPC) has authorised the 
Managing Director, Mr Neil McGregor, to issue the notice of intent to 
terminate its power purchase agreement (PPA) with the Maharashtra State 
Electricity Board (MSEB) ``at an appropriate time''. The decision was taken 
at a board meeting held in London yesterday. ``While MSEB, which is an 
`interested party', was not allowed to vote, it made a presentation 
clarifying its stand on the matter,'' a senior State Government official 
said. 
The resolution to authorise the management to issue the termination notice 
was carried by six votes to one. IDBI voted against the decision, the 
official said. The serving of the preliminary termination notice will lead to 
a six-month ``suspension period''. According to clause 17.8 of the 
Termination Procedure, of the PPA: ``Following the giving of a preliminary 
termination notice, the parties shall consult for a period of six months (or 
such longer period as they may agree) as to what step shall be taken with a 
view to mitigating the consequences of the relevant event having regard to 
all the circumstances...'' 
IDBI and State Bank of India, the principal Indian lenders, had earlier 
persuaded the overseas lenders to hold their consent to the termination 
notice for some more time. At least one lender has to consent for the company 
to serve termination notice. It is understood that overseas lenders are in 
favour of termination of the project and are prepared to consent. However, 
domestic lenders are worried about the security of their advances if the PPA 
is abandoned mid-way. 
According to institutional sources, Indian lenders are trying to get all the 
parties concerned to thrash out outstanding issues. The Maharashtra and 
Central Governments too are in favour of a conciliation. Mr Vilasrao 
Deshmukh, Chief Minister of Maharashtra, yesterday went on record that the 
State did not want the project terminated. Mr Yashwant Sinha, Union Finance 
Minister, is also understood to be of the same opinion. ``The DPC will now 
have to decide what is the `appropriate time' to serve the notice,'' the 
official said. MSEB pays Rs 134 crore: Meanwhile, MSEB has paid DPC Rs 134 
crore towards its March 2001 bill. MSEB officials confirmed that the bill was 
paid `in protest'' today morning. ``They (DPC) had billed us for an amount of 
Rs 146 crore. We do not agree with some of the items included,'' a senior 
MSEB official said. 
THE PIONEER, Friday, April 27, 2001
Enron testing Maharashtra's nerves, T N Raghunatha
Dabhol Power Company (DPC) has begun to put fresh pressure on the Maharashtra 
State Electricity Board (MSEB), the Maharashtra State Government and the 
Centre for an early resolution to the prolonged dispute between them, if the 
DPC Board of Directors' decision to authorise its managing director to serve 
a contract termination notice to the MSEB is any indication.
The DPC Board, in its meeting in London on Wednesday, empowered the company 
management to sever its power supply agreement with MSEB, a move that could 
inflict a financial liability of Rs 2,840 crore on the Centre. The decision 
to authorise the DPC management to issue a termination notice to MSEB was 
taken by a vote of six to one after the Maharasthra Government 
representatives were prevented from voting on the ground of "interested 
party".
When contacted, the company's Mumbai-based spokesperson, Mr Jimmy Mogal, 
declined to comment on the reports about the decision taken by the DPC Board. 
"We have nothing to say on the reports emanating from London. We will express 
our views after a few days," he said. However, Maharashtra Chief Minister 
Vilasrao Deshmukh on Thursday termed the DPC board's decision as 
"unfortunate". "We have already requested the company not to take any harsh 
decision", Mr Deshmukh said in Mumbai. 
Official sources in the State Energy Ministry interpreted the DPC Board's 
decision as a pressure tactic employed by the Enron subsidiary to force the 
MSEB to clear the pending power bills without any further delay. Through its 
tough posture, the DPC wants to make its position stronger before it can 
formally agree for re-negotiations with the MSEB, the Centre and the State 
Government for cutting the price of power supplied by it to the State 
electricity board. The sources said that the DPC's reported decision to 
authorise its managing director to stop electricity supply to the MSEB did 
not mean that the Enron subsidiary would actually go ahead with the scrapping 
of the power contract with the MSEB.
"If anything, the DPC's reported decision is to mount additional pressure on 
the MSEB for clearance of pending power bills and put itself in a stronger 
position in settling its dispute with the MSEB. As part of its plan to arm 
itself with powers to break a contract in case situation goes beyond its 
control, the DPC had recently served a political force majeure to the MSEB, 
the Centre and the State Government," the sources said.Not surprisingly, the 
DPC's London decision comes on the heels of the Maharashtra Government's 
decision to set up a high-level committee, comprising representatives of the 
MSEB, the Centre and the State Government to re-negotiate with the Enron's 
subsidiary company for reducing the cost of power supplied to the State 
electricity board.Meanwhile, amidst the threat of a possible termination 
notice hanging on its head, the MSEB on Thursday made a "protest payment" of 
the Rs 134 crore disputed amount towards March bill of Rs 146.64 crore to DPC.
riday, April 27

THE TELEGRAPH, Friday, April 27, 2001

ENRON SIGNAL TO SWITCH OFF DABHOL POWER  

Enron today took the first decisive step out of the controversy-ridden Dabhol 
Power Company when it won an authorisation from the company,s board to stop 
sale of power to Maharashtra State Electricity Board (MSEB). 
The meeting of the company, of which the Houston-based energy giant holds 65 
per cent and the MSEB 15 per cent, was attended by state energy secretary V M 
Lal and MSEB technical director P Paunikar and it came days after its lenders 
discussed payment problems and a possible termination.The Centre,s liability, 
if Enron decides to snap the agreement, will be a year,s power bill and a 
termination fee of $ 300 million. However, the company will have to wait for 
six months from the day it serves the notice before it pulls the plug.The 
Centre shrugged off the move, saying there would not be any adverse effect on 
foreign investment in power if Enron walks out. &We do not see FDI inflows 
into the power sector being hit,8 power minister Suresh Prabhu said.MSEB 
officials said the ball is now in the court of DPC, which said its corporate 
policy did not allow it to comment on proceedings at board meetings. The 
decision coincided with a Rs 134-crore +protest payment, by the cash-strapped 
power board as part of the March bill worth Rs 146.64 crore.
There was speculation that MSEB coughed up the amount to cool frayed tempers 
at Enron,s hub in Houston, and because it was rattled by the sudden turn of 
events in the past few days during which the dispute had come to a head. MSEB 
officials brushed away the allusions, saying the cheque was ready on 
Wednesday but could not be handed over to DPC because of the state-wide 
bandh. &We have a disputed payment of Rs 12.64 crore, which will be taken up 
at the dispute-resolution forum,8 a board official said. Last week, DPC told 
the state government and MSEB it would no longer accept protest payments in a 
move to fortify its legal position. 
MSEB officials say Bechtel and General Electric, the other partners who hold 
around 20 per cent in DPC, are willing to go along with Enron Corp in 
terminating the deal but financial institutions such as IDBI are not game 
because it puts their loans at risk. Investments made by Indian institutions 
are not covered under the Centre,s and state,s counter-guarantees, unlike 
those made by international lenders.Maharashtra chief minister Vilasrao 
Deshmukh called Enron,s decision unfortunate. &We had told state government 
officials attending the Enron board meeting to stop the company from winding 
up its operations in the state as it will harm both parties.8
THE STATESMAN, Friday, April 27, 2001
Enron threatens to pull out
 
 The Enron crisis deepened with the Board of Directors of the Dabhol Power 
Company deciding to authorise the managing director, Mr K Wade Cline, to 
serve a notice of termination on the contract for the first phase of the $2.9 
billion power project.The decision, which could lead to the cessation of 
Dabhol,s power supply to the state, was taken at the meeting held yesterday 
in London according to reports quoting the chairman of the Maharashtra State 
Electricity Board, Mr Vinay Bansal. 
While DPC officials refuse to comment on anything, it is learnt that MSEB was 
itself prepared to serve a legal notice of termination just two days before 
the meeting.MSEB was said to have been dissuaded by the Nationalist Congress 
Party president, Mr Sharad Pawar, and union power minister Mr Suresh Prabhu, 
who had talks in New Delhi with the Maharashtra chief minister, Mr Vilasrao 
Deshmukh, and an MSEB delegation last Monday.
The state government has been served two arbitration notices while the Centre 
is ready to go for conciliation with the DPC for failing to honour its 
counter-guarantee.Further, the DPC has already slapped a notice of political 
force majeure which protects itself against undeserved claims in the event of 
exigencies that force it to take an extreme step.The union power minister, Mr 
Suresh Prabhu, contended in Delhi that since DPC contributed only 0.7 per 
cent of the total energy output of the country, its termination would not 
have such a phenomenal impact on the power situation. 
However, if terminations proceedings go through, Enron Corp, a 65 per cent 
share-holder in the Dabhol Power Company, would stand to net a hefty amount 
in damages. The union power secretary has been quoted as saying that 
termination of the DPC would cost the Centre Rs 1,800 crore, which is the 
total of one years, electricity bill and a termination fee of $300 million. 
According to an energy analyst, Mr Pradyumna Kaul, the total liability would 
not cross Rs 350 crore. However Mr Prabhu said in the Lok Sabha today that 
the that scrapping of the agreement would cost the Centre Rs 2,840 crore.It 
is learnt that on 20 April, Mr Deshmukh had given the go-ahead to the MSEB to 
prepare a legal notice to be issued to Enron during the meeting of the DPC,s 
Board of Directors on Wednesday. At the meeting, the energy minister, 
Padamsinh Patil, energy secretary, Mr Vinay Mohan Lal and MSEB chairman Mr 
Vinay Bansal, were also present.The notice was prepared over the past weekend 
and taken by the delegation when they called on Mr Prabhu on 24 April. 
However, the politicians convinced them that Enron would not get tough, given 
its huge stake in the project, and that such a notice would not be necessary. 
The meeting thus ended with the decision to renegotiate the power tariff, 
with Enron,s consent.
Among those present at the London meeting were Mr Lal, Mr Bansal and MSEB 
technical director, Mr P Paunikar, in their capacity as directors. However, 
they abstained from voting since they were deemed an interested party. The 
only vote to go against the decision was that of the IDBI which is also 
represented on the board, it is learnt.The chief minister, Mr Vilasrao 
Deshmukh, said the state was not in favour of terminating the project. This 
could mean that the latest manoeuvre to arm-twist the Indian authorities 
could achieve its immediate target of getting the arrears accumulated over 
the past three months cleared.The MSEB owes Enron Rs 146.64 crore for March 
2001 and Rs 229 crore for December 2000 and January 2001.The Centre today put 
up a brave face on Enron,s decision saying there would not be any adverse 
effect on foreign investment in power sector in the country, PTI reported 
from New Delhi.
&There will be no adverse impact as a result of any action by any domestic or 
foreign company. As far as we are concerned there will be no adverse impact 
on FDI in power sector,8 Power Minister Suresh Prabhu told reporters when 
asked about DPC,s decision to authorise management to issue a termination 
notice to MSEB.Emphasising that there would be no fallout of such decision, 
Prabhu said after the meeting of the Cabinet Committee on Economic Affairs 
&we are expecting cooperation from many Scandinavian countries as well as 
European nations in the power sector.&In fact not only the Power Minister but 
also the Prime Minister of Norway was here to inaugurate a seminar on power 
and he promised lot of cooperation in the sector.8


MID DAY
'DPC may not wind up'
Maharashtra Chief Secretary V Ranganathan has said that though Neil McGregor, 
managing director of the Dabhol Power Corporation (DPC), has been given 
complete powers with regard to DPC's operations in the state, including the 
authority to wind up operations, it does not necessarily mean that McGregor 
will issue such a termination notice. McGregor was given the powers at a 
meeting of the DPC board in London on Wednesday. Ranganathan said that state 
officials, including Maharashtra State Electricity Board (MSEB) Chairman 
Vinay Bansal and Power Secretary V M Lal, have reported back to him about the 
meeting in London.
With regard to the state's failure to pay Enron, Ranganathan said, " Bills 
are prepared as per the Power Purchase Agreement (PPA) and DPC owes some 
money to us. Our people informed Enron officials about this.. In fact, there 
was no reason to give powers to the MD to slap a termination notice."In the 
London meeting, MSEB and Industrial Development Bank of India (IDBI) 
representatives insisted that the DPC must pay Rs 411 crore since it could 
not supply power whenever needed. 
Chief Minister Vilasrao Deshmukh has already termed as unfortunate the 
decision of the board of the Enron-promoted DPC to give McGregor powers to 
wind up operations. Deshmukh added, " We have already requested Enron not to 
take any harsh decision."Deshmukh had earlier said, " We have directed state 
Government officials attending the DPC board meeting to desist the energy 
company from winding up operations in the state, as it would be harmful to 
both of us."
Enron officials are keeping mum on the issue. McGregor said, " I am not going 
to give any comment."

MID DAY, April 27, 2001
Enron offers 'no comment' on renegotiation, H S Rao
A crucial meeting of the Board of Directors of the Dabhol Power Company 
(DPC), promoted by the US energy major Enron, was held here yesterday 
apparently to discuss fate of its $900-million power project in Maharashtra, 
but there was no official word on the Indian and state Governments' decision 
to renegotiate the contract. 
An Enron spokesman declined to divulge what transpired at the meeting, saying 
the issues discussed at the meeting were 'confidential' . " We have not 
received any direct communication. Unless we get it and evaluate the details, 
we have no comments to make," the spokesman said when asked about the 
proposed decision on re-negotiation of the project in which the Maharashtra 
State Electricity Board (MSEB) has 15 per cent stake.
Asked whether the Board had taken a decision on empowering DPC Managing 
Director Neil McGregor to wind up its operations in India, the spokesman said 
he had nothing to say on them. Enron has reportedly authorised Mcgregor to 
look at various options including selling the company's stake in DPC. 
Maharashtra Chief Minister Vilasrao Deshmukh said in Mumbai that the state 
Government would pay up the undisputed dues to the company. He said the 
Maharashtra government " is not in favour of terminating the 2184-MW project, 
but wanted an amicable solution to the imbroglio."
MID DAY, Friday, April 27, 2001,

Committee to renegotiate Enron deal
A committee to renegotiate the Power Purchase Agreement with the Dabhol Power 
Company will be appointed by this evening, Chief Minister Vilasrao Deshmukh 
said today. Addressing media persons after his meeting with the noted social 
reformer Anna Hazare at his official residence Varsha, Deshmukh said the 
committee would be formed by this evening or by tomorrow, at the most.He 
termed as unfortunate the Enron board decision empowering DPC chief Neil 
McGregor to serve a preliminary termination notice on the Maharashtra State 
Electricity Board and said the state was willing to negotiate the issue with 
power company.
" Renegotiations will be held as per the suggestions made by the Godbole 
committee and the center will also depute its representative on the 
renegotiating committee. We don't want to take any hasty decision," Deshmukh 
saidHe pointed that the only bone of contention with the DPC had been its 
expensive tariff and hoped that the issue would be resolved amicably.When 
pointed that the Enron board had taken a decision to serve the notice despite 
state9 s willingness to appoint a renegotiating committee, Chief Minister 
said it was unfortunate.
Earlier, in his meeting with Hazare, Deshmukh promised to make necessary 
amendments to the Right to Information law recently passed by the state so 
that the information was easily accessed by the common people. He also gave a 
patient hearing to Hazare on his complaints of corruption in various state 
departments and promised action against guilty after a thorough inquiry 
within three months.
 
AFTERNOON, APRIL 27, 2001
 'ENRON'S ON!' 
State govt. to renegotiate Dabhol Power Project , By Hubert Vaz 
The US power giant, Enron Power Corporation's willingness to wrap up the 
Dabhol Power Project and leave the shores may not actually materialise, 
though the Dabhol Power Company chief, Mr. Wade Cline, has been authorised to 
do so, since the lenders for the project would have a decisive say in the 
matter. 
Disclosing this, Chief Minister Vilasrao Deshmukh confirmed this morning that 
the state government would churn out a compromise formula by which the power 
project at Dabhol could be continued, and at the same time Enron did not feel 
slighted. "Enron has not yet conveyed to us about this decision. We are 
waiting for their letter," he said. When asked what sort of compromise the 
state government plans to forge, Mr. Deshmukh said, "Let our officers come 
back. After that we will decide a future course of action. But we are 
definitely going in for renegotiation of the project. It is very difficult to 
predict the outcome of Enron's decision but as of now the project is still 
on." When asked whether the project could be moved to another state, if wound 
up from Maharashtra, Mr. Deshmukh said, that was not possible as per the 
terms of the agreement between the US company and the state government. 
However, it was difficult for the project to move out of the state itself, he 
indicated. He also confirmed that both parties would face considerable losses 
if the project was terminated. 
The board of directors of the Dabhol Power Company, which met in London on 
Wednesday, decided to put an end to all controversies surrounding the project 
once and for all by empowering the DPC chief to terminate the project, if he 
deemed it fit. However, this decision, as of now, does not necessarily 
indicate the death knell for the project. The Enron project, which had been 
riddled with controversies right from its inception, had been a pretext for 
the political parties in the state to drag each other on the mat from time to 
time. The previous Sena-BJP government, which had been out to terminate the 
project, however, chose to continue with it following renegotiations with 
Enron's top visiting officials like Ms. Rebecca Mark. And, the Democratic 
Front government inherited the controversial project when the governments 
changed hands a year and a half ago. 
Meanwhile, State Energy Minister Dr. Padamsinh Patil, when contacted at the 
Osmanabad Circuit House, said the state government and the central government 
have decided to appoint a joint committee to renegotiate the project with 
Enron. "It is not easy for them to walk out of the project just like that. 
They will have to go in for litigation and this would prove costly for both 
sides," he said. In case the project is terminated, the government can still 
manage the power needs of the state, though it would be a bit tough job, he 
added.