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From: "Vince J Kaminski" <vkamins@ect.enron.com>
To: vkaminski@aol.com
Message-ID: <86256874.007E61A1.00@notes.ect.enron.com>
Date: Fri, 28 Jan 2000 17:00:29 -0600
Subject: Re: Mark-to-Market
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---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 01/28/2000 
05:00
PM ---------------------------

From: Wade Cline@ENRON_DEVELOPMENT on 01/28/2000 07:17 AM ZE5B

To:   Pinnamaneni Krishnarao/HOU/ECT@ECT
cc:   Sandeep Kohli/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Vince J
      Kaminski/HOU/ECT@ECT
Subject:  Re: Mark-to-Market  (Document link: Vince J Kaminski)

Sandeep,

Can DPC sell to MSEB and have EIPL buy an equivalent amount of power from MSEB
at another spot on their grid, and then EIPL sell to the 3rd party state?





Pinnamaneni Krishnarao@ECT
01/27/2000 04:00 PM

To:   Sandeep Kohli/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:   Vince J Kaminski/HOU/ECT@ECT, Wade
      Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT

Subject:  Re: Mark-to-Market  (Document link: Wade Cline)

Sandeep:
     I met with Bob today and discussed the deal structure we put together. On
the mark-to-market issue, Bob and his colleague Wess told me that as long as
payments are tied to one particular plant, we cannot m-t-m them. They had same
problem with plants here in the US (like the peaking plants) and they had to
separate the plant from power sales to be able to m-t-m the assocated 
cashflows.
What they did is: they sold power from the plant to an outside party and 
bought
it back from them at completely different (multiple) locations. The buyback is
not tied to any specific plant and is marked to maket. Even if Enron can 
somehow
mark-to-market a deal with DPC, it can do so for only 50% of the cashflows
because only 50% of DPC is owned by outsiders.  And a simple loan to an
affiliate cannot also be marked to market.

     Bob was suggesting that if EIPL buys options from DPC and from some other
plants and in turn sells power to AP or Karnataka then we could have a case 
for
m-t-m. Politically DPC selling power to EIPL may not be the best solution, to
put it rather mildly!

Our alternatives, as I see them, are
1. Do the deal as we structured it. The only difference is that Enron doesn't
mark it to market and income is      earned only in 2002-03.
2. Do the deal as we structured it. EIPL/Enron then sells the contract to
another party at a profit. The problem, of course, is finding this party and
forking part of the profit to them.
3. Same deal, except revenue securitization is done through an outside party 
in
India (not EIPL).

Bob said he will think about the issues some more this week. Let me know when
you will be here next week so we can meet with Bob together. I will be going 
to
Boston for Tuesday and/or Wednesday (Feb.1-2). I can book an appt. with Bob 
for
us.




Sandeep Kohli@ENRON_DEVELOPMENT
01/23/2000 09:45 PM

To:   Robert Butts, Pinnamaneni Krishnarao@ECT
cc:   Vince Kaminski, Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Ananda
      Mukerji, Jaiprakash Desai/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject:  Mark-to-Market

Bob,

I wanted to continue the analysis on mark-to-market that I had spoken to you
about on the phone.

I thought that it was getting very difficult explaining the whole transaction 
by
phone, so I am having Krishnarao who is in Vince's group explain the 
transaction
to you.

Krishna has been helping us structure the deal here in India, and he has just
returned to Houston from India after working with the team here.

He will seek an appointment with you to explain the transaction.  I would like
you to please spend some time with him, and then based on the discussion 
please
send us a note detailing how sucha a transaction would be marked to market.

Please cosider the fact that currently there are no such transactions from the
Indian side.  This is a very important transaction for us, and we may need to
repeat this in coming months, hence setting up the system to account for these
maybe well worth it.  Also, what I am concerned about is that there will be an
Enron India (EIPL) account in India based on Indian GAAP, and upon 
consolidation
there will be a US GAAP accounting in the US.  It is here that we would like 
to
have mark-to-market accounting.  EIPL is structured through Mauritius, and 
then
Caymen Islands.

Another key question to consider is that when we m-t-m the transaction in the 
US
there will be a tax accruing in the year of m-t-m (say 2000).  However, in
India, as a result of the accrual accounting, there will not be any income
showing till the year 2002 or 2003.  We will need to know how that would get
treated, and whether there is a way to get credit for the tax payable in the 
US.
I am also confused about whether US tax would be levied, since none of the
income is being brought back into the US (remains overseas - subpart-F and 
other
concerns).

Finally, we have been working hard in structuring a fixed price contract and
getting a fixed for floating swap in the US (this is still not allowed to 
Indian
Corporates).  I need you to think about this too, and see if some type of
accounting will solve this issue.  Krishna knows what I am talking about, and
will brief you on the same.

Krishna - Please walk Bob through the three structures we had worked here.

Look forward to your help and comments.  This is going to be an exciting 
project
for us all.

Regards,
Sandeep.