'Seasoned Trader' Moving Up To Head Enron Broadband
Dow Jones Energy Service, 07/17/01
BANDWIDTH BEAT: Enron Readies For Life After Watermelon
Dow Jones Energy Service, 07/17/10
USA: UPDATE 1-Waxman urges probe of White House aide Rove.
Reuters English News Service, 07/17/01
US Rep: White House Obligated To Seek DOJ Review Of Rove
Dow Jones International News, 07/17/01
PSC OKs permit for power plant plans in Lowndes County
Associated Press Newswires, 07/17/01
USA: INTERVIEW-EnronOnline sees volume growth, CEO says.
Reuters English News Service, 07/17/01
Texans Raise $500,000 for American Red Cross Relief Effort
PR Newswire, 07/17/01
Terms of reference in Dabhol power inquiry may be difficult to frame
THE TIMES OF INDIA, Tuesday, July 17, 2001

Maharashtra strives to avoid embarassment in Dabhol deal , Sanjay Jog
THE FINANCIAL EXPRESS, Tuesday, July 17, 2001 


'Seasoned Trader' Moving Up To Head Enron Broadband
By Erwin Seba
Of DOW JONES NEWSWIRES

07/17/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- An executive described as "a seasoned trader" will lead 
Enron Corp.'s (ENE) telecommunications unit after its current chief executive 
takes a different position within corporation in the next two weeks. 
James Fallon, president and chief operating officer, will lead Enron 
Broadband Services after it becomes part of Enron's Wholesale Services Group.
Broadband Services Senior Vice President Kelly Kimberly told Dow Jones 
Newswires Fallon will lead the organization after Kenneth Rice, chairman and 
chief executive, moves to a corporate job at Enron. 
Fallon was unavailable to talk to Dow Jones for this story. 
One broker said Fallon's selection indicated Enron isn't backing away from 
developing the bandwidth market. 
"Jim Fallon is a seasoned trader," the broker said. "He made a killing in the 
power markets. He has a huge reputation for making money." 
The broker speculated that Fallon may increase the number of traders Enron 
has in the bandwidth market. Broadband Services has announced plans to 
reassign and possibly layoff non-trader employees in the coming two weeks. 
An analyst said Fallon's appointment indicates future growth for Enron's 
bandwidth business. 
"I think Fallon is someone who wouldn't be there if it isn't a good 
opportunity," said Raymond Niles, director of power and merchant energy 
research with Salomon Smith Barney. 
In his new role, Fallon will report to Mark Frevert, chairman and chief 
executive of Enron Wholesale Services, and Greg Whalley, president and chief 
operating officer of Wholesale Services. 
Rice previously reported to Kenneth Lay, corporate chairman and chief 
executive. 
Before becoming president of Broadband Services, Fallon was managing director 
of global trading and risk management for the unit. 
From 1993 to 1999, he worked in Enron North America's wholesale energy 
business rising from the position of associate to managing director, leading 
the power trading business. 
Before coming to Enron, Fallon was a nuclear operations engineer for General 
Electric, a systems engineer at W.R. Grace and a certified public accountant 
for Price Waterhouse. 
Fallon earned a bachelor's degree in marine engineering from the 
Massachusetts Maritime Academy, a master's degree in accounting from 
Northeastern University and a master's in business administration from 
Columbia University. 
Fallon takes over a unit that lost $102 million in the second quarter of this 
year and is going through a restructuring to reduce losses at the same time 
bandwidth prices continue to plummet. 
-By Erwin Seba, Dow Jones Newswires; 713-547-9214; erwin.seba@dowjones.com

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


BANDWIDTH BEAT: Enron Readies For Life After Watermelon
By Michael Rieke

07/17/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

A Dow Jones Newswires Column 

HOUSTON -(Dow Jones)- Listen. Do you hear that giant sucking sound? It's the 
watermelon being sucked out of the bandwidth market.
Two years ago this month, Jeff Skilling, now chief executive and president of 
Enron Corp. (ENE), told Dow Jones Newswires that the Internet high-bandwidth 
area of the telecommunications market was growing faster than the wholesale 
energy market. 
"Enron is positioned in the heart of that watermelon," he said. 
Skilling's watermelon hype has been replaced by talk of burn rate. Last week 
during a conference call with analysts, he said Enron must reduce its 
operating expenses, because losses at Enron Broadband Services exploded to 
$102 million in the second quarter from $8 million in the same period last 
year. 
Skilling promised to cut expenses quickly. Enron is closing the broadband 
services office in Portland, Ore. It will redeploy some of those employees 
and lay off others. 
An Enron spokeswoman said Monday that Ken Rice, chairman and chief executive 
of the broadband unit, would move to an as-yet undetermined corporate job in 
two weeks. 
In addition to trimming bandwidth losses, Enron's taking a step that could 
trim their visibility. 
Enron reports results from Wholesale Services, Retail Energy Services, 
Transportation and Distribution, and Broadband Services. No longer. As of the 
third quarter of this year, Enron Broadband Services will become a business 
unit within Enron Wholesale Services. That move will "make it easier for 
Enron to hide the losses," one analyst said. 
For reporting purposes, Enron will treat broadband as it treats wholesale 
markets for weather, metals, lumber and steel. In second quarter results 
released last week, Enron said it more than doubled delivered volumes in each 
of those commodities, but it didn't give information on income from any of 
them. 
If the company's broadband business had been lumped into Wholesale Services 
in the second quarter, the company could have said simply and accurately that 
delivered volumes in broadband increased more than sevenfold during the 
second quarter. The broadband losses of $102 million before interest and 
taxes could have been rolled into the wholesale business income of $802 
million, leaving still-impressive income of $700 million for the quarter. 
Cutbacks Par For The Course 

Enron isn't alone in looking for ways to cut expenses in the broadband 
sector. Telecom carriers and equipment makers have been laying off thousands 
of employees this year in an effort to cut billions of dollars in losses. 
"It's not pretty out there," a consultant said. 
Keith Shoemaker, a senior trader at Aquila Energy Corp. (ILA), has left the 
company's broadband unit for its energy business. There isn't enough real 
trading now in bandwidth to require the services of a senior trader, Sushil 
Nelson, general manager of Aquila's broadband unit, told Dow Jones Newswires. 
"If you look at total sales of any network companies, the real sales - by 
carriers on down the chain - are a fraction of what they were a year ago," 
said Harold Kamins, a managing director for Morgan Stanley Dean Witter. As a 
result, trading has diminished at least the same amount. 
A liquid market for bandwidth trading is now expected to be six to 18 months 
away, according to predictions by Enron's Skilling, Aquila's Nelson and 
others. 
There's still a future for commodity trading in telecom, because companies 
want to avoid big capital outlays for laying and lighting networks and want 
to preserve cash, said Ciara Ryan, leader of Arthur Andersen's bandwidth 
trading team. 
Rather than each company building a network to link all the cities in Europe, 
in North America or throughout the globe, companies need to cooperate more, 
she said. If a company has unused capacity, it can raise revenue by selling 
it to a competitor. When it needs capacity not covered by its network, it can 
buy it from a competitor. 
That more efficient approach means carriers would be more interested in two 
requisites for trading - a more standardized contract and more widespread 
interconnectivity. 
They want to preserve capital, manage cash flow and earn more from network 
assets, Ryan said. That means bandwidth trading will reflect less the hype 
drummed up by the energy players and more a solid business rationale. 
Energy companies will remain players in telecom despite what they expect will 
be a lull in trading. Enron will concentrate on intermediation as well as 
network services and the content business, Skilling said last week during the 
conference call. 
He pointed to a deal Enron has done recently to provide MSN with bandwidth on 
demand. MSN will be able to provision and pay for bandwidth as it's needed. 
More details will be provided later, he said. 
Aquila will take a different approach. It will look for assets while waiting 
for liquidity in bandwidth trading. Prices for network properties are 
collapsing, Aquila's Nelson said, so more and more assets are becoming 
available to companies with money. 
"Any assets that measure up well against the forward curve, we're going to 
buy," he said. "You need to buy low and sell high." 
Nelson said Aquila will look primarily at metro assets and at some longhaul 
assets. 
Energy companies have an advantage during the current depression in the 
telecom sector, he said. They're used to the boom-and-bust cycle of the 
energy commodity market. 
-By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@wsj.com

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


USA: UPDATE 1-Waxman urges probe of White House aide Rove.
By Thomas Ferraro

07/17/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, July 17 (Reuters) - A key congressional Democrat told the White 
House on Tuesday it has "a legal obligation" to request a Justice Department 
review of senior aide Karl Rove's dealings with companies that Rove held 
substantial stock in. 
Rejecting the White House's contention there was no conflicts of interest. 
Rep. Henry Waxman of California argued that the law requires the Justice 
Department to make the call.
Earlier this year, Rove had contacts with energy companies as the 
administration drafted a national energy policy, and with Intel Corp ., as 
the California-based computer chip maker sought approval of a proposed merger 
it later won. 
Waxman, in a letter to White House Counsel Alberto Gonzales, wrote: 
"Regardless of whether you believe Mr. Rove violated any laws, the White 
House is under a legal obligation to seek an independent review of Mr. Rove's 
conduct by the Public Integrity Section of the Department of Justice." 
"A consistent theme of federal conflict of interest laws is their emphasis on 
an impartial review of conduct by federal employees," wrote Waxman, ranking 
Democrat on the House Government Reform Committee. 
White House spokesman Anne Womack replied in a statement, "We are confident 
that Karl Rove has followed all ethical guidelines and acted appropriately in 
his role as senior adviser to the president." 
"The White House counsel's office stated those assertions (last month) in a 
response to Congressman Waxman's first request," Womack said in a statement. 
"Unfortunately, it appears that Congressman Waxman is continuing to put the 
politics of personal destruction before the business of the American people," 
she said. 
Waxman said during the Clinton administration the White House counsel's 
office referred to the Justice Department "matters involving conduct similar 
to Mr. Rove's" and that Gonzales should now do the same. 
Last month, shortly after Waxman first inquired about Rove's dealings, Senate 
Majority Leader Tom Daschle, a South Dakota Democrat, said his chamber 
planned to seek no examination of Rove's activities. "We're not going to 
engage in payback," Daschle said. 
Waxman, in his letter, complained that a June 29 correspondence he received 
from Gonzales about Rove's dealings "raises more questions than it answers." 
ROVE'S MEETINGS 
Waxman said he wanted to specifically know what transpired during Rove's 
meetings in March and April with officials from Intel, General Electric and 
Enron , an energy company. According to a Waxman aide, Rove sold more than 
$250,000 in stock in the three companies in June. 
Waxman wrote to Gonzales: "Unfortunately, your letter fails to respond to my 
request for specific information about whom Mr. Rove met and talked with, 
what Mr. Rove said, and whether Mr. Rove participated in other meetings or 
discussion regarding these companies." 
"Instead your letter states your conclusion that 'Mr. Rove ... took care to 
comply with applicable conflict of interest rules' that 'Mr. Rove took care 
to avoid any such impropriety,' and that 'Mr. Rove either had a passing, 
inconsequential contacts or participated in broad policy discussions, neither 
of which presents an ethical problem under applicable regulations," the 
California Democrat wrote. 
Waxman said: "I have closely reviewed the law governing conflict of interest, 
investigated precedents from prior administrations and consulted with 
experts." 
"If the news reports of Mr. Rove's conduct are accurate, Mr. Rove discussed 
federal policies with senior executives of companies in which he held 
substantial investments," Waxman wrote. "This is exactly the type of conflict 
of interest that the ethics laws are designed to prevent."

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


US Rep: White House Obligated To Seek DOJ Review Of Rove

07/17/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

WASHINGTON (AP)--A Democratic congressman pressed Tuesday for a Justice 
Department investigation of Karl Rove, saying the White House has a legal 
obligation to find out if the president's political strategist had a conflict 
of interest. 
Rove met on energy policy and high-tech issues involving companies in which 
he owned stock and "under any objective interpretation...Mr. Rove's conduct 
would surely violate the federal conflict of interest laws," Rep. Henry 
Waxman, D-Calif., wrote in a letter to White House Counsel Alberto Gonzales.
Waxman, the senior Democrat on the House Government Reform Committee, said it 
isn't possible to assess the seriousness of Rove's actions or his intent 
"based on the little information that has been made public." 
White House spokeswoman Anne Womack said that Rove has followed all ethical 
guidelines and acted appropriately. 
"Unfortunately, it appears that Congressman Waxman is continuing to put the 
politics of personal destruction before the business of the American people," 
said Womack. 
Gonzales acknowledged June 29 that Rove participated in meetings on the 
administration's energy policy while he owned stock in energy companies such 
as Texas-based Enron Corp. (ENE). Gonzales said "general policy discussions" 
fall outside the scope of federal ethics rules that bar an official from 
participating in a matter in which he has a financial interest. 
Rove also met March 12 with the chairman of Intel Corp. (INTC) and two 
lobbyists who spoke in favor of a proposed high-tech merger which the Bush 
administration approved less than two months later. 
Gonzales said Rove was noncommittal to the Intel pitch and offered no 
substantive response. 
Waxman said Gonzales' explanation "raises many more questions than it 
answers" because the White House counsel failed to specify the number of 
Rove's meetings, when they were, what Rove said and whether he had other 
contacts regarding policies affecting companies in which he owned stock. 
"Regardless of whether you believe Mr. Rove's conduct violated any laws, the 
White House is under a legal obligation to seek an independent review of Mr. 
Rove's conduct by the Public Integrity Section of the Justice Department," 
Waxman wrote. 
Waxman's letter came the same day the government revealed that White House 
lawyers are fighting attempts by The Associated Press to force the release of 
details about how and when Rove acquired stocks in Enron, Intel and 21 other 
companies, which he sold June 7 for $1.5 million. 
In a letter to AP, the Office of Government Ethics said that "after 
consulting with the White House Counsel's office," the government concludes 
that disclosing Rove's application for a tax break on the sale of his stocks 
would constitute "a clearly unwarranted invasion of personal privacy." Such 
applications list the dates stocks were purchased and the method of 
acquisition - such as compensation for services rendered, a gift or highly 
profitable stock options. 
Rove, a Texas political consultant before coming to Washington, got a 
certificate of divestiture from the government which is enabling him to defer 
payment of capital-gains taxes on his stock sales. 
Rove sold his Intel stock for $110,000 and his Enron stock for $68,000. 
Besides energy and high-tech, Rove's stocks were in defense, financial and 
pharmaceutical companies. 
Before selling his Enron stock, Rove had at least two contacts by telephone 
with company chairman Ken Lay. 
In one call to Rove, Lay touted Pennsylvania utilities regulator Nora 
Brownell for the Federal Energy Regulatory Commission before the White House 
public announcement that Bush would nominate her for the post. The White 
House says Bush had already decided to pick Brownell at the time of Lay's 
call.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


PSC OKs permit for power plant plans in Lowndes County

07/17/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

CALEDONIA, Miss. (AP) - Mississippi utility regulators have approved plans by 
San Jose, Calif.-based Calpine Corp. to build a power plant in Lowndes 
County. 
The state Department of Environmental Quality has not yet decided to issue 
the required permits for the electric-generating facility.
Calpine has submitted plans to build its $450 million power plant - the Lone 
Oak Energy Center - and have it operating in 2003. 
Calpine needs permits from both the PSC and DEQ to build the facility, which 
will be located near Mississippi 12 and Lone Oak Road near Caledonia. 
The Columbus Light and Water Department and the Caledonia Natural Gas 
District have raised concerns about the potential harm the Calpine plant 
could have on the area's water and gas supplies. 
While Calpine has set out plans to use Yellow Creek as its main water source, 
underground water would be used as a backup during dry periods when the creek 
is low. 
DEQ officials had delayed their review of Calpine's plans pending the 
resolution of issues the company has with the U.S. Army Corps of Engineers 
concerning the power plant's water-intake plans. 
Enron already operates a power plant in the Caledonia area. Cogentrix has 
received PSC and DEQ permits to build a larger facility nearby. If built, the 
Calpine and Cogentrix power plants would be on adjoining land. 
Cogentrix will be using wastewater piped up from the Columbus water system.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

USA: INTERVIEW-EnronOnline sees volume growth, CEO says.
By Gelu Sulugiuc

07/17/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, July 17 (Reuters) - As most players in a shrinking pool of online 
energy trading platforms struggle to stay alive, leader EnronOnline has a 
simple philosophy: If it ain't broke, don't fix it. 
The Internet arm of the energy marketing and trading giant Enron Corp. , 
EnronOnline predicts it will increase its volume and says it can coexist with 
the IntercontinentalExchange (ICE), the chief executive of Enron Networks 
told Reuters on Tuesday.
The innovative company is always evaluating its business environment, ready 
to remold itself according to market demands, but it is not pursuing mergers 
or aquisitions for now, according to Greg Piper. 
"I would never say never, but we're not proactively looking at aquiring an 
ownership position in any other exchange platform," Piper said. 
With an average of $3.5 billion in trades every day, EnronOnline enjoys the 
highest volume of all energy electronic platforms. Most energy trading 
platforms launched last year have failed to generate profits. 
Its closest rival is ICE, which routinely exceeds $1 billion a day. But while 
ICE is a many-to-many exchange that matches bids and offers, on EnronOnline 
one can only trade with Enron. 
"It's a tool that supercharges our market-making business," Piper said. 
Enron is the No. 1 natural gas and electricity marketer in the United States. 
About 60 percent of its transactions are captured through the electronic 
platform. 
"As long as we show good prices to our customers, our volumes will continue 
to grow," Piper said. 
The company is looking to grow online volume in products such as metals, 
steel, weather, petrochemicals and plastics. 
"We're trying to remain the leader in energy and help our other markets get 
more traction," Piper said. "There is a huge amount of growth that we haven't 
even tapped into yet." 
Piper said he is not worried about ICE's recent success. The Atlanta-based 
exchange recently took over London's International Petroleum Exchange and 
plans to transfer its open-outcry business online, significantly boosting its 
trade volumes. 
"Maybe six to 12 months from now, the story might be a lot different," Piper 
said. "But right now, there is room for the both of us." 
He added that Enron traders do not shy away from trading on ICE. Many of the 
energy giants that founded ICE and provide most of its liquidity are also 
Enron's biggest clients. 
"Enron will seek out a good deal on ICE when there is one," Piper said. 
INNOVATION KEY TO SUCCESS 
Recognized as one of the most innovative companies in the United States, 
Enron is constantly evaluating its position in the market and thinking of 
ways to become more successful. 
"The right thing to do in November 1999 was to launch EnronOnline," Piper 
said. "But we look at it every day and if it made sense to do something 
different, you can bet that Enron would do it and we wouldn't be emotional 
about it." 
One of the company's advantages is the fact that its software is a flexible 
application that allows EnronOnline to easily go in an out of different 
markets and regions. It constantly adds new products to its trading arsenal. 
But Piper said that EnronOnline has no plans to turn itself in a many-to-many 
exchange. 
"We want to focus in providing our markets to others," he said. "In the near 
term, we're not changing that." 
The company is considering licensing the application itself, but would not 
elaborate on who wants it and how much Enron would ask for it. 
EnronOnline has been so successful that even its competitors take their hats 
off. 
"I've been hearing for two years now that a one-to-many exchange wouldn't 
work, but Enron just keeps proving people wrong," said Frank Getman, chief 
executive of online energy exchange HoustonStreet. 
"If you're willing to make tight two-way markets and be the best price in the 
market, then people will continue to use your site." 
Enron's stock rose 41 cents to $49.53 a share on Tuesday in trading on the 
New York Stock Exchange.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

Texans Raise $500,000 for American Red Cross Relief Effort

07/17/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

July 18th Event Recognizes Individual Contributors to Local Disaster Fund 
HOUSTON, July 17 /PRNewswire/ -- On Monday, June 11, just two days after 
Tropical Storm Allison devastated the Houston area, a special account was 
opened so concerned citizens could contribute to local flood relief efforts 
at Chase Texas branch offices. And contribute they did. To date Texans have 
given nearly $500,000 to the American Red Cross-Greater Houston Area Chapter 
Local Disaster Fund through those branches. These dollars have been used to 
operate shelters, bring meals and water to communities, and provide direct 
assistance to flood victims through service centers and outreach programs.
This is in addition to contributions of $100,000 or more made by 
organizations such as Enron, American General/AIG, Dynegy Inc., BP Americas 
Westlake, ExxonMobil, Shell Oil Company, Reliant Energy, Houston Endowment 
Inc., Brown Foundation, Anadarko Petroleum, Ford Motor Company, El Paso 
Corp., JPMorgan Chase, AT&T, Belo Corp./KHOU- TV, Astros in Action 
Foundation, Bud Adams, Anheuser-Busch Companies, Williams, Calpine Corp., 
Rockwell Fund, Southwesten Bell Foundation, Chevron USA, Duke Energy, Conoco 
Inc., George Foundation, Major League Baseball, The Robert & Janice McNair 
Foundation, NFL Charities, Houston Chronicle/Hearst, Texaco Inc., AIM 
Foundation, Schlumberger Technology Company. 
"The American Red Cross has witnessed first-hand the generosity of the people 
of this city and this state," said John W. McDivitt, Chief Executive Officer 
for the Houston chapter. "It is significant that contributions made by 
individuals represent the single largest source of relief dollars. On behalf 
of the American Red Cross, its volunteers, and the people who rely on our 
services, we extend our thanks to the community for this support." 
McDivitt added that the Local Disaster Fund will remain open at Chase Texas 
branches, serving as a fund-raising vehicle for future emergency relief 
efforts. Checks should be written to the American Red Cross, GHAC. 
"We know that our own corporate gift and the money collected in our Texas 
branches goes toward an extremely efficient relief organization," said Alan 
Buckwalter, Chairman and CEO of JPMorgan Chase, Texas Region. "And, we take 
comfort in knowing that the funds raised here will provide local benefits. We 
are proud to open our doors to assist the relief effort." 
MAKE YOUR OPINION COUNT - Click Here 
http://tbutton.prnewswire.com/prn/11690X74145113 
/EDITORS' ADVISORY: At 10:30 a.m. on Wednesday, July 18, join McDivitt, 
Buckwalter, relief fund contributors and beneficiaries in JP Morgan Chase's 
Main Lobby, 712 Main. Persons representing the thousands of contributors will 
gather to share the importance of giving, and families who recently benefited 
from Red Cross services will express their thoughts as well./


/CONTACT: Margaret O'Brien-Molina of American Red Cross-Greater Houston Area 
Chapter, +1-713-313-1657, or fax, +1-713-313-1778, or momolina@ghac.org/ 
10:56 EDT 
Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

THE TIMES OF INDIA, Tuesday, July 17, 2001
Terms of reference in Dabhol power inquiry may be difficult to frame, Seema 
Kamdar

The decision of the Democratic Front co-ordination committee to order a 
judicial probe has cheered many an activist and some political parties. But 
framing the terms of reference of the inquiry may turn out to be a tall 
order, given the fact that the supreme court has already made its comments 
clear on the subject of probing the validity of the Dabhol power project. 

The special leave petition filed in the supreme court by the Centre of Indian 
Trade Unions and activist Abhaya Mehta had raised two questions dealing with 
the validity of the project and the accountability of the state government. 
Only the latter part survives, with the apex court having observed that the 
issue of validity of the project &is not in the public interest now to 
reopen8. On July 2, 1997, the apex court held that the issue has been dealt 
with on several occasions in earlier public interest litigations in lower 
courts. Further, it said, that considering the stage &at which the project 
now is , it is not in the public interestto permit re-opening of that matter 
for re-examination of the validity of the same once again.8

Coming as it does from the highest court of the land, this perception would 
make it uncomfortable for the proposed judicial inquiry to cover the 
worthiness of the project in its entirety. Analysts point out that the terms 
of reference for a judicial inquiry should logically be consistent with the 
perception of the supreme court. In any case, the inquiry may not seem as 
much of a positive development as it appears, they warn. They point to the 
delay in framing the terms of reference for the inquiry. The government has 
decided to draft the terms of reference &within a month8. The renegotiation 
of the project too, entrusted to a committee headed by former Union home 
secretary Madhav Godbole, is moving at a snail,s pace. & We hold one meeting 
a month,8 says a committee member. At this rate, it might take a long time 
for the committee to come up with a viable rate chart. These facts make many 
wonder whether the second phase of the project will ever be commissioned. The 
1444 MW phase is the larger of the two parts of the project and is 80 per 
cent complete, according to Enron officials.

Many feel that arbitration would be more effective and at least quicker. & 
Most companies go in for arbitration in the event of disputes. Enron should 
be no different. Th very fact that  there is no serious effort to put the 
controversy to rest casts doubts on the political will of the government,8 
says a senior Mantralaya official. He sees the judicial probe as a 
half-hearted attempt to keep the project at bay. & The inquiry could go on 
for ever,8 he says. Then, there is the question of whether its report will be 
accepted by the state government. Excluding cases dealing with land 
acquisition and minor disputes, the Enron project, as a private power plant, 
has gone through more than 25 cases which have questioned various aspects of 
the project, including the tariff, the power purchase agreement, technical 
clearances, the guarantee and counter-guarantee provided by the state and 
central governments respectively. At the moment, there are two pending court 
cases concerning the project, one in the Bombay high court and the other in 
the supreme court.



THE FINANCIAL EXPRESS, Tuesday, July 17, 2001 
Maharashtra strives to avoid embarassment in Dabhol deal , Sanjay Jog

The Maharashtra Government, which has decided to institute a judicial probe 
into the Dabhol deal, is striving hard to avoid an embarrassment from its 
constituents in view of its affidavit before the Supreme Court way back in 
1997 defending the need for the Dabhol Phase-II (1,444 mw) in the State.The 
Government in its affidavit during the hearing on a petition by the CITU had 
said that various studies carried out by the Maharashtra State Electricity 
Board (MSEB) have established that even after absorbing the power generated 
from Dabhol Phase-II, the shortage in base load for certain periods and 
peaking shortage will prevail in the MSEB grid. MSEB had sent confirmation to 
the Central Electricity Authority that conditions laid down by CEA will be 
fulfilled and MSEB will be able to absorb power from Dabhol Phase-II. 
According to the State Government, MSEB has therefore little or no reasons to 
believe that the conditions laid down by CEA will not be met with. The 
Government said that however, on the experience of Dabhol Phase-I, it has 
noted that it takes some time for actual materialisation of the demand as it 
requires fresh addition of the consumers as well as laying of Infrastructure 
from the MSEB side. Thus, increase in demand will be gradual and full 
absorption to the extent of 90 per cent which is the guaranteed dispatch may 
take some time to be realised.

The Government had admitted that the presumption that MSEB will suffer a loss 
of Rs 72 crore a month in case of Dabhol Phase-I power and Rs 420 crore a 
month after commissioning of Dabhol Phase-II seems to be founded on incorrect 
premises. As per the present rates, the tariff after Dabhol Phase-II is 
commissioned, would be around Rs 400-425 crore per month, considering 
exchange rate of Rs 42 per dollar and fuel price of $4 per Million Metric 
British Thermal Unit (MMBTU).&MSEB is in a position to absorb the Dabhol 
power without any abnormal backing down and there is no likely-hood of MSEB,s 
cheaper coal based power station to be closed down as alleged by CITU,8 the 
Government said. In a related development, a section of the ruling Democratic 
Front in Maharashtra is of the view that its ally, the Communist Party of 
India (Marxist) be convinced and their intervention should be sought for the 
withdrawal of a petition by CITU in the Supreme Court. However, Sources said 
that this won,t be possible, as the CITU has been sticking to its guns since 
beginning, against the Dabhol project.

(.. Clears rs.350 crore overdraft

The Maharashtra government has cleared he overdraft of Rs 350 crore on Monday 
following a disbursement of Rs 750 crore from the centre. Mantralaya sources 
told The Financial Express that the government could clear its overdraft on 
the 12 working day today as it has received Rs 750 crore from the centre. The 
amount of Rs 750 crore was towards devolution of taxes, timely releases, 
small savings and plan advances. Sources said that the state had to draw an 
overdraft in view of drastic fall in the sales tax collection and other 
revenues mainly due to slump in the economy. The amount of Rs 750 crore was 
towards devolution of taxes, timely releases, small savings and plan 
advances. Sources said that the state had to draw an overdraft in view of 
drastic fall in the sales tax collection and other revenues mainly due to 
slump in the economy.