THE ECONOMIC TIMES
Wednesday, 23 May, 2001, http://www.economictimes.com/today/bn01.htm
Godbole quits, protests Pawar's remarks, Aditya Chatterjee 

The above article appeared in the following newspapers:
Wednesday, 23 May, 2001,http://www.timesofindia.com/today/23busu1.htm
Godbole quits Enron panel over Pawar's remarks, Aditya Chatterjee

Wednesday, 23 May, 2001,http://www.asianageonline.com/
GODBOLE RESIGNS FROM ENRON PANEL

MID DAY, Wednesday, 23 May, 2001,
http://www.chalomumbai.com/asp/article.asp?cat_id=29&cat_code=2f574841545f535f4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=11044
Godbole quits from Enron renegotiation panel
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MID DAY,  Wednesday, 23 May, 2001,
http://www.chalomumbai.com/asp/article.asp?cat_id=29&art_id=11046&cat_code=2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152
CM refuses to accept Godbole's resignation
The above article appeared in the following newspaper:
BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/news.asp?Menu=67#3
Maharashtra CM asks Godbole to withdraw resignation (1230 hrs IST)
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in04.htm
'Govt should take a stand & stand by it', Aditya Chatterjee 
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in03.htm
Should India pull the plug on Enron?, Aditya Chatterjee & Pooja Kothari 
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FINANCIAL TIMES
Wednesday, 23 May, 2001,http://globalarchive.ft.com/globalarchive/articles.html?print=true&id=010523001016
Enron may seek damages, JULIE EARLE
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in05.htm
Comments not on behalf of Maharashtra govt: Pawar

The above article appeared in the following newspapers:

BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/news.asp?Menu=67#7
Comments on Godbole not on behalf of Maharashtra govt, says Pawar (1500 hrs IST)

MID DAY,Wednesday, 23 May, 2001,
http://www.chalomumbai.com/asp/article.asp?cat_id=29&art_id=11047&cat_code=2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152
I was misquoted on Enron: Pawar
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in06.htm
Enron renegotiation meet called off
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ02.htm
Maharashtra may terminate DPC's services, Girish Kuber 
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ21.htm
MSEB employees to stage dharna at Dabhol on June 5
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THE INDIAN EXPRESS
Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus1.html
DPC fracas: NPA problem stares at FIs, stocks fall, George Mathew
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THE INDIAN EXPRESS
Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus2.html
Indian power firms not keen on buying DPC, Dev Chatterjee
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THE INDIAN EXPRESS
Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus4.html
DPC's Indian lenders may skip June meet in Singapore

The above article also appeared in the following newspaper:

THE FINANCIAL EXPRESS
Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/eco3.html
FIs may skip lenders meet in June 
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THE FINANCIAL EXPRESS
Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/eco1.html#
Scrips of DPC lenders dip after termination notice , Aarti Shetty
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THE FINANCIAL EXPRESS
Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/news6.html
State advocate general dubs MSEBs claim justified, Sanjay Jog
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BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/corp13.asp?Menu=2
Enron goes for India business valuation ,P Vaidyanathan Iyer & Parul Gupta in New Delhi
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BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/financ12.asp?Menu=5
DPC imbroglio: Rs 5,255 crore at stake for Indian lenders, Tamal Bandyopadhyay in Mumbai
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BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/opinion5.asp?menu=8
'An inexcusable failure of governance'
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BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/economy6.asp?Menu=3
DPC tangle: Centre adopts wait & watch policy, Subhomoy Bhattacharjee & Santosh Tiwary in New Delhi
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ19.htm
DPC to attend Godbole panel meet tomorrow
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ20.htm
DPC looks forward to Godbole panel's solutions
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/wl01.htm
Enron pulls out of venture drilling in Qatar's  waters
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THE ECONOMIC TIMES
Wednesday, 23 May, 2001, http://www.economictimes.com/today/bn01.htm
Godbole quits, protests Pawar's remarks, Aditya Chatterjee 

DR MADHAV Godbole, chairman of the Godbole Committee, appointed by the Maharashtra government to  renegotiate the power purchase agreement with Enron-promoted Dabhol Power Company, has resigned after Nationalist Congress Party supremo Sharad Pawar implied that he was not the right person to head the talks. In an apparent criticism of Godbole, Pawar had said on Tuesday he was apprehensive about the outcome of the renegotiations "as those leading the talks from the government side are working with a negative approach". Godbole's resignation was in protest of this allegation. "I have resigned due to derogatory remarks made against me by Nationalist Congress Party chief Sharad Pawar on Tuesday night," Godbole said here. Maharashtra has a coalition government, comprising the Congress and the NCP. And as the chief of NCP, Pawar has considerable clout in Maharashtra politics. 

Pawar was the state's chief minister when Maharashtra first signed an agreement with US-based power major Enron. DPC is a joint venture, with Enron as the majority shareholder. Enron has publicly said it was not willing to accept the terms of the Godbole panel report, which had suggested a re-negotiation of PPA, among others. In the light of Godbole's resignation, it seems that Enron may have scored a vital point in its negotiation with government authorities. It is not surprising that Enron is inimical to Godbole. The Madhav Godbole-led Energy Review Committee's report on the DPC project in Maharashtra had blamed DPC as well its major shareholders, Enron, General Electric and Bechtel, for a lack of due diligence to ensure the absorption of the entire DPC power after phase II was complete. The report had also slammed the role of financial institutions when it found they had exhibited poor  judgement and lack of due diligence in accepting these  projections without demur, and disbursing funds for the  phase II of the DPC project. "The decision of the financial institutions to fund this project seems to have been based primarily on the escrow account given by MSEB, the state government guarantee  and the counter guarantee by the Central government for phase I, rather than an independent and meticulous appraisal of the project," the Godbole report noted. 

The same financial institutions are now vigorously lobbying  with the Centre to ensure Enron does not pull out of India. The Godbole Committee had also expressed deep concern at the apparent failure of overnance that allowed such decisions to be taken. "A government that takes decisions involving the incurring   of liabilities to the extent of over Rs 6,000 crore a year (and rising) for over 20 years, in so cavalier a fashion, cannot at   the same time, assert that the courts must presume it  acts in the public interest," the report noted. The crux of India's problems with Enron lies on the issue of whether Enron is over-charging India. The Maharashtra government says that when the first PPA was signed in 1994, it was assumed that the DPC would  provide power at the rate of Rs 2.20 per unit, corresponding  with the rate of dollar at Rs 30 and cost of LNG at Rs  4,300 prevailing at that time. But that criterion, unfortunately, has not been considered, and now the state has to pay Rs 8.54 for every unit of power. 

State chief minister Vilasrao Deshmukh has gone on record to say: ``Even if we buy the entire power as per the agreement, the cost will be Rs 5.20 per unit." Enron, of course, claims that the higher power tariff was on account of the depreciation of the rupee against the dollar and the increase in world fuel prices. The negotiating committee, which comprises members of the Godbole Committee, representatives of Enron, Maharashtra State Electricity Board and the Centre, was supposed to meet on Wednesday, but the meeting was cancelled after Godbole put in his papers. It is not clear at this juncture whether the Maharashtra government will straight-away appoint a successor to Godbole or request him to reconsider his decision to  resign.

MID DAY,  Wednesday, 23 May, 2001,
http://www.chalomumbai.com/asp/article.asp?cat_id=29&art_id=11046&cat_code=2F574841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152
CM refuses to accept Godbole's resignation

In a significant development, CM Vilasrao Deshmukh has refused to accept the resignation  of Madhav Godbole, who heads the Enron renegotiation panel, saying that he (Godbole)  need not react to comments made by persons "outside the government".Deshmukh confirmed receiving Godbole's resignation but said that he has not accepted it. " I told him that he need not react to the comments made by persons outside the government. The panel was appointed by the state Government and we as the government are in total support of Godbole. I have requested him to continue and I hope that he will reconsider his decision". When asked if the crisis would pose any threat to the ruling coalition Deshmukh said there was no immediate cause for worry.

 Meanwhile, a crucial meeting on re-negotiation of the Power Purchase Agreement (PPA) between Maharashtra State Eelectricity Board (MSEB) and Enron-promoted Dabhol Power Company (DPC) for 2184 mw power plant at Guhaghar in Ratnagiri district has been cancelled following the resignation of Godbole. Confirming the cancellation of the meeting, the MSEB chairman and member of re-negotiation commitee, Vinay Bansal said that in wake of the resignation of committee chairman Dr Madhavrao Godbole the meeting has been cancelled.  Godbole chief of the committee appointed by the state Government to renegotiate Power Purchase Agreement (PPA) with Dabhol Power Corporation (DPC) had resigned this morning following criticism by the NCP president Sharad Pawar.Pawar had said that it was difficult to find any solution through a committee which was headed by a person having negative mind set. Though he did not mention Godbole, his criticism was clearly directed towards him.

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in04.htm
'Govt should take a stand & stand by it', Aditya Chatterjee 

NATIONALIST Congress Party chief Sharad Pawar said on Tuesday he was apprehensive about the outcome of Maharashtra government's renegotiations with Dabhol Power Company "as those leading the talks from the government side are working with a negative approach". Madhav Godbole, chairman of the negotiating committee, put in his papers in protest. Godbole spoke to Aditya Chatterjee of Times Internet Network about what led to his resignation. Excerpts: 

You were appointed the negotiating committee chairman by the Maharashtra government to renegotiate the power purchase agreement with the Enron-promoted Dabhol Power Company. A key member of the  government has now criticised you. Do you feel being let down? 
The government should learn to first take a stand and then stand by it. As you rightly pointed out, the Maharashtra government had appointed me as the committee head. And now, an important constituent of the government has alleged that the negotiating committee has a negative attitude. This type of a statement weakens the committee's stand on the crucial issue of negotiating the power purchase agreement with DPC. The government should try to give all the support to the committee and help strengthen it. Tuesday's comments by the senior NCP leader is counter-productive in this light. I have resigned because if the state government is not able  to place its full trust on my capabilities, there's no reason  for me to stay on. Therefore, I sent my resignation to the chief minister Vilasrao Deshmukh. 

Sharad Pawar was the chief minister of Maharashtra when the state first signed an agreement with US-based power major Enron in 1993-94. You were also regarded as the thorn in Enron's flesh. In fact, Enron has publicly said it was not willing to accept the terms of your committee report. Doesn't your  resignation, in effect, help out Enron and its supporters? 
I would not like to comment on this. It's for you to decide. But, the outcome of the negotiation will be decided by the kind of panel that the government constitutes. Hopefully, the committee will have a positive attitude this time. 

Is your decision to resign final or will you consider withdrawing the letter if the state government requests you to continue? 
I haven't considered this issue at this point of time. Sharad Pawar did not specifically name you in his statement. He actually blamed the entire committee for having a negative approach. Do you think other conscientious members of the Godbole committee will now follow your lead and put in their papers? That is a possibility. But, it's for the other members to decide. 

What is your future plan of action? 
Well, I will continue working on the report which involves the phase-II of the DPC project and the restructuring the  operations of the Maharashtra State Electricity Board. The report will be completed over the next 10 days.

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in03.htm
Should India pull the plug on Enron?, Aditya Chatterjee & Pooja Kothari 

THE Indian think-tank needs to quickly put their minds together in finding an amicable solution to the current Enron-Dabhol Power Company-Maharashtra government imbroglio and resolve the crisis which has risen over non-payment of electricity bills. If the two sides reach an understanding, it will be the best   case scenario. If not, India has to think whether to continue with a cancerous limb, or to simply cut it off to prevent further damage. 

The Maharashtra government has entrusted the Madhav Godbole panel with the responsibility of negotiating a new power purchase agreement with Enron. The panel would do well, if it takes into account the following. If Enron does pull the plugs on DPC, the central government will have to cough up a sum of Rs 2,910 crore - which constitutes a penalty amount of Rs 1,500 crore for one year of electricity bill, and $300 million as termination  fees (which, at $1=Rs 47, is equal to Rs 1,410 crore). This is a one-time payment, and the final figure of Rs 2,910  crore is certified by Union power secretary A K Basu. 

Now, instead of terminating the DPC project, if India were to continue with the present arrangement and keep paying Rs 1,500 crore per year for the next ten years to DPC, the net present value of this investment works out to a whopping Rs 9,217 crore, which is nearly three times the price that India pays - if DPC is terminated. The NPV was calculated on the basis of Rs 2,910 crore  being put in a fixed deposit for 10 years, and the deposit earning an interest rate of 10 per cent every year. However, another issue that also needs to be taken into account is the exposure of the Indian financial institutions and banks. FIs, led by the Industrial Development Bank of India, have, in two phases, provided loans of $ 95 million and $ 333 million, making their total exposure equal to $428 million (which, at $1=Rs 47, is equal to Rs 2,012 crore). This apart, SBI also underwrote the maximum portion of a $557 million cross-border loan, and have an exposure of about $175 million (or Rs 823 crore). 

Thus, the cumulative exposure of the Indian banks and financial institutions in DPC works out to Rs 2,835 crore. However, since only 80 per cent of this amount has been disbursed so far and FIs have tightened their purse strings of late, the net exposure of Indian lenders in DPC works out to Rs 2,268 crore. Since the Indian lenders are not covered by any counter-guarantee, their bottomline would take a hit if Enron backed out of this project. The government being a  majority stakeholder in most of these institutions, would also take a hit on account of these losses. If all these loans are taken into account, and added to the one-time payment of Rs 2,910 crore, the total cost to government would be Rs 5,178 crore - which is still lower than Rs 9,217 crore (the price India will pay to DPC, if the nation is to continue with the present arrangement of paying Rs 1,500 crore per year over the next ten years). Thus, going by the current scenario where a compromise seems like a very far-fetched option, the termination option will be a less costly one for the nation. 

However, the question which arises then is what happens to the assets and the plant in case of a termination. Well,  the government can sell it to private power players and  re-negotiate the cost factor with them - this time hopefully  after doing a cost-benefit analysis! A sale of assets would also lessen the load on the government. Who knows - the government may actually strike a deal with another private sector player to sell the ownership of DPC at a premium? Now, for our fears that cancelling the project might cost us future foreign direct investment since Enron is the biggest investor in India so far. Compare this - while Brazil raised $31 billion and China $49 billion last year alone in foreign direct investment, how  much FDI can India, with its annual inflow of about $4  billion, really lose? In short, it's a case of losing what you don't have in the first place. The Godbole panel would also do well to note that many developing nations, who were pushed into signing expensive power projects by power MNCs, have  successfully re-negotiated their contracts with no serious  financial consequences. 

Many nations simply did not have the money to pay for the  inflated bills, some refused to pay even after losing international arbitration awards, while some others like Costa Rica declared that the 15 contracts signed with Independent Power Producers (like Enron) have no legal  status or are bad in law. There are others too. 

* In July 1999, the Hungarian parliament declared that a PPA signed with multinational RWE was unconstitutional and void. 

* In August 2000, the Croatian government insisted on  tearing up a PPA signed by Enron with a previous  government. The contract was considered to be unaffordable, and was allegedly signed in politically  dubious circumstances. Enron subsequently abandoned the original agreement. 

* In September 2000, the Philippines government took a decision of not renewing contracts with IPPs. This was done to avert the excessive financial burden caused by these deals. 

The Enron project was always mired in controversy. One has seen how the Shiv Sena-BJP combine had thundered during 1994 election campaigns that they would "throw the Enron project in the Arabian Sea". Now, of course, the same BJP-led government at the Centre is bending backwards to prevent Enron from packing its bags. One can understand the predicament of the Indian politicians. The MNC was the biggest contributor to the campaign fund of US president George Bush and has the high profile former US ambassador to India, Frank Wisner among its  board of directors. 

In a sense, the fondness of the government for Enron is not surprising at all since the Sena-BJP government of Maharashtra had taken pride for `successfully' negotiating with Enron to increase the total output of the project where an additional 1,444 mw was added to the 740 mw DPC project. It's a different matter that as of date, neither Maharashtra can consume all of DPC's 740 mw produce, nor it has the money to pay the bills. The crux of India's problems with Enron lies on the issue of whether Enron is over-charging India. 

The Maharashtra government says that when the first power purchase agreement was signed in 1994, it was assumed that the Enron-sponsored DPC would provide  power at the rate of Rs 2.20 per unit, corresponding with  the rate of dollar at Rs 30 and cost of LNG at Rs 4,300  prevailing at that time. But that criteria, unfortunately, has not been considered, and now the state has to pay Rs 8.54 for every unit of power. In fact, the state chief minister Vilasrao Deshmukh  has gone on record to say: ``Even if we buy the entire 
power as per the agreement, the cost will be Rs 5.20 per  unit." 

Enron, of course, claims that the higher power tariff was on account of the depreciation of the rupee against the dollar and the increase in world fuel prices. Even during the first days of the Enron project, there were  enough warnings from sensible quarters. For instance, in  August 1994, the then Union finance secretary had written  to the power secretary that that the size of "the potential liability for a 1,000 MW plant, was around Rs 3,000 crore per year". The department of economic affairs had also expressed a fear that the "...risk of the counter guarantees being invoked was not unreal, given that SEBs had been defaulting in payments...". Caution was thrown to the winds then. The least India can do now is to ask for a re-negotiation. The question is does the Indian government have the guts to threaten a cancellation and force Enron to re-negotiate?


FINANCIAL TIMES
Wednesday, 23 May, 2001,http://globalarchive.ft.com/globalarchive/articles.html?print=true&id=010523001016
Enron may seek damages, JULIE EARLE

 Enron, the US power company, warned yesterday it would move to recoup significant termination damages if it was unable to settle a dispute over unpaid bills with the Maharashtra State Electricity Board(MSEB). It is understood that Enron would seek damages of Dollars 3.5bn (Pounds 2.4bn) to Dollars 5bn(Pounds 3.4bn). It has a 65 per cent stake in the Dabhol Power Company (DPC), which operates the Bombay plant thathas supplied the MSEB. Julie Earle, New York For regional reports, 


THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in05.htm
Comments not on behalf of Maharashtra govt: Pawar

REACTING to Madhav Godbole's resignation from the renegotiation panel, Nationalist Congress Party chief Sharad Pawar said on Wednesday that he was not talking on behalf of Maharashtra government when he commented on Tuesday on the "negative approach" of those leading the talks with Dabhol Power Company. Godbole's decision to resign from the committee is a"personal one", Pawar told reporters. He said there is need for renegotiations with Enron to reduce power tariff of DPC and the Godbole panel should complete its unfinished work. Godbole submitted his resignation to the chief minister in the morning after an adverse comment made Pawar at a public meeting on Tuesday night. Pawar had said he was "apprehensive of the outcome of  the discussions with Enron as those leading the talks from the government side are working with a negative approach." (PTI)

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/in06.htm
Enron renegotiation meet called off

US-based Enron Power said on Wednesday a meeting with the expert panel set up to renegotiate the  controversy-hit electricity supply contract to Maharashtra  had suddenly been called off. "We went to attend the meeting and we were told the meeting was called off. We were not assigned any reason for that," a spokesman of Enron's Indian arm told AFP by telephone. 

The state and Central governments last month decided to set up a panel to renegotiate the power purchaseagreement. The Enron-backed Dabhol Power Company has almost finished building a $3-billion two-part power plant in the western state -- which is the single largest US investment  project in India. Part one of the plant began generating power in May 1999, but the project has run into problems, with the Maharashtra government arguing it could not afford the high electricity  bills. Dabhol Power last Saturday issued a warning notice threatening to terminate the electricity supply contract with Maharashtra, due to the payments dispute. The "preliminary termination notice" effectively gives six months to the state to sort out disputes over the power purchase pact with Enron.  Payments for electricity have been guaranteed by the state and central governments. 

Early in April, Dabhol Power served the state electricity board a notice of political "force majeure," which is a legal manoeuvre that enables a party to break a contract in the case of events beyond its control. The Dabhol project has had a turbulent ride since initial contracts were signed in 1992. Allegations of corruption and high costs led to the scrapping of the contract in 1995, but it was re-negotiated  the same year. In February a state government panel recommended fresh re-negotiations to bring down the tariffs and charged Enron with inflating costs. (Agencies)

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ02.htm
Maharashtra may terminate DPC's services, Girish Kuber 

THE DABHOL Power Company is likely to be served with a primary termination notice from the Maharashtra government. Senior officials of the state's energy department and the Maharashtra State Electricity Board on Tuesday, separately, held a series of meetings with Maharashtra's Advocate-General to decide their strategy. "This is certainly the first option we are looking at to tackle the situation after the Enron served a PTN to MSEB," sources from the state's energy minister said. 

The state government and MSEB will issue a primary termination notice to DPC if Enron refuses to change its  stand and 'non-cooperation' with the Godbole panel  continues. "This could be the only option left with us to face the crisis," said sources. The decision to issue the termination notice will be arrived  at only after a meeting of the Godbole panel on Wednesday. The meet will also be attended by A V  Gokak, the Centre's nominee on the Godbole panel. This will be the first meeting being held after DPC issued the notice and also the first in which a Centres's nominee will be present. Meanwhile, changing its earlier stand, US energy major Enron, DPC's promoter, has also decided to attend the meet. Enron said it was looking forward to "hearing proposed solutions from the Godbole panel particularly related to credit-worthy purchasers for the power".  An Enron spokesman said they were "specially interested in the Centre's presence and learning of their expected role".

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ21.htm
MSEB employees to stage dharna at Dabhol on June 5

EMPLOYEES' unions of the Maharashtra State Electricity Board will stage a dharna in front of US energy major Enron's Dabhol Power Company's power project on June 5, demanding cancellation of the power purchase agreement with DPC and and end to renegotiation. R Jadhav, zonal monitor (Nasik), Subordinate Engineers Association, said people from the Konkan region would also participate in the protest against the power purchase agreement. Jadhav said the DPC project had plunged Maharashtra into  an economic crisis and its impact would be felt by the  innocent consumers. (PTI)

THE INDIAN EXPRESS
Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus1.html
DPC fracas: NPA problem stares at FIs, stocks fall, George Mathew

The Dabhol fracas has started reflecting on Indian financial institutions. Angry investors have been pressing sales in the counters of financial institutions which have a huge exposure in $2.775 billion Dabhol power project. Investors and fund managers are worried over the possibility of Dabhol loansbecoming non-performing assets (NPAs) in the books of Indian FIs.IDBI stock has already fallen 8.47 per cent to Rs 24.85 and ICICI by 6.09 per cent to Rs 83.95 on the Bombay Stock Exchange in the last two days. "If the PPA is terminated, supply of power will also stop. This means further payments will also stop. This can create problems for Indian institutions which are already saddled with huge NPAs," institutional sources said.

FIs and banks have already disbursed over Rs 1,700 crore out of its total commitments of around Rs 2,000 crore. What has accentuated the problems for Indian institutions is that they do not enjoy the comfort of their exposure to Dabhol Power Company being covered under the counter-guarantee agreement. On the other hand, foreign lenders have nothing to worry as their loans are covered under the counter-guarantee agreement.Indian FIs have taken further exposure by guaranteeing some of the foreign loans. Besides the rupee loans, IDBI has extended a guarantee for a $200-million credit extended to DPC by the US Exim Bank. "The two different sets of loans are likely to complicate things for FIs. They should have taken counter-guarantee for their loans... Why shouldn't Indian FIs also get cover for the loans? It's to be seen whether it will help them if they run to the government now," sources said.Foreign lenders who have committed around $ 1.6 billion have disbursed around level of provisioning in case of an eventual termination of the project after DPC issued a preliminary termination notice under the power purchase agreement. "There's no wonder Indian FIs have been trying to prevent the pre-termination  notice at any cost," sources said.

Banking circles said the Finance Ministry has so far ignored the request of domestic FIs to help protect their loan exposure. "Going by the turn of developments, DPC loans may become a problem for Indian FIs and eventually turn into NPAs. This may prove costly for lenders especially at a time when they are trying to clean up their balance sheets and recover existing NPAs," said a  banker, adding, "otherwise the government will have to come forward and bail them out. This seems to be a remote possibility."Another alternative for FIs would be to reschedule the loans on the lines of steel bailouts. While NPAs of commercial banks have crossed the Rs 60,000 crore, Fis in the country have not lagged behind. NPAs of ten leading institutions have reported a rise of 11.89 per cent, or Rs 1,929 crore, to Rs 18,146 crore during the year ended March 2000 from Rs 16,217 crore. 

IDBI has topped the NPA list by notching up bad loans worth Rs 7675 crore by March 2000. In fact, its NPAs have gone up by Rs 1,185 crore from Rs 6,490 crore. IFCI followed with NPAs of Rs 4,103 crore, but it reported fall of Rs 134 crore from the previous year's level of Rs 4,237 crore. ICICI's NPAs went up to Rs 3,959 crore from Rs 3,623 crore in the previous year, as per the RBI figures. FIs had resorted to large scale loan reschedulements, interest waiver and bail-out packages in the last two years. "This is beneficial to both the FIs and borrowers. While FIs can report a smaller amount as NPAs, borrowers (mostly big corporate houses) can avoid their names in the NPA list," said a former IDBI official, adding, "had FIs included bail-outs and reschedulements, the NPA figure would have gone up further."

THE INDIAN EXPRESS
Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus2.html
Indian power firms not keen on buying DPC, Dev Chatterjee

Leading Indian power companies have ruled out buying Enron Corp's stake in Dabhol Power Company if the project comes up for sale. The reason, say power company officials, is the high power tariff. ''None of the state government or consumer will buy power at the prevailing power tariff,'' say officials of leading power companies. ''If the project is up for sale, there is no question of us buying Enron's stake in Dabhol Power Corporation. We think the power tariff of over Rs 7 is too high and it would be difficult for us to find any buyers,'' said a top Tata Power official. ''The PPA has to be re-negotiated and tariff brought down,'' he added.

Tata Power had taken over the Mangalore power project after US energy giant, Cogentrix had withdrawn from the project. According to sources, the company will now invest its time and funds into 1000 mw coal-based Mangalore power project instead of taking over new power projects like DPC. ''There are reports that Karnataka government wants to have re-look at the Mangalore power project PPA, we are busy with that,'' said Tata Power official. Tata Power is one of India's largest power generation and distribution companies and is considered a likely suitor for the DPC.

Reliance Industries, which was setting up a 450 mw power project in Patalganga near Mumbai, has also expressed its reservations about taking over the project. In its post-annual results news conference, Anil Ambani managing director of RIL had said that the company is not keen on buying Enron's stake in DPC. RIL also owns 29.68 per cent equity in BSES which has its own distribution and power  generation capacity for Mumbai suburbs.Power sector analysts say only the cash-rich Union government utilities have the cash to takeover Enron power project but it would be difficult for them to sell power to other States unless some solution is hammered out between Enron, and Maharashtra government over the tariff. Already Karnataka and Madhya Pradesh, though facing major power cuts, have ruled out buying power from MSEB at the stiff rate.

Similarly, Maharashtra is a power deficit project but it is unable to lift power from Enron project as the state electricity board is unable to pay Enron bills due to its bankrupt balance sheet.MSEB has said the power produced by $ 2.7 billion Dabhol power project is expensive and has refused to buy the output from the second phase. The contract between the two signed in the mid-1990s had called for MSEB to buy the entire capacity of 2,184 MW. The first phase of 740 MW began operations in May 1999 but MSEB is unable to pay even the bills for first phase.

THE INDIAN EXPRESS
Wednesday, 23 May, 2001,http://www.indian-express.com/ie20010523/bus4.html
DPC's Indian lenders may skip June meet in Singapore

The Indian lenders of the US energy major Enron-promoted Dabhol Power Company (DPC) may skip the forthcoming two-day global lenders meet from June 4-6 in Singapore to discuss the implication of the pre-termination notice (PTN) served by the former to MSEB. "We have discussed the crisis with the international lenders on several occasions including at the April 25 London meet and the three-day tele-conferencing last week. Unless there is something specific on the agenda, the Indian lenders are not too keen to attend the Singapore meet," fnancial institution sources said here today. 

The Indian lenders, led by Industrial Development Bank of India, State Bank of India and ICICI, have lent around $1.4 billion out of DPC's total $ three billion  2,184 MW project. The lenders have stopped disbursement of about 20 per cent of the remaining funds of around $800 million for the phase-II, owing to the severing of ties between DPC and MSEB over non-payment of Rs 213 crore dues. They said the foreign lenders led by ABN-AMRO were in no mood to comprehend the  financial failure of MSEB and argued that the loss-making board should abide by  its contractual agreements as per the power purchase agreement. Meanwhile, the Indian lenders would once again knock the Centre's doors next week to solve the issue.(PTI)

THE FINANCIAL EXPRESS
Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/eco1.html#
Scrips of DPC lenders dip after termination notice , Aarti Shetty

Mumbai, May 22: SCRIP prices of the State Bank of India (SBI), ICICI and the Industrial Development Bank of India (IDBI) have dipped after the Dabhol Power Corporation (DPC) gave its preliminary termination notice last Saturday. On Tuesday, SBI's share price on the Stock Exchange, Mumbai (BSE) quoted at Rs 228.10, down from Friday's level of Rs 236.20. The scrips of ICICI and IDBI were seen at Rs 83.95 and Rs 24.80 down from Friday's quotes at Rs 89.40 and Rs 27.15 respectively. SBI and local financial institutions have both fund-based and non-fund based exposures to DPC. This is in main to the phase-2 of the project, which does not have a counter-guarantee from the Centre. In the project is scrapped, only a new buyer can salvage the situation on a reworked power purchase agreement (PPA). Domestic lenders have an exposure in excess of Rs 4,000 crore to DPC.
 
The termination of the project is expected to reflect badly on loan-portfolios. This in turn has made markets wary of the stocks of these financial intermediaries. It might be recalled that international lenders have already started a review on the impact of the termination of the DPC project on their loan-books, and the provisioning required. Local banksand financial institutions have been lobbying hard to salvage the project. Domestic-lenders led by IDBI are leaving no stone unturned to save the project. At the same time, banks with exposure to both Phase-1 and Phase-2 are now examining the extent to which they can limit their losses in the event of the project's termination. It is widely believed that both SBI and IDBI will also post lower net-profits for the last fiscal. SBI is seen posting a lower net-profit on account of its VRS charges, and interest on IMDs with IDBI taking 
a hit on higher provisioning as a result of its NPAs. 


THE FINANCIAL EXPRESS
Wednesday, 23 May, 2001,http://www.financialexpress.com/fe20010523/news6.html
State advocate general dubs MSEBs claim justified, Sanjay Jog

THE Maharashtra State Electricity Board (MSEB) has received a major boost, as state advocate general Ghulam Vahanvati has remarked that the MSEB's claim towards rebate of Rs 401 crore charged on the Dabhol Power Company (DPC) for misdeclaration and default on the availability of power on January 28 is justified.
"One would have to fall back on the basic principles of the law of contracts, under which, if the MSEB has a legitimate claim against DPC, it would be entitled to withhold payments to DPC. It cannot be that the MSEB should be required to continue to make payments to DPC, merely because the latter chooses to raise a dispute with regard to the rebate," Mr Vahanvati said in a 22-page communication to the MSEB.

Mr Vahanvati said that the DPC has solemnly undertaken to operate the Dabhol plant in accordance with the dynamic parameters and it was binding on the company to specify a variation in the Availability Declaration in the preparation time required to commence start-up procedure. "No such thing was done in the Availability Declaration," he added.On January 28, 2001, although DPC had declared the baseload capacity of 657 mw, the actual generation of mere 156 mw against the MSEB's instructed capacity of 657 mw during 6 pm to 7 pm. During 7 pm to 8 pm, the actual generation was 325 mw, against the declared baseload capacity and instructed capacities of 657 mw, during 9 to 10 pm, the actual generation was 325 mw against the declared and instructed capacities of 657 mw and during 11 pm to 12 am, the actual generation was 450 mw against the declared and instructed capacities of 657 mw."The moment there was a shortfall, apart from anything else, Clasue 10.2 of the power purchase agreement (PPA), which deals with availability, rebates and bonuses, came into operation," Mr Vahanvati opined.

According to him, DPC in its communication on February 1 to MSEB, has conceded that it has breached its obligations, but "that it has not done so knowingly." "One wonders how such a statement could be made, having regard to the confession that 180 minutes is insufficient to bring the plant to 657 mw. If this was an obligation and if DPC gave its Availability Declaration contrary to this, there could be no doubt that it did so knowingly," he added.Mr Vahanvati said that the DPC could have made changes to the Availability Declaration under article 3.4, but it did not do so. Clauses 6.1 and 6.2 of Schedule 6 also reiterate the importance of the dynamic parameters, since they provide that the DPC could not be required to operate the plant otherwise than within the Availability Declaration or the Dynamic parameters. The company in another letter on February 14, admitted that the actual performance capability of the Dabhol plant is not in accordance with what is stated in the PPA.

Mr Vahanvati said that the rebate has to be adjusted and the contract provides for billing in terms of payment in Clause 11. The billing statement has to contain the computation of rebate in accordance with Clasue 10.2.

BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/corp13.asp?Menu=2
Enron goes for India business valuation ,P Vaidyanathan Iyer & Parul Gupta in New Delhi

In a move which may be a prelude to Enron's complete exit from India, the company has appointed Arthur Andersen and Jones Lang La Salle to undertake a valuation exercise of all its business in the country, including the controversial Dabhol Power Company. While Jones Lang La Salle will assess all the real estate investments of Enron in India, Arthur Andersen will value the business worth of the Houston-based energy major's Indian set-up. When contacted, a company spokesperson declined to comment. "Nobody in Enron will talk about it," he said. However, sour- ces said the appointment of consultants was in line with Enron's strategic decision of pulling out of the 2,144 mw power venture which has been mired in controversy from day one. 

According to sources, Enron's real estate investments have taken a big hit. "Enron invested in prime real estate during 1992-1995 when the prices were at a peak. However, they have touched more realistic levels now," said a real estate consultant.Jones Lang La Salle is, however, tight-lipped about such a mandate from Enron. Meanwhile, sources said that Cushman & Wakefield which had earlier finalised certain real estate investments for Enron was also in the race. 

CB Richard Ellis has also proposed certain clients to Enron for buying/leasing some of its property. Enron's Houston-based president Jeffrey Skilling had in February said in an interview to Business Week that Enron "should not be in there (India) building $2 billion power plants. Our cost of capital is too high for that." DPC had disregarded the contents of the Godbole Committee report when it issued a preliminary termination notice to MSEB on May 19. The PTN gives DPC, MSEB, the state government and the Centre six months to resolve the issue amicably. If the talks fail, DPC would issue the final termination notice. Enron India had earlier this year also decided to abandon the proposed joint venture with MSEB and Global Telesystems for a broadband network in Maharashtra. 


BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/financ12.asp?Menu=5
DPC imbroglio: Rs 5,255 crore at stake for Indian lenders, Tamal Bandyopadhyay in Mumbai

The three Indian lenders to the Dabhol Power Company -Industrial Development Bank of India, State Bank of India and ICICI-may take a hit of Rs 3,000 crore on account of the deferred payment guarantee (DPG), given to foreign lenders in case they decide to trigger the accelerable guarantee clause in the wake of the preliminary termination notice (PTN). Also at stake is the Indian lenders' Rs 2,255 crore in term loans outstanding for both phases of the controversial $3 billion project.

Bankers are lobbying hard with the finance ministry to defuse the crisis. If the ministry continues with its "indifference," banks may collectively stay away from core sector lending in future. Indian banks have also decided not to attend the lenders' meet in Singapore, called in the first week of June to take stock of the situation.In phase I of the project, the outstanding US Exim loan is $221 million, backed by the guarantees of IDBI, ICICI and SBI. In rupee terms (exchange rate of Rs 47 per dollar), it works out to Rs 1,039 crore. 

For phase II, IDBI, ICICI and SBI have given guarantees to OND's (a Belgian bank) $64 million, Miti's $143 million and J-Exim's $210 million (Rs 1,960 crore).If the accelerable guarantee is invoked, Indian financial intermediaries will face a massive cash flow problem. Their capital adequacy ratio (CAR) will go down as the risk weightage to loans is 100 per cent, against 50 per cent risk weightage of guarantees. The outstanding rupee loans on Indian lenders' books for phase-I is around $53 million (Rs 249 crore) with IDBI taking the lead with $26 million, ICICI, SBI and Industrial Finance Corporation of India $7 million each and Canara Bank $3 million. 

BankAm's Indian office also has a $3 million exposure to phase I. SBI has disbursed $141 million worth of foreign exchange loans for phase-II and Canara Bank $40 million. The rupee loan for this phase is pegged at $246 million (Rs 1,156 crore). Here, ICICI has the highest exposure ($93 million), followed by IDBI ($83 million), SBI ($37 million), Canara Bank ($17 million) and IFCI ($16 million)."It is too early to speculate on the fate of our exposure. This is backed by assets," said an institutional source. Bankers said the company can pay the dues up to September but if DPC's activities come to a halt, problems could surface later. Indian lenders are not covered by the Centre's counter-guarantee. 

BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/opinion5.asp?menu=8
'An inexcusable failure of governance'

An extract from the first part of the Godbole Committee report on Dabhol Power Company suggests that the project was based on questionable assumptionsThe Dabhol project has generated a lot of controversy in the past and till the date of the constitution of the committee, there have been a number of public interest litigations filed against DPC [Dabhol Power Company] on various counts. Even during the tenure of the Committee, fresh petition have been admitted and are under consideration of the Bombay High Court. 

However, none of the earlier petitions have found favour with the courts. Even the one case that is still pending before the Supreme Court, has been retained because of the conduct of the GoM [Government of Maharashtra] in first filing an affidavit and then disclaiming it. Whenever the history of public interest litigation is written, this will be recognised as one of the failures of the process. One would presume that with such judicial scrutiny, all the issues in the project would have been examined thoroughly. Unfortunately,...this is far from true. The fault does not lie with the court but with inexcusable failure of governance... The case against DPC was argued extensively at least in two major writ petitions before the Bombay High Court. In these two critical cases, viz, the Ramdas Nayak case and the CITU case, various Government agencies argued forcefully...that DPC was in the public interest; that the contract could not have been awarded through competitive bidding but it was negotiated hard and long in order to obtain a beneficial outcome, that the design and size of the project was appropriate, and that the tariff was competitive and below the norms set by the Government of India and that all these issues had been examined by the appropriate authorities as required under law. 

The various agencies submitting affidavits and arguments to this effect included GoM, MSEB [Maharashtra State Electricity Board], Ministry of Power, GoI [Government of India] and the CEA [Central Electricity Authority]. In both these cases as also several other cases filed against DPC, the Court did not consider it appropriate to intervene. In the Ramdas Nayak case, the court observed that, "It is well accepted legal position today that judicial review is not an appeal from a decision but a review of the manner in which a decision was made. ...The function of the Court is to see that lawful authority is not abused; while doing so, it should arrogate itself the task entrusted to that authority...The Court should not enter into the merits of Government actions, more so in economic matters unless the same is unreasonable and is not in public interest... But at the same time the Court can certainly examine whether a decision making process was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution." 

The Committee believes that this report brings out these very concerns and shows in no uncertain terms that the decision-making process violated all these salutary principles, i.e, it was neither reasonable [nor] rational.... The Committee is surprised at the breadth of governance failure , which has occurred across time, across governments and across agencies, right from 1992 till as late as 1999...This chapter will show that every one of the assertions, relating to the benefits from the project, viz., the effectiveness of negotiations, its design and size, the need for power and competitiveness of tariff, for both Phase I and Phase II, have proven to be false and indeed, were based, at the time of the assertions on extremely questionable assumptions. 

The Committee, in the short time allocated to it, is unable to determine reasons for this consistent lapse in governance but is extremely concerned at it. Two members of the Committee, namely Dr Godbole and Dr Sarma, felt that, prima facie, the manner in which each and every opportunity was exploited by those favouring the entry of DPC at different points of time, against the interests of MSEB, the interests of the Maharashtra consumer and the people of Maharashtra raises doubts about a concerted effort to exercise undue influence at every stage in this project. ... One of the persistent issues has been the lack of competitive bidding. ... The GoM had chosen consciously to enter into negotiations, instead of going by the competitive bidding route and it justified this course of action and insisted that it had conducted intense negotiations before signing the contract. Both the justification and quality of these negotiations are suspect. ...[O]n the issue of competitive bidding, it was affirmed (by GoM through MSEB) that this was not relevant, counter-productive and inappropriate. Perhaps the only accurate statement was it was not unlawful. For reasons detailed below, the Committee finds each of these reason to be deficient and suspect. "Not relevant": GoM said that the "competitive bidding procedure [was] relevant when the Government or public authority [was] either disposing of or purchasing property or services. It [had] no relevance to cases where a private party chooses to set up a project on its own with its own resources" [affidavit by MSEB in Ramdas Nayak dated 25 July 1994]. 

This depiction of DPC as an investment with no obligation on either the "Government or public authority" to purchase services was patently in error. The GoM resolution extending a guarantee to DPC dated 10th February 1994 clearly mentions that "As MSEB will purchase power from DPC, it has to execute an agreement, namely Power Purchase Agreement (PPA)". "Counterproductive": This is a very interesting statement, which suggests that "major companies should not be asked to compete for projects. The Committee believes that the vacuity of such an argument is self-evident and does not merit further consideration. Inappropriate": This is a surprising statement, for it admits that GoM's "expert knowledge and experience" for evaluating bids is "not sufficiently up to the mark" and that its "knowledge of risk identification and allocation...is also not sufficiently developed." At the same time, however, GoM argues that it has the expertise, experience and knowledge to negotiate a contract. 

It is apparent to the Committee that if a body is not qualified to evaluate bids, which are submitted on standard terms, it is evidently less qualified to negotiate minute details of a similar project. This dissonance between the two bodies of knowledge as perceived by GoM is inexplicable. If the argument is that the MSEB had engaged international financial and legal adviser to assist it in its negotiation with DPC, the same could have been done with respect to preparation and evaluation of bid documents. 

'Enron revisited, Enron saw and Enron conquered' 

The Bombay High Court, in writ petition No 2416 of 1996 in CITU and Abhay Mehta vs DPC and others, observes the following regarding the renegotiations of the project in 1995: " But once it [GOM] decided to revive the project, it acted in the very same manner in which its predecessor in office had done. It forgot all about competitive bidding and transparency. The only transparency it claims is the constitution of the negotiating group. The speed with which the negotiating group studied the project, made a proposals for renegotiations which was accepted by Dabhol, and submitted its reports is unprecedented.The negotiating group was constituted by the Government of Maharashtra on 8th November 1995. It was asked to submit its report to the state governmentby 7th December 1995. The committee, we are told, examined the project, collected data on various similar other projects as well as internal bids including data on a similar project executed by Enron in the UK, held considerable negotiations, settled the terms of revival of the project, got the consent of Enron and Dabhol to the same on 15th November 1995, just within a week of its constitution and submitted its exhaustive report ... on 19th November, 1995, just 11days after its formation, much before the 7th December....The speed at which the whole thing was done by the negotiating group is unprecedented. What would stop one to say, as was said by the Chief Minister in the context of the original PPA, "Enron revisited, Enron saw and Enron conquered - much more than 
it did earlier"." 

(To be continued tomorrow) 

BUSINESS STANDARD
Wednesday, 23 May, 2001,http://www.business-standard.com/today/economy6.asp?Menu=3
DPC tangle: Centre adopts wait & watch policy, Subhomoy Bhattacharjee & Santosh Tiwary in New Delhi

The Centre will await the outcome of the conciliation proceedings before deciding on its next step about the Dabhol Power Company. Talking to Business Standard senior finance ministry officials said the central government representative AV Gokak has already been suitably briefed about the affair, and the centre is looking forward to the outcome of the proceedings. The sources said since the preliminary termination notice (PTN) has been sent by DPC to the Maharashtra government the Centre cannot take a stand on the issue without the state asking it to intervene. 

They also said since there is a mandatory time period of six months between the serving of a PTN and the implementation of the same, the conciliation can proceed. Officials of the finance and power ministries have meetings with Gokak last week to sieve through the entire legal position between the company, the state and the central governments. However, they agreed that the conciliation proceedings cover a very small portion of the dispute involving only the pending bills of DPC for December amounting to Rs 103 crore and will not solve the entire issue of electricity purchase between the company and the Maharashtra State Electricity Board.

Since the bills for the successive months have also run into problems it has created the possibility that the project may be terminated. Though the sources said that since the company has already invested a substantial sum for the second phase, it will not be very keen to withdraw from India abruptly.Incidentally the Godbole committee for renegotiating the power purchase agreement with DPC is slated to meet tomorrow in Mumbai.The officials also said that though the lenders to the project, which includes IDBI have approached the finance ministry to enquire about the stand of the centre, they have been told that the Centre can do very little about it.This is because the contract as drawn up is between the Maharashtra government and the DPC with the Centre only standing as a counter guarantor.

The wait and watch policy of the Centre is also dictated by the political compulsions, with the centre deciding to let the state government do all the talking. The total amount of guarantee that will come into play if the project is terminated is about $300 million. Since the second phase of the project does not involve any further counter guarantee the liability for the government will not rise. The sources also said no letter has been sent to either Enron or DPC till now. 

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ19.htm
DPC to attend Godbole panel meet tomorrow

DESPITE serving the preliminary termination notice on Maharashtra State Electricity Board, Enron-promoted Dabhol Power Company has agreed to attend the Godbole  Renegotiations Committee meeting to be held here on Wednesday. "In an official intimation, DPC has informed the state government that their representatives will attend the  committee meeting slated for Wednesday", state government sources said here. 

With regard to payment of the Rs 139 crore April bill, sources said MSEB would soon make a "protest payment" to DPC. "There have also been reports of DPC stalling operations at  Dabhol, but this is not true. The power station is working  and its Phase-II will be fired on June 7", sources added. Confirming MSEB's decision to slap yet another Rs 400 crore penalty on DPC, the state government officials said it was likely to be issued by the month-end. "In this post-PTN stage, currently MSEB is seeking legal opinion whether to challenge the PTN", they added. 

Sources also said the Centre's representative A V Gokak would at the meeting. Once a nine-member committee, the Godbole panel has now been reduced to six with three of its members,Rajendra Pachauri, Kirit Parekh and E A S Sarma, having opted out of it on personal grounds.  At the May 11 meeting, DPC officials including Enron India chief K Wade Cline and president Neil Mcgregor had expressed readiness to renegotiate the power purchase agreement and a possible reduction in its high tariff. (PTI)

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/23econ20.htm
DPC looks forward to Godbole panel's solutions
 
IN AN unexpected move, US energy major Enron-promoted Dabhol Power Company on Tuesday said it was looking forward to hear the proposed solutions from the Godbole  Renegotiations Committee, particularly related to  credit-worthy purchasers of power. In a late-evening statement here, DPC, which served the preliminary termination notice to Maharashtra State  Electricity Board on May 19, confirmed its attendance at  the committee's second meeting to be held here on Wednesday. "In addition, we are especially interested in the Government of India's attendance and learning of their expected role," the statement said. 

Earlier in the day, state government sources had said DPC would attend the committee meeting and that it had sent an official intimation to this regard. The DPC team would comprise Enron India chief K Wade  Cline, DPC president Neil McGregor, chief financial officier Mohan Gurunath, vice-presidents Sanjeev Khandker and Mukesh Tyagi and their legal counsel Jonathan Inman from  Linklaters & Associates. 

The DPC, in its PTN, had categorically stated that it was looking forward to a "specific proposal from MSEB, state government and the Centre encompassing the above requirements, which should form the basis for any future discussions and not the Godbole Committee report". It had also made it clear that in absence of such a proposal and active participation by the Centre, "further   meetings will not be productive". (PTI)

THE ECONOMIC TIMES
Wednesday, 23 May, 2001,http://www.economictimes.com/today/wl01.htm
Enron pulls out of venture drilling in Qatar's  waters

EXECUTIVES of Enron say they are withdrawing from a large natural gas project off Qatar, partly because the venture doesn't fit with the energy company's focus. Plans for the Dolphin project called for Houston-based Enron to work with Elf, a subsidiary of France's Total Fina, and the United Arab Emirates Offsets Group to develop and pipe natural gas from a block of the Qatar North Field. 

But the company pulled out, believing there are better places to invest its money, said Alex Parsons, a company spokesman in London. He said the project doesn't fit with Enron's current focus of emphasizing businesses such as marketing and trading in wholesale markets such as those for natural gas and electricity and broadband. Those involved with the project said last year it could end  up requiring investments of up to $10 billion over six or seven years. 

Enron said on Monday it was transferring its 24.5 per cent stake in the project to the United Arab Emirates Offsets Group, which said in a news release it had started negotiating with other international players to become stakeholders. With the transfer, United Arab Emirates Offsets Group will   own 75.5 per cent of Dolphin. Terms of the deal weren't released. Enron said it would consider future ventures with the United Arab Emirates Offsets Group that were "in line with our core business activities." M Carol Coale, an energy analyst with Prudential  Securities in Houston, said Enron's move is consistent  with its exit strategy from international assets that generate low returns. (AP)