THE FINANCIAL EXPRESS, Tuesday, November 06, 2001
Dabhol Power slaps asset transfer notice on MSEB

Similar story also appeared in the following publications:

THE HINDU, Tuesday, November 06, 2001
DPC serves notice to MSEB 

THE INDIAN EXPRESS, Tuesday, November 06, 2001
DPC serves asset transfer notice on MSEB

DECCAN CHRONICLE, Tuesday, November 06, 2001
Enron ready to switch off DPC 

THE HINDU BUSINESS LINE, Tuesday, November 06, 2001
DPC serves asset transfer notice 

THE TELEGRAPH, Tuesday, November 06, 2001
Enron One Step Closer To Quitting Dabhol 

THE DECCAN HERALD, Tuesday, November 06, 2001
DPC serves asset transfer notice on MSEB

THE ASIAN AGE, Tuesday, November 06, 2001
DPC serves Asset Transfer Notice to MSEB 

THE HINDUSTAN TIMES, Tuesday, November 06, 2001
DPC slaps asset transfer notice on MSEB

BUSINESS STANDARD, Tuesday, November 06, 2001
Dabhol serves asset transfer notice on MSEB

THE ECONOMIC TIMES, Tuesday, November 06, 2001
DPC serves asset transfer notice; MSEB nonchalant

THE TIMES OF INDIA, Tuesday, November 06, 2001
Dabhol serves MSEB with asset-transfer notice

THE FREE PRESS JOURNAL, Tuesday, November 06, 2001
MSEB served asset transfer notice by DPC

Regional Publications which carried similar stories: Loksatta, Lokmat, Maharashtra Herald, Statesman, Pioneer, Dainik Jagaran, Punjab Kesari, Anand Bazar Patrika
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THE FINANCIAL EXPRESS, Tuesday, November 06, 2001
MSEB justifies rescinding PPA to panel, Sanjay Jog 
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BUSINESS STANDARD, Tuesday, November 06, 2001
Dabhol domestic lenders to meet in Singapore , S Ravindran 
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THE ECONOMIC TIMES, Tuesday, November 06, 2001
Enron could sell major assets
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THE FINANCIAL EXPRESS, Tuesday, November 06, 2001
Dabhol Power slaps asset transfer notice on MSEB

The Dabhol Power Company (DPC), in yet another attempt to legally corner the Maharashtra State Electricity Board (MSEB), on Monday served an asset transfer notice on the latter and thereby set in motion the valuation process of Dabhol's assets including the liquified natural gas (LNG) plant in connection with the termination of the power purchase agreement (PPA). However, MSEB, which has rescinded its PPA with DPC on May 29 for the material misrepresentation and default on the availability of power, has decided not to take cognisance but take future course of action after seeking advice from its solicitors. "Consequently, DPC is left with little choice other than to serve the transfer notice on MSEB, which draws us closer to final termination of the PPA and the ultimate recovery of damages as allowed under the project documents," the DPC said in a statement. 

However, the MSEB chairman Vinay Bansal in his reaction told The Financial Express that "the transfer notice served by DPC is quite an expected move. The company has resorted to this move to follow the PPA which we have already rescinded." "This action follows more than two years of late payments and defaults in payments from MSEB and a repudiation of the PPA by MSEB. The transfer notice is an important step in the asset valuation process agreed to by all parties to the PPA and is necessary to protect the interests of Dabhol's sponsors, lenders and other stakeholders. Following this transfer notice, the final termination notice is likely to be served in the near future to continue the legal process against MSEB," the DPC said in its statement. The MSEB would be required to pay damages of around Rs 35,000 crore towards revenue compensation and demobilisation costs. 

According to DPC, it would still prefer to resolve this dispute amicably through a negotiated purchase by the Government of India and Indian financial institutions (IFIs) of the foreign sponsors equity including offshore lender's debt. However, ongoing discussions between DPC and GoI/IFIs are yielding no significant progress towards a fair and reasonable solution, the company said. DPC, which has already served three preliminary termination notices in May, September and October to the MSEB by declaring its intention to opt out of the distressed Dabhol project after recovery of at least $1.2 billion, has issued the transfer notice under Clause 17.8 (c) of PPA. After issuance of asset transfer notice, the DPC would launch the process of evaluating the operating assets, preparation and auditing of provisional termination statement, preparation of legal documentation in order to issue a final termination statement in terms of schedule 11 of the PPA. 

Independent accountants and valuers would be appointed by the party terminating the PPA within 15 days of issuance of transfer notice. The provisional termination statement would be prepared by the terminating party and submitted to the accountants within 45 days of the transfer notice or if later, then within seven business days following the receipt of the valuer's certificates as per schedule 11 of the PPA. The accountants would be required to issue a certificate to both parties certifying the same after reviewing the basis of the provisional termination statement. Thereafter, a final termination would have to be prepared by the terminating party and submitted to the accountants prior to the transfer date (the date of serving final termination notice). 

The Enron Virodhi Andolan convener Pradmuna Kaul has welcomed the DPC's decision to serve the asset transfer notice and termed it as an endgame of Enron project. "We are concerned but the Government of India (GoI), Government of Maharashtra (GoM) and MSEB are not putting out its cards to put Enron on defensive. The GoI, GoM and MSEB should prepare a full case including fraud, public interest and public policy against Enron in a bid to force the latter to carry out fair and correct business calculation and asset valuation. Enron should not be allowed to claim fancy compensation under the asset transfer notice and final termination notice," he added. 

MSEB objects to DPC move , Sanjay Jog 

Mumbai, Nov 5IN a preemptive move, the Maharashtra State Electricity Board (MSEB) has taken a strong objection to the Dabhol Power Company's (DPC) move to serve asset transfer notice and appointment of experts, valuers and accounts under the power purchase agreement (PPA) in view of its decision to rescind the PPA on May 29. MSEB, which recently heaved a sigh of relief after the Supreme Court (SC) on November 2 extended the status quo until January 2002, in its communication of August 23 to the DPC had made it clear that the question of appointment of any experts, valuers and accountants did not arise as it has already rescinded the PPA. "As the rescission alongwith other disputes and differences are pending final determination by the Maharashtra Electricity Regulatory Commission (MERC), DPC ought to desist from taking any step as suggested," MSEB said. 

Accordingly, the board has already refused to participate or give its consent to such appointments. MSEB sources told The Financial Express that the DPC was seeking to take improper advantage of the stay of the proceedings before the MERC secured by the board. Also, the DPC was seeking to circumvent and/or defeat the orders passed by the SC by resorting to issuance of preliminary termination notices (PTN) and asset transfer notice. "By these actions, DPC is seeking to alter the status quo and is attempting to achieve indirectly which the company has been restrained from doing directly," sources said. 

The MSEB sources said that the board was of the opinion that in view of the recent orders passed by the SC, MSEB has been prevented from proceeding further with its case before the MERC until the issue relating to the Commission's jurisdiction is decided by the Mumbai High Court. The preliminary termination notices issued in May, September and October were the subject matter of MSEB's petition before the MERC. According to MSEB, DPC was driving the board to give up its case relating to the rescission of the PPA and the illegality of the PTNs. MSEB reiterated that the disputes and differences of non-payment raised by DPC through its PTNs were pending adjudication by the MSEB in its petition filed on May 25 this year. 
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THE FINANCIAL EXPRESS, Tuesday, November 06, 2001
MSEB justifies rescinding PPA to panel, Sanjay Jog 

The Maharashtra State Electricity Board (MSEB) in its presentation before the visiting Parliamentary Assurance Committee (PAC) on Monday justified its decision to rescind power purchase agreement (PPA) and suspend power purchases from Dabhol Power Company (DPC). "Today, despite installed capacity being only about 15,000 mw there is no base load shortage even without DPC," MSEB said. According to MSEB, it paid a whopping Rs 3,500 crore for the purchase of 6,700 million units from DPC during May 1999 and April 01 and sold the same power for Rs 1,000 crore at a paltry Rs 3 per unit (by incurring a loss of Rs 2,500 crore). As against this, MSEB had to purchase DPC power at around Rs 7 last year when a competing supply of 2,500 mw was available from eastern region at less than Rs 2 per unit to other states. MSEB chairman Vinay Bansal accompanied by the state principal energy secretary VM Lal and MSEB officials told the visiting parliamentary assurance committee that the merit order despatch issued by Maharashtra Electricity Regulatory Commission (Merc) required it to draw the most expensive DPC power. The order restricted DPC power purchases to about 250 million units per month, which was about 40 per cent plant load factor (PLF). 

However, the PPA envisaged the plant as a base load station at 90 per cent PLF. The committee chairman and former union minister S Venugopal (Telugu Desam Party) after its interaction with the MSEB and state government officials told The Financial Express that "the MSEB has made a presentation on its functioning and also on its power purchase agreement with DPC. They have also submitted the Madhav Godbole committee reports. We will submit these reports to the Government of India." Further, MSEB argued that it has been quite punctual in the payment of power purchase bills to DPC and added that it had and would pay interest for delays. However, MSEB pointed out that DPC was correcting monthly availability statements despite admission of shortfall in supply against declaration. DPC has yet to pay rebate served by MSEB for the default on the availability of power. According to MSEB, it has rescinded the PPA on May 29 for material misrepresentation by DPC. Ironically, other states were unwilling to make base load purchase commitments. On the implementation of its memorandum of understanding with the Centre, MSEB said that it would complete the installation of 1,672 time of day meters by December, implement 100 per cent metering after tariff correction and introduce computerised billing. According to MSEB, it has reduced the outstanding dues to below one month billing. In addition to this, implementation of Ahluwalia committee report would address another Rs 400 crore of dues. 
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BUSINESS STANDARD, Tuesday, November 06, 2001
Dabhol domestic lenders to meet in Singapore , S Ravindran 

Foreign lenders to the Enron-promoted Dabhol Power Company (DPC) are finally set to give the go-ahead to the company for serving the final termination notice (FTN) to the Maharashtra State Electricity Board (MSEB). The deadline for DPC to serve the FTN expires on November 19, 2001. The FTN will be the culmination of a series of measures that started with DPC serving the preliminary termination notice in May this year. In a related development, domestic lenders to the 2,184 mw power project are meeting in Singapore on November 8 and 9 in a last-ditch effort to save the project. 

Institutional sources said the lenders will take a close look at the offers of BSES and the Tatas for the project. Given a choice, the banks and institutions are not willing to run the project themselves even if they are offered the project at a hefty discount. "Our business is to lend and not to run a power project," said a senior banker. The latest provocation for the foreign lenders is the ruling by the Supreme Court last week restraining DPC from encashing a Rs 136-crore letter of credit issued by the MSEB till January 2002. "It is a simple case. The letter of credit issue should be delinked from the problems surrounding the project. Instead, MSEB has gone to court and the matter has now got delayed. Under these circumstances it makes perfect sense to serve the final termination notice," said sources in the foreign lenders consortium. "DPC has already approached us seeking permission to serve the FTN. So far, we had not taken a clear-cut decision. After the Supreme Court ruling, we are very much inclined to assent to serving the FTN," sources added. 

The overseas lenders have a combined exposure of about $1 billion in the $3 billion power project in Maharashtra. The foreign lenders include Bank of America, Citibank, Credit Suisse First Boston, Japanese Bank for International Cooperation and ANZ Investment Bank. Even after the foreign lenders give their permission to serve the FTN, the path will not be paved for international arbitration. MSEB and DPC are locked in a legal battle over the jurisdiction of various disputes between them. While MSEB is keen on the issue being resolved by the state power regulator, the Maharashtra Electricity Regulatory Commission, the power company is keen on going to the Court of Arbitration in London. 
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THE ECONOMIC TIMES, Tuesday, November 06, 2001
Enron could sell major assets

 STRUGGLING energy giant Enron may have to sell power plants, pipelines and even some of its energy trading assets as it seeks to head off a credit crunch and restore investor confidence, investment bankers said. While Houston-based Enron lined up $1 billion of new credit last Thursday, it still suffered a second credit rating cut amid concerns about questionable financial transactions that have triggered an investigation by the US Securities and Exchange Commission. The deteriorating picture, including a drop of almost 70 per cent in its share price in less than a month, has close watchers of the company saying it will probably have to break itself up if it is to stay independent. "It will have to refocus on its core strengths and get out of other businesses," said one investment banker close to Enron. There is also the possibility of a full bid for the company given its market value has now sunk to less than $9 billion. On Sunday, Britain's Independent reported that energy giant Royal Dutch/Shell Group may mount an $11 billion bid for Enron. 

Still, most bankers think such an opportunistic bid is unlikely given the questions hanging over Enron's balance sheet. During its third-quarter results announcement last month, the company said it expected over a billion dollars of writeoffs related to several soured investments, including broadband communications and water utility interests. It also announced an extra $1.2 billion writedown of shareholder equity related to investments that were not recorded on its balance sheet. The big challenge Enron now faces is to decide what assets it could sell first and what is the best possible price it can achieve from them, the bankers said. "In terms of classic corporate finance, the question they should ask is: 'Do I get enough money that represents equity?'" said Alan McFarland, a Wall Street veteran and co-founder of merchant bank McFarland Dewey. (Reuters)