Enron Faces Calls for Big Changes in Indian Power Project --- Maharashtra 
State Panel Wants Debt Moratorium And Other Concessions
The Wall Street Journal, 04/13/01

Utility owes Enron $570 million
Houston Chronicle, 04/13/01

Texas energy company owed hundreds of millions in California
Associated Press Newswires, 04/13/01

Up & down and all around, its a merry dance alright
The Economic Times, 04/13/01

Power sale: Godbole wants DPC freed
Business Standard, 04/13/01

Brief: India to renegotiate Enron power prices
Houston Chronicle, 04/13/01

Enron Owed $570 Million by Pacific Gas & Electric, Paper Says
Bloomberg, 04/12/01



International
Enron Faces Calls for Big Changes in Indian Power Project --- Maharashtra 
State Panel Wants Debt Moratorium And Other Concessions
By Daniel Pearl
Staff Reporter of The Wall Street Journal

04/13/2001
The Wall Street Journal
A8
(Copyright (c) 2001, Dow Jones & Company, Inc.)

BOMBAY, India -- A government panel called for sweeping changes in a contract 
to supply power from Enron Corp.'s landmark Indian energy project to the 
industrial state of Maharashtra, warning that the changes would require 
"significant financial sacrifices" for the project's financial backers. 
Maharashtra, which faces a cash crunch and hasn't been able to pay its bills 
for electricity generation, created the panel. The recommendations, released 
yesterday, are likely to serve as the state's initial bargaining position as 
it seeks to reopen a power-supply contract that one Maharashtra government 
reached with Enron-led Dabhol Power Co. in 1993 and another renegotiated in 
1996. Enron has indicated it is willing to reopen the contract yet again.
The $3 billion project has been watched closely by U.S. officials, since 
Dabhol is India's largest foreign investment to date, and the U.S. 
Export-Import Bank is a major lender. Yesterday's report slams the Dabhol 
contracts as based on "extremely questionable assumptions" about oil prices, 
foreign-exchange rates and the state's demand for power. With a second phase 
expected to bring the project to 2,184 megawatts of capacity shortly, the 
report concludes, the state couldn't afford to sell power from Dabhol at the 
levels needed to make the project economical, even if the state's electricity 
board made years' worth of distribution reforms overnight. 
The 200-page report recommends converting the project's dollar-based equity 
and debt to Indian rupees, reducing Dabhol's return on equity to 16% from as 
much as 39% and putting a moratorium on debt payments until the state can 
afford to buy more of the plant's power. The five-member panel, which 
included a top Indian banker and several energy specialists, also suggested 
the project's liquefied-natural-gas facility sell gas to others. Dabhol is 
the sole user of the gas, which is shipped from the Arabian Gulf, and 
Maharashtra is responsible for paying for most of it no matter how much is 
used. 
A Dabhol spokesman said the company hasn't seen a copy of the report and 
declined to comment. Dabhol has disputed the 39% figure, and denied that its 
power rates are unusually high. 
The power project's lenders, meanwhile, are expected to meet next week to 
convey their views to Enron. One official of a lending bank said lenders are 
more concerned with the power company's immediate difficulties getting paid 
than with the prospects of having to renegotiate terms, though any new 
contract would need to be approved unanimously. 
Dabhol's lenders include the Japanese government, the Industrial Development 
Bank of India, ICICI Ltd. and scores of other Indian and international banks. 
Enron holds 65% of Dabhol's equity, with Bechtel Group Inc., General Electric 
Co. and the state electricity board splitting the rest.

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






April 13, 2001
Houston Chronicle
Utility owes Enron $570 million 
California's PG&E in bankruptcy 
By MICHAEL DAVIS 
Copyright 2001 Houston Chronicle 
Enron Corp. is owed $570 million by bankrupt utility Pacific Gas & Electric 
Co., the Houston company has disclosed in a letter to the utility's 
bankruptcy trustee. 
Other Houston companies have said they are owed large amounts, but Enron's 
disclosure was the first indication to Wall Street that the bankrupt utility 
owes the Houston company such a substantial amount, said M. Carol Coale, 
energy analyst with Prudential Securities in Houston. 
"They told the investment community that their California receivables were 
not material and that they were fully reserved against them," Coale said. 
Even so, "This is not going to be received favorably." 
This disclosure came as Enron became one of the companies named late 
Wednesday to the creditors' committee for San Francisco-based Pacific Gas & 
Electric's Chapter 11 bankruptcy. The committee represents the parties with 
the largest claims in a bankruptcy case. 
A letter to the trustee overseeing the case disclosing how much Enron is owed 
was part of Enron's effort to secure a seat on the committee appointed by 
U.S. Trustee Linda Stanley, a Justice Department official. 
Mark Palmer, an Enron spokesman in Houston, declined to comment Thursday on 
what Enron is owed. He said Enron has taken adequate reserves to protect its 
balance sheet against any outstanding debts owed it by Pacific Gas & 
Electric. 
Enron's shares closed Thursday at $57.30, down $1.21 per share. The stock 
markets are closed today in observance of Good Friday. 
Pacific Gas & Electric filed for bankruptcy protection one week ago, listing 
assets of more than $24 billion and debts of $18 billion, including more than 
$9 billion in uncollected costs for power purchases. The utility's creditor 
list is so long and varied that creditors are expected to form numerous 
subgroups based on the types of claims they hold against the company. 
The case is expected to take months, if not years, to settle. It is the 
largest utility bankruptcy ever filed and the third largest business 
bankruptcy in U.S. history, based on assets, behind Texaco in 1987 and 
Financial Corporation of America in 1998. 
Pacific Gas & Electric sells electricity and natural gas to the San Francisco 
and Northern California areas. The company said it filed Chapter 11 because 
negotiations with California over how to resolve the state's power crisis 
were going nowhere. 
Enron is scheduled to make its first-quarter earnings report on Tuesday. 
Enron is expected to report 45 cents per share for the quarter, up from 40 
cents per share in the first quarter of last year, according to earnings 
estimates compiled by First Call/Thomson Financial in Boston. 
"We are still confident that we will earn $1.70 to $1.75 per share for the 
year," Palmer said. 
He would not specify how much Enron has reserved to cover Pacific Gas & 
Electric's debt. 
The prevailing wisdom had been that Enron's exposure in California was 
minimal because it does not own power plants there. Companies such as Reliant 
Energy and Dynegy, which own power plants in California, have been forced to 
sell power with no guarantee of payment. 
Although Enron is one of the larger creditors of Pacific Gas & Electric, 
others are owed substantially more. 
The largest unsecured creditor is Bank of New York, with a $2.2 billion 
claim. 
The California Power Exchange, which once served as the marketplace for power 
sales in the state's deregulated power markets, holds a claim against Pacific 
Gas & Electric of $1.9 billion. The Power Exchange filed for bankruptcy prior 
to Pacific Gas & Electric's filing. 
Enron was dealt another setback in California earlier this week when a 
federal judge ordered the company to keep supplying low-cost power to 
California's state university systems after Enron tried to shift 
responsibility for buying the school's power to the state's troubled 
utilities. 
The school systems argued that if Enron were allowed to dump them as "direct 
access" customers who receive power bought and resold directly by the 
company, they would lose the ability to manage their power most efficiently, 
which could cost the taxpayers of California millions. 
Enron said it would file an emergency appeal to the 9th U.S. Circuit Court of 
Appeals in San Francisco to overturn U.S. District Judge Phyllis Hamilton's 
ruling in the lawsuit brought by the California State University and 
University of California systems. 
Enron said it is honoring all terms of the contracts, but the company added 
that it believes it has the legal right to shift the school systems back into 
the hands of the utilities, a spokeswoman said. 




Texas energy company owed hundreds of millions in California

04/13/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - Texas-based-Enron Corp.'s executives say financially troubled 
utility Pacific Gas & Electric Co. owes them $570 million, according to a 
letter to the utility's bankruptcy trustee. 
Enron's disclosure was the first indication to Wall Street that the West 
coast utility owes the Houston company such a substantial amount, an energy 
analyst said.
"They told the investment community that their California receivables were 
not material and that they were fully reserved against them," M. Carol Coale, 
energy analyst with Prudential Securities in Houston, told the Houston 
Chronicle in Friday's editions. "This is not going to be received favorably." 
Enron late Wednesday became one of the companies named to the creditors' 
committee for San Francisco-based Pacific Gas & Electric's Chapter 11 
bankruptcy. The committee represents the parties with the largest claims in a 
bankruptcy case. 
Mark Palmer, an Enron spokesman in Houston, said the company has taken 
adequate reserves to protect its balance sheet against any outstanding debts 
owed it by Pacific Gas & Electric. 
Enron officials used the letter to the trustee overseeing the case disclosing 
how much Enron is owed as part of Enron's effort to secure a seat on the 
committee appointed by U.S. Trustee Linda Stanley, a Justice Department 
official. 
A week ago, Pacific Gas & Electric filed for bankruptcy protection. The 
company listed assets of more than $24 billion and debts of $18 billion, 
including more than $9 billion in uncollected costs for power purchases. 
Officials of Pacific Gas & Electric, who sell electricity and natural gas to 
the San Francisco and Northern California areas, say they sought Chapter 11 
bankruptcy protection because negotiations with California over how to 
resolve the state's power crisis were going nowhere. 
The case is the largest utility bankruptcy ever filed and the third largest 
business bankruptcy in U.S. history, based on assets, behind Texaco in 1987 
and Financial Corporation of America in 1998, officials said. 
Enron, scheduled to make its first-quarter earnings report on Tuesday, was 
expected to report 45 cents per share for the quarter, up from 40 cents per 
share in the first quarter of last year, according to earnings estimates 
compiled by First Call/Thomson Financial in Boston. 
Earlier this week, Enron was dealt another setback in California when a 
federal judge ordered the company to keep supplying low-cost power to 
California's state university systems after Enron tried to shift 
responsibility for buying the school's power to the state's troubled 
utilities.

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


Up & down and all around, its a merry dance alright
Girish Kuber

04/13/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

MUMBAI 
IT COULD be a classic case for management students to study. In a span of 
just eight years the Enron controversy has repeated itself with a reversal of 
roles.
First it was the Sharad Pawar-led Congress government that went all out to 
persuade the US energy major to set up shop in Maharashtra. The general 
election that followed changed Pawars fortunes. 
A Sena-BJP government came to power but not before painting Enron black 
thanks to its Rs 64 crore expenditure on `education that had become an 
election issue back then. 
So the first thing that the Sena-BJP government did after assuming power was 
to scrap the Enron project. Subsequently the `review committee headed by 
Kirit Parikh, Professor Emeritus, IGIDR, once a bitter critic of Enron, came 
up with a new look power purchase agreement. The new PPA cobbled together 
phase I and II of the Dabhol Power Company. 
The next election was in 1999. By this time Pawar had deserted the Congress. 
The Sena-BJP alliance bit the dust at the hustings and a paralysed Congress 
was forced to join hands with Sharad Pawar. All for the sake of a 
power-sharing arrangement in the state. 
By this time Enrons partner, the Maharashtra State Electricty Board, had 
weakened further and it wanted the state government to help it pay Enrons 
bills. The equally bankrupt state government was obviously unable to spare 
the funds. 
The situation was perfectly ripe to rake up the Enron controversy. Once 
again. Whats more, it seemed politically correct too. The Vilasrao Deshmukh 
government did exactly this. It installed Vinay Bansal, a no-nonsense 
bureaucrat known for taking on ministers, as MSEB chairman to give the Enron 
dispute some much needed credibility. 
Bansal caught Enron napping when it failed to supply electricity as per the 
MSEBs demand. MSEB invoked the PPA clause and slapped Rs 402 crore penalty on 
the American utility. This provided the trigger for the fight which was 
waiting to happen. 
Meanwhile, the state governments review committee led by Madhav Godbole 
submitted its report and recommended a renegotiation of the project. 
Interestingly, this committee too had Parikh as a member. His inclusion had 
raised many eyebrows and N D Patil, convenor of the ruling coalition in the 
state criticised Parikh for his flip-flop on the project. 
In the end, Parikh kept himself away from the committee. The committee has 
observed that the then political leadership had shown ``great haste for 
signing the current PPA. 
It noted that even the cost of constructing a jetty at Dabhol has been 
included in the cost of power by the DPC. The committee wants to delink 
dollar-rupee equation for tariff to lower the bill. 
A large chunk of the loans taken by Enron have a bigger foreign currency 
component and the committee wants the Indian currency component in these 
loans to be increased. 
Interestingly, Enron has preferred to remain silent on the Godbole committee 
report. It has already invoked the political force majeure clause, has 
invoked the state and Centre guarantee and even announced its decision to go 
in for arbitration. 
The next twist in this longdrawn-out tale depends on Enrons reaction to the 
report. However, experts feel that the Dabhol case clearly highlights some of 
the major failures in past decision-making in the power sector. Firstly, 
before inviting IPPs, necessary reforms like setting up of independent 
regulatory bodies should have been in place. 
The problem of realisation of dues from defaulting customers and poor 
maintenance of transmission and distribution systems require that reform 
should begin at the distribution end, so that any supplier of power has the 
assurance that dues will be collected and payments effected for power sold. 
There is also need to correct the imbalance in terms of base-load versus 
peak-load power capacity. 
The SEBs supply power to farmers and domestic users at ridiculously 
subsidised prices. Moreover, many customers do not pay their bills and like 
other SEBs, MSEB too is unable to initiate action to collect these dues. 
The T&D losses too, which include pilferage of power, have gone up 
substantially in recent years. In this situation, the more MSEB purchases 
from Dabhol the more it loses through subsidies and T&D.

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


Power sale: Godbole wants DPC freed
Renni Abraham MUMBAI

04/13/2001
Business Standard
1
Copyright (c) Business Standard

The Madhav Godbole committee has recommended to the Maharashtra government 
that the Enron-promoted Dabhol Power Company should be allowed to sell power 
to entities other than the Maharashtra State Electricity Board (MSEB). It has 
also recommended that the tariff should be benchmarked to the lowest cost of 
supply of power from gas-based projects elsewhere, and restructured into a 
two-part tariff. 
"The committee recommends that the DPC tariff be re-defined using principles 
contained in the government of India guidelines and the availability-based 
tariff order of the Central Electricity Regulatory Commission, to convert it 
into a two-part tariff but limit equity return substantially," the report 
says.
Further, the committee has recommended that the equity returns for the 
redefined DPC tariff be defined in rupee terms, rather than in dollar terms. 
It has also suggested that the escrow agreement with DPC should be scrapped, 
as the current agreement "would soon give rise to a situation where virtually 
all of MSEB's revenues would be escrowed to meet DPC's payments, leaving 
little for wages and fuel, let alone additional power purchase." 
The report, "Energy review, Maharashtra and the DPC issue," was submitted to 
the state legislature on Thursday by minister for energy Padmasinh Patil. 
Business Standard obtained a copy of the 198-page report. Godbole panel 
suggestions 
The second part of the report will focus on the future course of action for 
reforms in the state energy sector. It is to be submitted to the state 
government on May 10. 
The first report recommends that DPC be allowed to sell power if it 
designates a certain capacity for sale outside the MSEB system and "the fixed 
charges on account of MSEB are reduced in proportion to this designated 
capacity." Alternatively, if DPC felt it has prospects of earning better 
return if it had the contractual freedom to sell power to other parties 
directly, it could do so only if it agreed to relieve MSEB of all its 
contractual obligations relating to the power plant, the committee said. 
The committee said that only benchmarking of the tariff against lowest gas 
based power projects elsewhere would make third party sale to other states 
and the power trading corporation possible. Otherwise negotiations with DPC 
will prove futile, the report states. 
Significantly, the committee has argued that in view of the un-sustainability 
of the DPC project, the power major should forego a portion of the return on 
its equity to make the project viable.In other words it wants the current 
rate of return of equity of 16 per cent to be lowered. 
"The maturity of the debt of DPC should be increased preferably to 15 years, 
with an initial moratorium of five years. An indicative interest rate for 
such debt could be 12 per cent (in rupee terms which would be around six per 
cent in dollar terms). In case such maturity is not possible for foreign 
loans, the foreign debt should be converted to rupee debt and restructured 
accordingly. Concomitantly, the equity may be restructured into deferred 
preference capital so that the impact on tariff is felt only in later years," 
the report said. 
It also makes a case for separating Enron's LNG project from DPC. As a 
separate facility, the gas could be marketed to other buyers of gas distinct 
from power projects. "That such buyers exist is demonstrated by Enron's own 
MetGas initiative and by Petronet's larger project plans. It is critical that 
costs of this facility be distributed over its entire capacity and not just 
over the amount sold to the power plant, as is currently the case. The 
facility's capital costs should also be reflected in the fuel charge, not as 
take or pay, but only in proportion to the extent of fuel re-gasified for 
power generation, compared to the total re-gasificatio capacity," it noted.

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







April 13, 2001, 12:53AM
Briefs: City and state 


India to renegotiate Enron power prices
BOMBAY, India -- A government-appointed committee recommended renegotiating a 
power supply agreement with U.S. energy giant Enron Corp. to lower prices 
being charged to a western Indian state. 
The panel also called for reform of a state power utility that defaulted on 
payments to Enron, which is based in Houston. 
State government ministers have been critical of Dabhol Power Co., Enron's 
Indian subsidiary, saying the power supplied by the 2-year old plant is 
"unaffordable." 




Enron Owed $570 Million by Pacific Gas & Electric, Paper Says
2001-04-12 23:01 (New York)


     Houston, April 12 (Bloomberg) -- Pacific Gas & Electric Co.,
the bankrupt subsidiary of Pacific Gas & Electric Corp., owes
Enron Corp. $570 million, the Houston Chronicle reported on its
web site, citing a letter from Enron to a bankruptcy trustee.
     Enron, a Houston-based electricity and natural gas marketer,
disclosed the amount to secure a seat on the creditors' committee
for the San Francisco-based utility, the report said. The $570
million was more than Enron previously indicated it was owed, the
paper said, citing Carol Coale, a Prudential Securities analyst.
     Pacific Gas & Electric filed for bankruptcy protection last
Friday after incurring more than $9 billion in debt buying
electricity at soaring prices and selling it at capped rates.
     The Bank of New York is the utility's largest unsecured
creditor, owed $2.2 billion, the Houston Chronicle said.
     Four power generation companies asked a bankruptcy judge
yesterday to excuse them from supply contracts with the utility,
saying the agreements could push them to financial ruin.