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----- Forwarded by Rob Walls/NA/Enron on 12/11/2000 01:00 PM ----- Bruce Lundstrom@ENRON_DEVELOPMENT 12/11/2000 11:39 AM To: James A Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rebecca McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Rob Walls/NA/Enron@Enron Subject: Dahbol - PPA and Permits/Approvals Compliance Rebecca/Jim - The India legal team has completed two important reviews: Permits/Approvals Review. Sandeep Katwala led a group reviewing our permits and approvals. They feel pretty good about our compliance with these permits/approvals. As you have heard on previous phone calls, the day tank seepage some time ago makes us the most nervous. It seems to us that a release from the site resulting in substantial groundwater contamination plays pretty well in the court of public opinion given DPC's failure to "come forward" on the issue (even though it was advised at the time of the release that it had no legal obligation to do so). Sandeep's note is below. PPA Review. Paul Kraske led a group reviewing the PPA. His memo on this issue is also below. He feels pretty good about our ongoing compliance with the PPA. The instances of the non-compliance are not particularly material and none would appear to play well in the court of public opinion. I should also note that it would be very difficult for MSEB to lawfully terminate the PPA -- that remedy is not readily available to MSEB under the PPA terms. Both review efforts have relied somewhat on the representations of DPC personnel. The India legal team was able to "tie down" many significant issues with written documentation but in many cases have relied on the oral representations of our own employees to confirm compliance with our obligations. There are a number of other legal review efforts underway and I will keep you apprised as these reviews progress. Bruce ---------------------- Forwarded by Bruce Lundstrom/ENRON_DEVELOPMENT on 12/11/2000 10:21 AM --------------------------- Sandeep Katwala 12/11/2000 07:43 AM To: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: jinman@linklaters.com, niyer@linklaters.com, kthakore@linklaters.com, Lauren Hagerty/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Re: PPA Compliance - Attorney Client Priviledged Bruce, Lauren, Narayan and Kunal have completed their review of DPC compliance with clearances. Based on discussions with DPC personnel and a review of correspondence where relevant, no material non-compliance issues have surfaced which I feel would pose a problem under the PPA. There are two instances under the Reserve Bank of India approvals DPC has failed to submit reports to the Ministry of Finance within the time frame indicated; these are however minor issues. We have to accept that there may be practical instances where there may not be strict compliance at the site (eg the actual construction of physical assets is not strictly as per the layout approved by the authorities) but, from the discussions with DPC personnel none of these have come to light. On the environment approvals DPC has submitted compliance statements to the Maharashtra State Pollution Control Board which confirm that DPC is in compliance with the conditions in the relevant approvals. We have relied on these statements as being accurate. With respect to the water pollution issue, as we saw on Saturday, DPC has notified MPCB pursuant to the show cause notice of the measures taken to mitigate the pollution off the site. That correspondence seemed to indicate that there should be no further problems with this issue. However, my sense is that we have not seen the end of this issue and in particular, the report currently being prepared by GSDA has not yet surfaced in final form. There is no guarantee that it will be positive. Shobhan's view that it is difficult to see how a Court would support an injunction of some sort shutting down the plant "permanently" given the remedial measures taken by DPC is persuasive - you can however see that it provides excellent ammunition for PR purposes. Sandeep Paul Kraske 12/11/2000 06:23 PM To: Sandeep Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: jonathan.inman@linklaters.com, Pancharatnam Ramaswamy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Suhas Tuljapurkar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: PPA Compliance - Attorney Client Priviledged Gentlemen- Attached is a short note we prepared summarizing our conclusions after an initial review of PPA compliance. Please feel free to call if you have any questions regarding the attached. Regards, Paul
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