Dabhol Status

----- Forwarded by Stephanie Harris/Corp/Enron on 12/01/2000 01:21 PM -----

Rob.Walls@enron.com
11/30/2000 04:23 PM

To: Stephanie.Harris@enron.com, Bruce.Lundstrom@corp.enron.com
cc:
Subject: Dabhol Status

----- Forwarded by Rob Walls/NA/Enron on 11/30/2000 04:22 PM -----

Sanjay
Bhatnagar@ENRON_D To: Kenneth Lay@ENRON, Jeff
Skilling@ENRON
EVELOPMENT cc: Rebecca
McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James A

Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Wade
11/30/2000 06:07
Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rob Walls
PM Subject: Dabhol Status

Jeff/Ken:

I heard from Wade that there were a number of questions on Dabhol yesterday
and I thought it may help if u received a quick update. Over the last 3
days, I have met with most key players in GOI and GOM assisted by some very
close friends of ours. The start of the state assembly session has given
some politicians and some vested interests an opportunity to raise issues
about Dabhol in the assembly again, a feature that we have seen every year,
at about this time, without exception and has led to a number of misleading
newspaper reports. The usual suspects are behind the latest stirring of the
pot.

The facts however are as follows:

1. GOM (at the administrative and political level) and MSEB remain firmly
behind the project and the commitments to it. They are concerned but at the
same time looking at proactively working to find a solution. They also
believe that they may have found one that is agreeable to GOI.

2. After discussions with us on Tuesday, GOM and MSEB are working on a plan
(thru this weekend) to treat Dabhol as a national asset. The plan involves
MSEB selling power from DPC to the central government utility which will
then pool the power with over 30,000 MW of power that they currently
control and sell the power onward to other states. The plan has already
been discussed at senior levels in the GOI and finds general acceptance.
Obviously the details are to be worked out and we are proceeding to help
GOM put the outline together over this weekend in Delhi and GOM will then
discuss it with MOP on Monday.

Wade reported that it was felt that the seniormost GOI ministers be
apprised of the seriousness which with we are viewing this situation. This
was already done Tuesday.

3. The Indian Lenders to the Dabhol project have met and agreed to a 30 day
waiver of MSEB delay in payment - agreed subject to review of the situation
at the end of 6 months. They have also agreed to the Equity transfer -
subject to lenders counsel confirming that there are no legal issues under
any of the project contracts. This shows the lender support for continuing
to move forward and buys us time to put in place the fix we are planning.

4. Ministry of Power has yesterday agreed to support an effort to freeze
the duties on imported fuel at a lower level of about $12/bbl versus the
current $35 or so. This will help achieve an immediate reduction in tariff
from Phase I and make Dabhol more competitive. This proposal is currently
with Ministry of Finance and our expectation is that they will review it
favorably as the MOP is taking it up personally.

All signs that I have received in India over the last few days lead me to
believe that the GOM is committed to solving the Dabhol issues at the
earliest. While we all have concerns, they seem to be addressable and if
the current plan is successful, they can be sorted out within the context
of current and existing documentation.

I have left names out but they are better discussed on the call that has
been scheduled for Monday evening India time. Hope that this helps in the
meantime.

Regards,

Sanjay