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Enron Mail |
FYI news articles from Indian press.
---------------------- Forwarded by Sandeep Kohli/ENRON_DEVELOPMENT on=20 04/27/2001 08:24 AM --------------------------- Nikita Varma 04/27/2001 07:51 AM To: Nikita Varma/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: (bcc: Sandeep Kohli/ENRON_DEVELOPMENT) Subject: From The Enron India Newsdesk - April 27th newsclips Friday Apr 27 2001, http://www.economictimes.com/today/cm03.htm DPC board empowers MD to cancel MSEB contract Friday Apr 27 2001, http://www.economictimes.com/today/27comp11.htm MSEB pays Rs 134cr under 'protest' to DPC Friday, April 27, 001,=20 http://www.businessstandard.com/today/economy4.asp?Menu=3D3 Enron India MD authorised to terminate PPA Friday, April 27, 2001,http://www.financialexpress.com/fe20010427/top1.html Foreign lenders slam brakes on disbursements to DPC , Sanjay Jog & Raghu Mo= han Global banks comfortable with Enron pull-out Friday, April 27, 2001, http://www.indian-express.com/ie20010427/nat23.html Enron: Dabhol chief gets powers to end deal with the MSEB Friday, April 27, 2001, http://www.the-hindu.com/stories/0227000d.htm Offer of renegotiation 'too late': Enron, By Mahesh Vijapurkar=20 Friday ,27 April 2001, http://www.timesofindia.com/today/27home2.htm Enron ready to pull out, but lenders say wait=20 Friday, April 27, 2001, http://www.hindubusinessline.com/stories/142756dh.h= tm DPC board authorises MD to issue PPA termination notice=20 Friday, April 27, 2001,=20 http://www.dailypioneer.com/secon2.asp?cat=3Dstory7&;d=3DFRONT_PAGE Enron testing Maharashtra's nerves, T N Raghunatha Friday, April 27, 2001,http://www.telegraphindia.com/ ENRON SIGNAL TO SWITCH OFF DABHOL POWER=20 =20 Friday, April 27, 2001,=20 http://www.thestatesman.org/page.news.php3?id=3D13026&;type=3DPageone&theme= =3DA Enron threatens to pull out Friday, April 27, 2001,=20 http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&art_id=3D10006&cat_c= ode=3D2F5 74841545F535F4F4E5F4D554D4241492F5441415A415F4B4841424152 'DPC may not wind up' Friday, April 27, 2001,=20 http://www.chalomumbai.com/asp/article.asp?cat_id=3D29&cat_code=3D2f5748415= 45f535f 4f4e5f4d554d4241492f5441415a415f4b4841424152&art_id=3D9953 Enron offers 'no comment' on renegotiation, H S Rao =20 http://www.afternoondc.com/ 'ENRON'S ON!'=20 State govt. to renegotiate Dabhol Power Project , By Hubert Vaz=20 THE ECONOMIC TIMES, Friday Apr 27 2001 DPC board empowers MD to cancel MSEB contract THE ENRON power project crisis on Thursday deepened with the board of Dabho= l=20 Power Company authorising the management to issue a termination notice to t= he=20 Maharashtra State Electricity Board even while international lenders to the= =20 project asked Enron to renegotiate power purchase agreement signed with the= =20 MSEB. The decision to authorise managing director Neil McGregor to issue "notice = of=20 termination on the contract to sell 740 MW of power" was taken after the=20 board prevented MSEB from voting on the ground that it was an interested=20 party. The decision was taken with six votes in favour and the single=20 opposition vote was cast by IDBI, sources said.=20 According to reports, financial institutions such as ANZ Investment Bank,= =20 Credit Suisse First Boston, Citibank, ABN-Amro and the State Bank of India= =20 have on Wednesday advised Enron against terminating its PPA with MSEB. MSEB= =20 chairman Vinay Bansal, who with two other directors attended the meeting on= =20 Wednesday representing Maharashtra=01,s 15 per cent stake in the near $3-bi= llion=20 project, said: "The Indian side told them that it would be unfortunate if= =20 Enron broke the contract." While Bansal declined comment on the board=20 decision, the sources said the Indian side had expressed its interest to=20 holds talks on the issue rather than terminating the project and there were= =20 possibilities of a fresh power purchase agreement between the company and t= he=20 state. (PTI) THE ECONOMIC TIMES, Friday Apr 27 2001 MSEB pays Rs 134cr under 'protest' to DPC DESPITE the threat of a possible termination notice hanging on its head,= =20 Maharashtra State Electricity Board on Thursday made a "protest payment" of= =20 Rs 134 crore disputed amount, towards March bill of Rs 146.64 crore to=20 Dabhol. "We were ready with the payment on Wednesday itself, but DPC=20 officials could not collect the cheque due to the statewide bandh", a senio= r=20 MSEB official said. "We have disputed payment of Rs 12.64 crore and it woul= d=20 be now taken up at the disputes resolution forum, of which Enron India=20 managing director K Wade Cline and Krishna Rao are members", MSEB sources= =20 said.=20 Last week, DPC had dashed off a communication to the government and MSEB th= at=20 it would not accept "protest payments" anymore. Cline had said the energy= =20 major shall treat such payments as an election to pay the sums, which MSEB = in=20 fact owed DPC in full and that the company would also not recognise the=20 "purported protest or reservation". MSEB had paid a Rs 113.5 crore February= =20 bill in protest last month. On April 23 last, both domestic and internation= al=20 lenders of DPC had met in London and held exhaustive discussions the=20 multinational's move to issue a termination notice to MSEB and state=20 government. (PTI)=20 BUSINESS STANDARD, Friday, April 27, 001 Enron India MD authorised to terminate PPA The board of the Enron-promoted Dabhol Power Company (DPC), at its meeting = in=20 London on Wednesday, authorised the managing director of Enron India to iss= ue=20 a notice for terminating the power purchase agreement to the Maharashtra=20 State Electricity Board and the state government. =01&The board has authori= sed=20 Wade Cline to serve the termination notice. However, this does not mean tha= t=20 the termination notice will be served immediately. It is only an enabling= =20 provision and will be used only if the situation arises,=018 a state govern= ment=20 source told Business Standard from London. He said DPC was under pressure= =20 from its lenders.=20 The DPC spokesperson here refused to comment on the issue. The hardening of= =20 the board=01,s stand is in sharp contrast to the advice of DPC's lenders, w= ho=20 had warned Enron not to precipitate matters by issuing a termination notice= .=20 The lenders had arrived at a consensus that the termination notice need not= =20 be served at this stage. Serving of the notice requires a nod from the=20 lenders, who have an exposure of about $2 billion in the project. Sources= =20 said given the lenders' strong opposition to termination of the contract, t= he=20 Enron board's "enabling resolution" did not have much significance beyond= =20 conveying a hardening of its stand with regard to the current imbroglio. Th= e=20 Maharashtra Chief Minister had warned Enron not to scuttle the process of= =20 crisis resolution by issuing a termination notice. The state government is = to=20 nominate an expert group to renegotiate the terms of the Dabhol contract.= =20 Enron holds 65 per cent in DPC, while US-based GE and Bechtel hold 10 per= =20 cent each. The balance 15 per cent is held by MSEB through a special purpos= e=20 vehicle, Maharashtra Power Development Corporation. The MSEB representative= s=20 were not allowed to vote at the meeting since they were an interested party= .=20 The IDBI representative protested against the board's decision. The meeting= =20 was attended by state energy secretary VM Lal. The meeting was held against= =20 the backdrop of a dispute between MSEB and DPC over payment of bills.=20 After MSEB failed to pay Rs 102 crore towards the December 2000 bill, DPC= =20 invoked the state government's guarantee and then the Union government's=20 counter guarantee. When payment of the Rs 127-crore January bill became=20 overdue, DPC again invoked the state government's guarantee. MSEB retaliate= d=20 on January 28, 2001 by slapping a Rs 401-crore penalty for non-supply of=20 electricity at adequate levels. It demanded that DPC adjust the bills again= st=20 this penalty. "This stand of MSEB was explained to DPC at the board meeting= ",=20 a state government official said. The Centre also supported MSEB's stand an= d=20 refused to honour the counter guarantee. The power company then invoked the= =20 political force majeure clause. A process of conciliation and arbitration= =20 between the Centre and DPC is currently on.=20 THE FINANCIAL EXPRESS, Friday, April 27, 2001 Foreign lenders slam brakes on disbursements to DPC , Sanjay Jog & Raghu Mo= han Global banks comfortable with Enron pull-out Lenders to the Dabhol Power Company (DPC) are a sharply divided lot.=20 International lenders, in direct contrast to the stand taken by local ones= =20 led by the the Industrial Develoment Bank of India (IDBI), are categorical= =20 that additional assistance to DPC=01,s phase-II will be held in abeyance de= spite=20 the completion of 92 per cent of the project work.The stage is also set for= a=20 preliminary termination notice to be served by DPC to the Maharashtra State= =20 Electricity Board (MSEB) within the next four weeks.This follows the=20 authorisation given to Enron India=01,s managing director K Wade Cline and = DPC=20 president & CEO Neil McGregor to serve the termination notice, and transfer= =20 notices to MSEB, following Wednesday=01,s DPC board meeting in London. The essence of the message from the international lenders following the=20 London meeting with DPC board is: Emotions do not work. Contractual=20 obligations and payments have to be met. We are convinced that the MSEB has= =20 failed to meet its obligations. There is no point in Enron continuing with= =20 the project and the company should get out of it.The structuring of DPC=01,= s=20 debt has created two classes of lenders. In phase-I, international lenders= =20 are covered by a sovereign guarantee while in phase-II, no lender is.=20 However, all lenders have a parri passu charge, making attachment of assets= a=20 messy affair. Sources in international banks were quick to point out that local lenders t= o=20 phase-II of the project are worried that an awry DPC project will affect=20 their interests more given that they have no security =01* other than asset= s =01*=20 like a sovereign cover. =01&It was this desperation that made local lenders= like=20 IDBI slash the interest rates a few months back to 16.5 per cent from 21.5= =20 per cent,=018 a leading foreign banker pointed out.Three points that were m= ade=20 clear and stressed in no uncertain terms by international lenders were: a)= =20 there are contractual obligations b) MSEB was not punctual in its payments = to=20 DPC and c) MSEB adopted a confrontational position by slapping a Rs 401 cro= re=20 rebate charge on DPC for misdeclaration and default on the availability of= =20 power. While local lenders led by IDBI =01* with MSEB parroting the same =01* were= of the=20 view that the current situation is a temporary one, international lenders= =20 were steadfast that pulling out of the project is the only way out. This is= =20 despite the stance taken by IDBI and MSEB that authorisation for terminatio= n=20 given to Mr Cline and Mr McGregor was not called for. International bankers= =20 pointed out that they will now have to look at the issue of charges and=20 protection for their loans in the event of the power project being scrapped= =20 in its present form.The points of contention are: a) that phase-I of DPC is= =20 backed by a sovereign guarantee b) phase-II is not and c) to the extent tha= t=20 phase-II is covered by assets, cancellation of phase-II may see all assets = =01*=20 even those under phase-I =01* getting attached. Therefore, an examination o= n the=20 segregation of assets under phase-I and phase-II is now warranted. PTI adds: In a significant move, DPC board has empowered its management to= =20 sever power supply agreement with MSEB, a move that could inflict a financi= al=20 liability of about Rs 2840 crore on the Centre. A decision to authorise DPC= =20 president Neil McGregor to issue a termination notice to MSEB for sale of= =20 power was taken by the board at its meeting on Wednesday.=20 THE INDIAN EXPRESS, Friday, April 27, 2001 Enron: Dabhol chief gets powers to end deal with the MSEB THE BOARD of Dabhol Power Company, a subsidiary of Houston-based Enron Corp= ,=20 has decided to warn the Maharashtra State Electricity Board (MSEB) that it= =20 intends to pull the plug on its Guhagar-based project.In a board meeting he= ld=20 in London on Wednesday, the board decided to authorise DPC President and CE= O=20 Neil McGregor and Enron India=01,s managing director K Wade Cline to serve = a=20 =01+=01+preliminary=01,=01, termination notice for sale of power to the MSE= B within the=20 next four weeks.The Dabhol project has been mired in disputes since MSEB=20 began missing payments last year. MSEB owes Dabhol Power $48 million for=20 power delivered in December and January. The payment ran into a dispute aft= er=20 MSEB slapped penalty notices of Rs 401 crore on DPC for its failure to supp= ly=20 power within three hours of the demand being placed.But MSEB has paid $24= =20 million for February. And a payment of $31 million was made for March on=20 Thursday. The $3 billion Dabhol project is the largest foreign investment made in Ind= ia=20 to date. Issuing the preliminary termination notice could enable Dabhol to= =20 suspend deliveries as it negotiates payment disputes.While a preliminary=20 termination notice is the first of three steps that could potentially lead = to=20 the abandonment of the project by Enron, analysts have described the decisi= on=20 as a =01+=01+procedural=01,=01, move consistent with DPC=01,s negotiating s= trategy to=20 recover overdue payments from the MSEB. After the company issues the preliminary termination notice, step two would= =20 be an official termination notice, and step three would be a notice that th= e=20 company is surrendering control of the project. If the project is terminate= d,=20 the government of India will have to take a hit of $300 million besides=20 paying bills of Rs 1,500 crore for the next one year to Enron as penalty.= =20 =01+=01+Our (Centre=01,s) liability, if Dabhol power project is terminated,= would be=20 one year=01,s electricity bill and a termination fee of $300 million,=01,= =01, Power=20 Secretary A K Basu said.=01+=01+Contractually, the Centre will have to pay = one year=01, s electricity bill, totalling at present prices about Rs 1,400-1,500 crore,= =20 and take over DPC=01,s debt, which stands at around $300 million, if the pr= oject=20 was terminated,=01,=01, Basu said in Delhi. Dabhol Power is in the process = of=20 completing the second phase of the 2,184-megawatt power-plant project, whic= h=20 is 95 per cent through. While the international lenders to the project are pressurising the company= =20 to get out of the project, Indian lenders, led by IDBI, are asking the=20 company to reconsider its decision on its termination notice. During the=20 meeting in London, MSEB which holds a 15 per cent stake in the project, had= =20 strongly opposed DPC=01,s move to authorise Cline and McGregor to issue not= ices=20 for termination. MSEB Chairman Vinay Bansal and technical director Prem Paunikar =01* both= =20 directors on the DPC board =01* and the state principal secretary (energy) = VM=20 Lal, an invitee to the board, raised the issue at the board meeting in=20 London. MSEB claimed that DPC was needlessly =01+=01+threatening=01,=01, to= issue various=20 arbitration notices and thereby interpreting the clauses of PPA in=20 isolation.In recent weeks, Dabhol has raised the stakes in its spat with th= e=20 MSEB, delivering a notice of political force majeure to Maharashtra =01* a = step=20 typically invoked to dissolve a contract in case of an emergency like a war= ,=20 coup, or a similar radical political event. In this case, DPC=01,s move was= =20 viewed as a threat to stop providing electricity.DPC has come under fire=20 because of the relatively high cost of its power. Critics object to the=20 company charging Rs 7.1 a kilowatt-hour for its power, compared with around= =20 Rs 1.5 a kilowatt-hour charged by other suppliers. THE HINDU, Friday, April 27, 2001 Offer of renegotiation 'too late': Enron, By Mahesh Vijapurkar=20 MUMBAI, APRIL 26. The Enron-sponsored Dabhol Power Company, which last nigh= t=20 authorised its local management to issue a notice of termination of its Pow= er=20 Purchase Agreement (PPA) with the Maharashtra State Electricity Board, has= =20 decided to keep a stiff upper lip. This, in turn, has stoked speculation th= at=20 the switching off of power from its Phase I plant was imminent, while in=20 reality, a lengthy procedure has to be followed as prescribed within the PP= A.=20 As one source familiar with the PPA told The Hindu, ``it is not sudden deat= h=20 of the project'' and in all probability, the DPC, vexed with the=20 developments, including sharp and pointed observations by the Godbole=20 Committee, has chosen to only arm itself with a serious option. ``This woul= d=20 only eventually come into effect. It is not an overnight operation and a lo= t=20 of legal work is involved''. Apparently, the DPC intends to do some=20 arm-twisting.=20 At the board of directors meeting in London, which Maharashtra was initiall= y=20 disinclined to attend but later used the forum to put across its contention= s=20 on the project, the DPC squarely told the MSEB nominees on the board that t= he=20 offer of renegotiation had come rather ``too late''. It also said it did no= t=20 see any room for optimism about the outcome. It did not, however, rule out= =20 the option of talks, thus underscoring the possibility that the decision to= =20 authorise termination was a new weapon.=20 The Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, had hoped that DPC= =20 would not take any ``harsh step'' which would cause lot of damage to the=20 interests of both the independent power producer and the Government and tod= ay=20 he expressed his dismay. In fact, the mandate of the team that went, on the= =20 strength of its stake in the DPC, was to put across the idea that negotiati= on=20 was the requirement and not confrontation.=20 Echo in LS=20 The Enron issue also echoed in the Lok Sabha today where the Power Minister= ,=20 Mr. Suresh Prabhu, said that scrapping of the agreement would cost the Cent= re=20 Rs. 2,840 crores, whose liability in the project agreement was limited. The= =20 Centre's liability in case of termination is one year's electricity bill an= d=20 a termination fee of $300 million.=20 Blow to FIs=20 The termination could prove to be a serious blow to the Indian Financial=20 Institutions (FIs) which, under the leadership of the IDBI, were trying to= =20 convince the other lenders of the project against the notice. The exposure = of=20 Indian FIs in the project is understood to be not covered by any guarantee= =20 either of the Centre or the State.=20 THE TIMES OF INDIA, Friday ,27 April 2001 Enron ready to pull out, but lenders say wait=20 The Dabhol Power Company board, which met on Wednesday in London, authorise= d=20 the company management to issue a termination notice to the Maharashtra Sta= te=20 Electricity Board. The company, however, may not pull out of the project ye= t,=20 considering its lenders, who met on Monday, opposed such a move and favoure= d=20 renegotiations. Sources present during both the meetings said that though= =20 foreign lenders supported Enron on the termination issue, domestic financia= l=20 institutions, led by the Industrial Development Bank of India, prevailed ov= er=20 the deliberations to oppose any such drastic move. Enron needs the lenders'= =20 consent to file a pre-termination notice for pulling out from the project.= =20 The decision to empower DPC chief Wade Cline to issue a termination notice= =20 was taken with six votes in favour against a single IDBI vote against such = a=20 move.=20 Another significant development during the entire proceedings was that the= =20 financial institutions made it clear that further funding of Phase II of th= e=20 project will depend on the Government of India assuring payment mechanisms.= =20 Institutions are yet to disburse about 30 per cent of the sanctioned packag= e,=20 which is crucial for completing the Phase II expansion project. ``The board= =20 has given powers to Wade Cline to issue a pre-termination notice. But the= =20 meeting quite unanimously felt the need of the hour is not to terminate the= =20 project but to initiate serious re-negotiation proceedings,'' said MSEB=20 Chairman Vinay Bansal, who attended the board meeting. ``MSEB presented the= ir=20 views to the board members and it was understood by Enron which also includ= ed=20 the Rs 401 crore penalty issue which is heading for arbitration proceedings= .=20 ``We have also made it clear that the tariff structure of Enron is quite hi= gh=20 and a downward revision of tariffs is unavoidable," Bansal added.=20 ``They cannot issue a termination notice without our consent since our=20 exposure in the project is quite large and the lenders should approve any= =20 plans in that direction,'' said a top banker who was present during the=20 lenders' meet. ``There is a general consensus that the project must be=20 completed and the proposal to terminate the PPA should be kept in abeyance,= ''=20 he added. The global arrangers for the DPC include ANZ Investment Bank,=20 Credit Suisse First Boston, ABN-AMRO, Citibank and the State Bank of India,= =20 where all these parties conducted separate meetings with the company=20 officials. However, some bankers said the company can file a termination=20 notice even if one lender with a minimum 5 per cent exposure on the project= =20 favours such proceedings.=20 Meanwhile, in a clear reversal of roles, Maharashtra Chief Minister Vilasra= o=20 Deshmukh said that the state government was not keen on terminating the PPA= .=20 ``We will ask them to refrain from taking any such harsh steps since that= =20 would be bad news for all of us, including DPC,'' Deshmukh said. Deshmukh w= as=20 echoing Union Power Minister Suresh Prabhu's sentiments, who said that the= =20 government wanted an amicable settlement of the payment row. He, however,= =20 added that termination of the project would not hurt foreign investments, a= nd=20 dismissed warnings by analysts that winding up the $2.9 billion project wou= ld=20 be a blow to India's efforts to woo foreign investors.=20 The DPC has already slapped one conciliation notice on the Centre and three= =20 arbitration notices on the state government over non-payment of dues=20 amounting to Rs 213 crore and interest towards the bills due for December= =20 2000 and January 2001. Meanwhile, MSEB officials said in Mumbai that the=20 March bills amounting to Rs 134 crore was paid on Thursday as protest=20 payment, despite the dispute over the amount.=20 When asked on the future course of action, Bansal said it was up to the DPC= . THE HINDU BUSINESSLINE, Friday, April 27, 2001 DPC board authorises MD to issue PPA termination notice=20 THE board of directors of Dabhol Power Company (DPC) has authorised the=20 Managing Director, Mr Neil McGregor, to issue the notice of intent to=20 terminate its power purchase agreement (PPA) with the Maharashtra State=20 Electricity Board (MSEB) ``at an appropriate time''. The decision was taken= =20 at a board meeting held in London yesterday. ``While MSEB, which is an=20 `interested party', was not allowed to vote, it made a presentation=20 clarifying its stand on the matter,'' a senior State Government official=20 said.=20 The resolution to authorise the management to issue the termination notice= =20 was carried by six votes to one. IDBI voted against the decision, the=20 official said. The serving of the preliminary termination notice will lead = to=20 a six-month ``suspension period''. According to clause 17.8 of the=20 Termination Procedure, of the PPA: ``Following the giving of a preliminary= =20 termination notice, the parties shall consult for a period of six months (o= r=20 such longer period as they may agree) as to what step shall be taken with a= =20 view to mitigating the consequences of the relevant event having regard to= =20 all the circumstances...''=20 IDBI and State Bank of India, the principal Indian lenders, had earlier=20 persuaded the overseas lenders to hold their consent to the termination=20 notice for some more time. At least one lender has to consent for the compa= ny=20 to serve termination notice. It is understood that overseas lenders are in= =20 favour of termination of the project and are prepared to consent. However,= =20 domestic lenders are worried about the security of their advances if the PP= A=20 is abandoned mid-way.=20 According to institutional sources, Indian lenders are trying to get all th= e=20 parties concerned to thrash out outstanding issues. The Maharashtra and=20 Central Governments too are in favour of a conciliation. Mr Vilasrao=20 Deshmukh, Chief Minister of Maharashtra, yesterday went on record that the= =20 State did not want the project terminated. Mr Yashwant Sinha, Union Finance= =20 Minister, is also understood to be of the same opinion. ``The DPC will now= =20 have to decide what is the `appropriate time' to serve the notice,'' the=20 official said. MSEB pays Rs 134 crore: Meanwhile, MSEB has paid DPC Rs 134= =20 crore towards its March 2001 bill. MSEB officials confirmed that the bill w= as=20 paid `in protest'' today morning. ``They (DPC) had billed us for an amount = of=20 Rs 146 crore. We do not agree with some of the items included,'' a senior= =20 MSEB official said.=20 THE PIONEER, Friday, April 27, 2001 Enron testing Maharashtra's nerves, T N Raghunatha Dabhol Power Company (DPC) has begun to put fresh pressure on the Maharasht= ra=20 State Electricity Board (MSEB), the Maharashtra State Government and the=20 Centre for an early resolution to the prolonged dispute between them, if th= e=20 DPC Board of Directors' decision to authorise its managing director to serv= e=20 a contract termination notice to the MSEB is any indication. The DPC Board, in its meeting in London on Wednesday, empowered the company= =20 management to sever its power supply agreement with MSEB, a move that could= =20 inflict a financial liability of Rs 2,840 crore on the Centre. The decision= =20 to authorise the DPC management to issue a termination notice to MSEB was= =20 taken by a vote of six to one after the Maharasthra Government=20 representatives were prevented from voting on the ground of "interested=20 party". When contacted, the company's Mumbai-based spokesperson, Mr Jimmy Mogal,=20 declined to comment on the reports about the decision taken by the DPC Boar= d.=20 "We have nothing to say on the reports emanating from London. We will expre= ss=20 our views after a few days," he said. However, Maharashtra Chief Minister= =20 Vilasrao Deshmukh on Thursday termed the DPC board's decision as=20 "unfortunate". "We have already requested the company not to take any harsh= =20 decision", Mr Deshmukh said in Mumbai.=20 Official sources in the State Energy Ministry interpreted the DPC Board's= =20 decision as a pressure tactic employed by the Enron subsidiary to force the= =20 MSEB to clear the pending power bills without any further delay. Through it= s=20 tough posture, the DPC wants to make its position stronger before it can=20 formally agree for re-negotiations with the MSEB, the Centre and the State= =20 Government for cutting the price of power supplied by it to the State=20 electricity board. The sources said that the DPC's reported decision to=20 authorise its managing director to stop electricity supply to the MSEB did= =20 not mean that the Enron subsidiary would actually go ahead with the scrappi= ng=20 of the power contract with the MSEB. "If anything, the DPC's reported decision is to mount additional pressure o= n=20 the MSEB for clearance of pending power bills and put itself in a stronger= =20 position in settling its dispute with the MSEB. As part of its plan to arm= =20 itself with powers to break a contract in case situation goes beyond its=20 control, the DPC had recently served a political force majeure to the MSEB,= =20 the Centre and the State Government," the sources said.Not surprisingly, th= e=20 DPC's London decision comes on the heels of the Maharashtra Government's=20 decision to set up a high-level committee, comprising representatives of th= e=20 MSEB, the Centre and the State Government to re-negotiate with the Enron's= =20 subsidiary company for reducing the cost of power supplied to the State=20 electricity board.Meanwhile, amidst the threat of a possible termination=20 notice hanging on its head, the MSEB on Thursday made a "protest payment" o= f=20 the Rs 134 crore disputed amount towards March bill of Rs 146.64 crore to D= PC. riday, April 27 THE TELEGRAPH, Friday, April 27, 2001 ENRON SIGNAL TO SWITCH OFF DABHOL POWER =20 Enron today took the first decisive step out of the controversy-ridden Dabh= ol=20 Power Company when it won an authorisation from the company=01,s board to s= top=20 sale of power to Maharashtra State Electricity Board (MSEB).=20 The meeting of the company, of which the Houston-based energy giant holds 6= 5=20 per cent and the MSEB 15 per cent, was attended by state energy secretary V= M=20 Lal and MSEB technical director P Paunikar and it came days after its lende= rs=20 discussed payment problems and a possible termination.The Centre=01,s liabi= lity,=20 if Enron decides to snap the agreement, will be a year=01,s power bill and = a=20 termination fee of $ 300 million. However, the company will have to wait fo= r=20 six months from the day it serves the notice before it pulls the plug.The= =20 Centre shrugged off the move, saying there would not be any adverse effect = on=20 foreign investment in power if Enron walks out. =01&We do not see FDI inflo= ws=20 into the power sector being hit,=018 power minister Suresh Prabhu said.MSEB= =20 officials said the ball is now in the court of DPC, which said its corporat= e=20 policy did not allow it to comment on proceedings at board meetings. The=20 decision coincided with a Rs 134-crore =01+protest payment=01, by the cash-= strapped=20 power board as part of the March bill worth Rs 146.64 crore. There was speculation that MSEB coughed up the amount to cool frayed temper= s=20 at Enron=01,s hub in Houston, and because it was rattled by the sudden turn= of=20 events in the past few days during which the dispute had come to a head. MS= EB=20 officials brushed away the allusions, saying the cheque was ready on=20 Wednesday but could not be handed over to DPC because of the state-wide=20 bandh. =01&We have a disputed payment of Rs 12.64 crore, which will be take= n up=20 at the dispute-resolution forum,=018 a board official said. Last week, DPC = told=20 the state government and MSEB it would no longer accept protest payments in= a=20 move to fortify its legal position.=20 MSEB officials say Bechtel and General Electric, the other partners who hol= d=20 around 20 per cent in DPC, are willing to go along with Enron Corp in=20 terminating the deal but financial institutions such as IDBI are not game= =20 because it puts their loans at risk. Investments made by Indian institution= s=20 are not covered under the Centre=01,s and state=01,s counter-guarantees, un= like=20 those made by international lenders.Maharashtra chief minister Vilasrao=20 Deshmukh called Enron=01,s decision unfortunate. =01&We had told state gove= rnment=20 officials attending the Enron board meeting to stop the company from windin= g=20 up its operations in the state as it will harm both parties.=018 THE STATESMAN, Friday, April 27, 2001 Enron threatens to pull out =20 The Enron crisis deepened with the Board of Directors of the Dabhol Power= =20 Company deciding to authorise the managing director, Mr K Wade Cline, to=20 serve a notice of termination on the contract for the first phase of the $2= .9=20 billion power project.The decision, which could lead to the cessation of=20 Dabhol=01,s power supply to the state, was taken at the meeting held yester= day=20 in London according to reports quoting the chairman of the Maharashtra Stat= e=20 Electricity Board, Mr Vinay Bansal.=20 While DPC officials refuse to comment on anything, it is learnt that MSEB w= as=20 itself prepared to serve a legal notice of termination just two days before= =20 the meeting.MSEB was said to have been dissuaded by the Nationalist Congres= s=20 Party president, Mr Sharad Pawar, and union power minister Mr Suresh Prabhu= ,=20 who had talks in New Delhi with the Maharashtra chief minister, Mr Vilasrao= =20 Deshmukh, and an MSEB delegation last Monday. The state government has been served two arbitration notices while the Cent= re=20 is ready to go for conciliation with the DPC for failing to honour its=20 counter-guarantee.Further, the DPC has already slapped a notice of politica= l=20 force majeure which protects itself against undeserved claims in the event = of=20 exigencies that force it to take an extreme step.The union power minister, = Mr=20 Suresh Prabhu, contended in Delhi that since DPC contributed only 0.7 per= =20 cent of the total energy output of the country, its termination would not= =20 have such a phenomenal impact on the power situation.=20 However, if terminations proceedings go through, Enron Corp, a 65 per cent= =20 share-holder in the Dabhol Power Company, would stand to net a hefty amount= =20 in damages. The union power secretary has been quoted as saying that=20 termination of the DPC would cost the Centre Rs 1,800 crore, which is the= =20 total of one years=01, electricity bill and a termination fee of $300 milli= on.=20 According to an energy analyst, Mr Pradyumna Kaul, the total liability woul= d=20 not cross Rs 350 crore. However Mr Prabhu said in the Lok Sabha today that= =20 the that scrapping of the agreement would cost the Centre Rs 2,840 crore.It= =20 is learnt that on 20 April, Mr Deshmukh had given the go-ahead to the MSEB = to=20 prepare a legal notice to be issued to Enron during the meeting of the DPC= =01,s=20 Board of Directors on Wednesday. At the meeting, the energy minister,=20 Padamsinh Patil, energy secretary, Mr Vinay Mohan Lal and MSEB chairman Mr= =20 Vinay Bansal, were also present.The notice was prepared over the past weeke= nd=20 and taken by the delegation when they called on Mr Prabhu on 24 April.=20 However, the politicians convinced them that Enron would not get tough, giv= en=20 its huge stake in the project, and that such a notice would not be necessar= y.=20 The meeting thus ended with the decision to renegotiate the power tariff,= =20 with Enron=01,s consent. Among those present at the London meeting were Mr Lal, Mr Bansal and MSEB= =20 technical director, Mr P Paunikar, in their capacity as directors. However,= =20 they abstained from voting since they were deemed an interested party. The= =20 only vote to go against the decision was that of the IDBI which is also=20 represented on the board, it is learnt.The chief minister, Mr Vilasrao=20 Deshmukh, said the state was not in favour of terminating the project. This= =20 could mean that the latest manoeuvre to arm-twist the Indian authorities=20 could achieve its immediate target of getting the arrears accumulated over= =20 the past three months cleared.The MSEB owes Enron Rs 146.64 crore for March= =20 2001 and Rs 229 crore for December 2000 and January 2001.The Centre today p= ut=20 up a brave face on Enron=01,s decision saying there would not be any advers= e=20 effect on foreign investment in power sector in the country, PTI reported= =20 from New Delhi. =01&There will be no adverse impact as a result of any action by any domest= ic or=20 foreign company. As far as we are concerned there will be no adverse impact= =20 on FDI in power sector,=018 Power Minister Suresh Prabhu told reporters whe= n=20 asked about DPC=01,s decision to authorise management to issue a terminatio= n=20 notice to MSEB.Emphasising that there would be no fallout of such decision,= =20 Prabhu said after the meeting of the Cabinet Committee on Economic Affairs= =20 =01&we are expecting cooperation from many Scandinavian countries as well a= s=20 European nations in the power sector.=01&In fact not only the Power Ministe= r but=20 also the Prime Minister of Norway was here to inaugurate a seminar on power= =20 and he promised lot of cooperation in the sector.=018 MID DAY 'DPC may not wind up' Maharashtra Chief Secretary V Ranganathan has said that though Neil McGrego= r,=20 managing director of the Dabhol Power Corporation (DPC), has been given=20 complete powers with regard to DPC's operations in the state, including the= =20 authority to wind up operations, it does not necessarily mean that McGregor= =20 will issue such a termination notice. McGregor was given the powers at a=20 meeting of the DPC board in London on Wednesday. Ranganathan said that stat= e=20 officials, including Maharashtra State Electricity Board (MSEB) Chairman=20 Vinay Bansal and Power Secretary V M Lal, have reported back to him about t= he=20 meeting in London. With regard to the state's failure to pay Enron, Ranganathan said, " Bills= =20 are prepared as per the Power Purchase Agreement (PPA) and DPC owes some=20 money to us. Our people informed Enron officials about this.. In fact, ther= e=20 was no reason to give powers to the MD to slap a termination notice."In the= =20 London meeting, MSEB and Industrial Development Bank of India (IDBI)=20 representatives insisted that the DPC must pay Rs 411 crore since it could= =20 not supply power whenever needed.=20 Chief Minister Vilasrao Deshmukh has already termed as unfortunate the=20 decision of the board of the Enron-promoted DPC to give McGregor powers to= =20 wind up operations. Deshmukh added, " We have already requested Enron not t= o=20 take any harsh decision."Deshmukh had earlier said, " We have directed stat= e=20 Government officials attending the DPC board meeting to desist the energy= =20 company from winding up operations in the state, as it would be harmful to= =20 both of us." Enron officials are keeping mum on the issue. McGregor said, " I am not goi= ng=20 to give any comment." MID DAY, April 27, 2001 Enron offers 'no comment' on renegotiation, H S Rao A crucial meeting of the Board of Directors of the Dabhol Power Company=20 (DPC), promoted by the US energy major Enron, was held here yesterday=20 apparently to discuss fate of its $900-million power project in Maharashtra= ,=20 but there was no official word on the Indian and state Governments' decisio= n=20 to renegotiate the contract.=20 An Enron spokesman declined to divulge what transpired at the meeting, sayi= ng=20 the issues discussed at the meeting were 'confidential' . " We have not=20 received any direct communication. Unless we get it and evaluate the detail= s,=20 we have no comments to make," the spokesman said when asked about the=20 proposed decision on re-negotiation of the project in which the Maharashtra= =20 State Electricity Board (MSEB) has 15 per cent stake. Asked whether the Board had taken a decision on empowering DPC Managing=20 Director Neil McGregor to wind up its operations in India, the spokesman sa= id=20 he had nothing to say on them. Enron has reportedly authorised Mcgregor to= =20 look at various options including selling the company's stake in DPC.=20 Maharashtra Chief Minister Vilasrao Deshmukh said in Mumbai that the state= =20 Government would pay up the undisputed dues to the company. He said the=20 Maharashtra government " is not in favour of terminating the 2184-MW projec= t,=20 but wanted an amicable solution to the imbroglio." MID DAY, Friday, April 27, 2001, Committee to renegotiate Enron deal A committee to renegotiate the Power Purchase Agreement with the Dabhol Pow= er=20 Company will be appointed by this evening, Chief Minister Vilasrao Deshmukh= =20 said today. Addressing media persons after his meeting with the noted socia= l=20 reformer Anna Hazare at his official residence Varsha, Deshmukh said the=20 committee would be formed by this evening or by tomorrow, at the most.He=20 termed as unfortunate the Enron board decision empowering DPC chief Neil=20 McGregor to serve a preliminary termination notice on the Maharashtra State= =20 Electricity Board and said the state was willing to negotiate the issue wit= h=20 power company. " Renegotiations will be held as per the suggestions made by the Godbole=20 committee and the center will also depute its representative on the=20 renegotiating committee. We don't want to take any hasty decision," Deshmuk= h=20 saidHe pointed that the only bone of contention with the DPC had been its= =20 expensive tariff and hoped that the issue would be resolved amicably.When= =20 pointed that the Enron board had taken a decision to serve the notice despi= te=20 state=0F9 s willingness to appoint a renegotiating committee, Chief Ministe= r=20 said it was unfortunate. Earlier, in his meeting with Hazare, Deshmukh promised to make necessary=20 amendments to the Right to Information law recently passed by the state so= =20 that the information was easily accessed by the common people. He also gave= a=20 patient hearing to Hazare on his complaints of corruption in various state= =20 departments and promised action against guilty after a thorough inquiry=20 within three months. =20 AFTERNOON, APRIL 27, 2001 'ENRON'S ON!'=20 State govt. to renegotiate Dabhol Power Project , By Hubert Vaz=20 The US power giant, Enron Power Corporation's willingness to wrap up the=20 Dabhol Power Project and leave the shores may not actually materialise,=20 though the Dabhol Power Company chief, Mr. Wade Cline, has been authorised = to=20 do so, since the lenders for the project would have a decisive say in the= =20 matter.=20 Disclosing this, Chief Minister Vilasrao Deshmukh confirmed this morning th= at=20 the state government would churn out a compromise formula by which the powe= r=20 project at Dabhol could be continued, and at the same time Enron did not fe= el=20 slighted. "Enron has not yet conveyed to us about this decision. We are=20 waiting for their letter," he said. When asked what sort of compromise the= =20 state government plans to forge, Mr. Deshmukh said, "Let our officers come= =20 back. After that we will decide a future course of action. But we are=20 definitely going in for renegotiation of the project. It is very difficult = to=20 predict the outcome of Enron's decision but as of now the project is still= =20 on." When asked whether the project could be moved to another state, if wou= nd=20 up from Maharashtra, Mr. Deshmukh said, that was not possible as per the=20 terms of the agreement between the US company and the state government.=20 However, it was difficult for the project to move out of the state itself, = he=20 indicated. He also confirmed that both parties would face considerable loss= es=20 if the project was terminated.=20 The board of directors of the Dabhol Power Company, which met in London on= =20 Wednesday, decided to put an end to all controversies surrounding the proje= ct=20 once and for all by empowering the DPC chief to terminate the project, if h= e=20 deemed it fit. However, this decision, as of now, does not necessarily=20 indicate the death knell for the project. The Enron project, which had been= =20 riddled with controversies right from its inception, had been a pretext for= =20 the political parties in the state to drag each other on the mat from time = to=20 time. The previous Sena-BJP government, which had been out to terminate the= =20 project, however, chose to continue with it following renegotiations with= =20 Enron's top visiting officials like Ms. Rebecca Mark. And, the Democratic= =20 Front government inherited the controversial project when the governments= =20 changed hands a year and a half ago.=20 Meanwhile, State Energy Minister Dr. Padamsinh Patil, when contacted at the= =20 Osmanabad Circuit House, said the state government and the central governme= nt=20 have decided to appoint a joint committee to renegotiate the project with= =20 Enron. "It is not easy for them to walk out of the project just like that.= =20 They will have to go in for litigation and this would prove costly for both= =20 sides," he said. In case the project is terminated, the government can stil= l=20 manage the power needs of the state, though it would be a bit tough job, he= =20 added.=20
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