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Enron Mail |
FYI news articles from Indian press.
---------------------- Forwarded by Sandeep Kohli/ENRON_DEVELOPMENT on 04/2= 7/2001 08:24 AM --------------------------- Nikita Varma 04/27/2001 07:51 AM To:=09Nikita Varma/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc:=09 (bcc: Sandeep Kohli/ENRON_DEVELOPMENT) Subject:=09From 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, http://www.businessstandard.com/today/economy4.asp?M= enu=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, 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, http://www.thestatesman.org/page.news.php3?id=3D130= 26&type=3DPageone&theme=3DA Enron threatens to pull out Friday, April 27, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id= =3D29&art_id=3D10006&cat_code=3D2F574841545F535F4F4E5F4D554D4241492F5441415= A415F4B4841424152 'DPC may not wind up' Friday, April 27, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id= =3D29&cat_code=3D2f574841545f535f4f4e5f4d554d4241492f5441415a415f4b48414241= 52&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 Power Company authorising the management to issue a termination notice to= the Maharashtra State Electricity Board even while international lenders t= o the project asked Enron to renegotiate power purchase agreement signed wi= th the MSEB. The decision to authorise managing director Neil McGregor to issue "notice = of termination on the contract to sell 740 MW of power" was taken after the= board prevented MSEB from voting on the ground that it was an interested p= arty. The decision was taken with six votes in favour and the single opposi= tion vote was cast by IDBI, sources said.=20 According to reports, financial institutions such as ANZ Investment Bank, C= redit Suisse First Boston, Citibank, ABN-Amro and the State Bank of India h= ave on Wednesday advised Enron against terminating its PPA with MSEB. MSEB = chairman Vinay Bansal, who with two other directors attended the meeting on= Wednesday representing Maharashtra's 15 per cent stake in the near $3-bill= ion project, said: "The Indian side told them that it would be unfortunate = if Enron broke the contract." While Bansal declined comment on the board de= cision, the sources said the Indian side had expressed its interest to hold= s talks on the issue rather than terminating the project and there were pos= sibilities of a fresh power purchase agreement between the company and the = 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, M= aharashtra State Electricity Board on Thursday made a "protest payment" of = Rs 134 crore disputed amount, towards March bill of Rs 146.64 crore to Dabh= ol. "We were ready with the payment on Wednesday itself, but DPC officials = could not collect the cheque due to the statewide bandh", a senior MSEB off= icial said. "We have disputed payment of Rs 12.64 crore and it would be now= taken up at the disputes resolution forum, of which Enron India managing d= irector K Wade Cline and Krishna Rao are members", MSEB sources said.=20 Last week, DPC had dashed off a communication to the government and MSEB th= at it would not accept "protest payments" anymore. Cline had said the energ= y major shall treat such payments as an election to pay the sums, which MSE= B in fact owed DPC in full and that the company would also not recognise th= e "purported protest or reservation". MSEB had paid a Rs 113.5 crore Februa= ry bill in protest last month. On April 23 last, both domestic and internat= ional lenders of DPC had met in London and held exhaustive discussions the = multinational's move to issue a termination notice to MSEB and state govern= ment. (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 London on Wednesday, authorised the managing director of Enron India to = issue a notice for terminating the power purchase agreement to the Maharash= tra State Electricity Board and the state government. "The board has author= ised Wade Cline to serve the termination notice. However, this does not mea= n that the termination notice will be served immediately. It is only an ena= bling provision and will be used only if the situation arises," a state gov= ernment source told Business Standard from London. He said DPC was under pr= essure from its lenders.=20 The DPC spokesperson here refused to comment on the issue. The hardening of= the board's stand is in sharp contrast to the advice of DPC's lenders, who= had warned Enron not to precipitate matters by issuing a termination notic= e. The lenders had arrived at a consensus that the termination notice need = not be served at this stage. Serving of the notice requires a nod from the = lenders, who have an exposure of about $2 billion in the project. Sources s= aid given the lenders' strong opposition to termination of the contract, th= e Enron board's "enabling resolution" did not have much significance beyond= conveying a hardening of its stand with regard to the current imbroglio. T= he Maharashtra Chief Minister had warned Enron not to scuttle the process o= f crisis resolution by issuing a termination notice. The state government i= s to nominate an expert group to renegotiate the terms of the Dabhol contra= ct.=20 Enron holds 65 per cent in DPC, while US-based GE and Bechtel hold 10 per c= ent each. The balance 15 per cent is held by MSEB through a special purpose= vehicle, Maharashtra Power Development Corporation. The MSEB representativ= es were not allowed to vote at the meeting since they were an interested pa= rty. The IDBI representative protested against the board's decision. The me= eting was attended by state energy secretary VM Lal. The meeting was held a= gainst 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 i= nvoked the state government's guarantee and then the Union government's cou= nter guarantee. When payment of the Rs 127-crore January bill became overdu= e, DPC again invoked the state government's guarantee. MSEB retaliated on J= anuary 28, 2001 by slapping a Rs 401-crore penalty for non-supply of electr= icity at adequate levels. It demanded that DPC adjust the bills against thi= s penalty. "This stand of MSEB was explained to DPC at the board meeting", = a state government official said. The Centre also supported MSEB's stand an= d refused to honour the counter guarantee. The power company then invoked t= he political force majeure clause. A process of conciliation and arbitratio= n 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. Intern= ational lenders, in direct contrast to the stand taken by local ones led by= the the Industrial Develoment Bank of India (IDBI), are categorical that a= dditional assistance to DPC's phase-II will be held in abeyance despite the= completion of 92 per cent of the project work.The stage is also set for a = preliminary termination notice to be served by DPC to the Maharashtra State= Electricity Board (MSEB) within the next four weeks.This follows the autho= risation given to Enron India's managing director K Wade Cline and DPC pres= ident & CEO Neil McGregor to serve the termination notice, and transfer not= ices to MSEB, following Wednesday's DPC board meeting in London. The essence of the message from the international lenders following the Lon= don meeting with DPC board is: Emotions do not work. Contractual obligation= s and payments have to be met. We are convinced that the MSEB has failed to= meet its obligations. There is no point in Enron continuing with the proje= ct and the company should get out of it.The structuring of DPC's debt has c= reated two classes of lenders. In phase-I, international lenders are covere= d by a sovereign guarantee while in phase-II, no lender is. However, all le= nders have a parri passu charge, making attachment of assets a messy affair= . Sources in international banks were quick to point out that local lenders t= o phase-II of the project are worried that an awry DPC project will affect = their interests more given that they have no security - other than assets -= like a sovereign cover. "It was this desperation that made local lenders l= ike IDBI slash the interest rates a few months back to 16.5 per cent from 2= 1.5 per cent," a leading foreign banker pointed out.Three points that were = made clear and stressed in no uncertain terms by international lenders were= : a) there are contractual obligations b) MSEB was not punctual in its paym= ents to DPC and c) MSEB adopted a confrontational position by slapping a Rs= 401 crore rebate charge on DPC for misdeclaration and default on the avail= ability of power. While local lenders led by IDBI - with MSEB parroting the same - were of th= e view that the current situation is a temporary one, international lenders= were steadfast that pulling out of the project is the only way out. This i= s despite the stance taken by IDBI and MSEB that authorisation for terminat= ion given to Mr Cline and Mr McGregor was not called for. International ban= kers pointed out that they will now have to look at the issue of charges an= d protection for their loans in the event of the power project being scrapp= ed in its present form.The points of contention are: a) that phase-I of DPC= is backed by a sovereign guarantee b) phase-II is not and c) to the extent= that phase-II is covered by assets, cancellation of phase-II may see all a= ssets - even those under phase-I - getting attached. Therefore, an examinat= ion on the segregation of assets under phase-I and phase-II is now warrante= d. PTI adds: In a significant move, DPC board has empowered its management to = sever power supply agreement with MSEB, a move that could inflict a financi= al liability of about Rs 2840 crore on the Centre. A decision to authorise = DPC president Neil McGregor to issue a termination notice to MSEB for sale = of 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= , has decided to warn the Maharashtra State Electricity Board (MSEB) that i= t intends to pull the plug on its Guhagar-based project.In a board meeting = held in London on Wednesday, the board decided to authorise DPC President a= nd CEO Neil McGregor and Enron India's managing director K Wade Cline to se= rve a ''preliminary'' termination notice for sale of power to the MSEB with= in the next four weeks.The Dabhol project has been mired in disputes since = MSEB began missing payments last year. MSEB owes Dabhol Power $48 million f= or power delivered in December and January. The payment ran into a dispute = after MSEB slapped penalty notices of Rs 401 crore on DPC for its failure t= o supply power within three hours of the demand being placed.But MSEB has p= aid $24 million for February. And a payment of $31 million was made for Mar= ch on Thursday. The $3 billion Dabhol project is the largest foreign investment made in Ind= ia to date. Issuing the preliminary termination notice could enable Dabhol = to suspend deliveries as it negotiates payment disputes.While a preliminary= termination notice is the first of three steps that could potentially lead= to the abandonment of the project by Enron, analysts have described the de= cision as a ''procedural'' move consistent with DPC's negotiating strategy = to recover overdue payments from the MSEB. After the company issues the preliminary termination notice, step two would= be an official termination notice, and step three would be a notice that t= he company is surrendering control of the project. If the project is termin= ated, the government of India will have to take a hit of $300 million besid= es paying bills of Rs 1,500 crore for the next one year to Enron as penalty= . ''Our (Centre's) liability, if Dabhol power project is terminated, would = be one year's electricity bill and a termination fee of $300 million,'' Pow= er Secretary A K Basu said.''Contractually, the Centre will have to pay one= year's electricity bill, totalling at present prices about Rs 1,400-1,500 = crore, and take over DPC's debt, which stands at around $300 million, if th= e project was terminated,'' Basu said in Delhi. Dabhol Power is in the proc= ess of completing the second phase of the 2,184-megawatt power-plant projec= t, which is 95 per cent through. While the international lenders to the project are pressurising the company= to get out of the project, Indian lenders, led by IDBI, are asking the com= pany to reconsider its decision on its termination notice. During the meeti= ng in London, MSEB which holds a 15 per cent stake in the project, had stro= ngly opposed DPC's move to authorise Cline and McGregor to issue notices fo= r termination. MSEB Chairman Vinay Bansal and technical director Prem Paunikar - both dire= ctors on the DPC board - and the state principal secretary (energy) VM Lal,= an invitee to the board, raised the issue at the board meeting in London. = MSEB claimed that DPC was needlessly ''threatening'' to issue various arbit= ration notices and thereby interpreting the clauses of PPA in isolation.In = recent weeks, Dabhol has raised the stakes in its spat with the MSEB, deliv= ering a notice of political force majeure to Maharashtra - a step typically= invoked to dissolve a contract in case of an emergency like a war, coup, o= r a similar radical political event. In this case, DPC's move was viewed as= a threat to stop providing electricity.DPC has come under fire because of = the relatively high cost of its power. Critics object to the company chargi= ng Rs 7.1 a kilowatt-hour for its power, compared with around Rs 1.5 a kilo= watt-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 authorised its local management to issue a notice of termination of its P= ower Purchase Agreement (PPA) with the Maharashtra State Electricity Board,= has decided to keep a stiff upper lip. This, in turn, has stoked speculati= on that the switching off of power from its Phase I plant was imminent, whi= le in reality, a lengthy procedure has to be followed as prescribed within = the PPA.=20 As one source familiar with the PPA told The Hindu, ``it is not sudden deat= h of the project'' and in all probability, the DPC, vexed with the developm= ents, including sharp and pointed observations by the Godbole Committee, ha= s chosen to only arm itself with a serious option. ``This would only eventu= ally come into effect. It is not an overnight operation and a lot of legal = work is involved''. Apparently, the DPC intends to do some arm-twisting.=20 At the board of directors meeting in London, which Maharashtra was initiall= y disinclined to attend but later used the forum to put across its contenti= ons on the project, the DPC squarely told the MSEB nominees on the board th= at the offer of renegotiation had come rather ``too late''. It also said it= did not see any room for optimism about the outcome. It did not, however, = rule out the option of talks, thus underscoring the possibility that the de= cision to authorise termination was a new weapon.=20 The Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, had hoped that DPC w= ould not take any ``harsh step'' which would cause lot of damage to the int= erests of both the independent power producer and the Government and today = he expressed his dismay. In fact, the mandate of the team that went, on the= strength of its stake in the DPC, was to put across the idea that negotiat= ion 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= , Mr. Suresh Prabhu, said that scrapping of the agreement would cost the Ce= ntre Rs. 2,840 crores, whose liability in the project agreement was limited= . The Centre's liability in case of termination is one year's electricity b= ill and a termination fee of $300 million.=20 Blow to FIs=20 The termination could prove to be a serious blow to the Indian Financial In= stitutions (FIs) which, under the leadership of the IDBI, were trying to co= nvince the other lenders of the project against the notice. The exposure of= Indian FIs in the project is understood to be not covered by any guarantee= 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 the company management to issue a termination notice to the Maharashtra S= tate Electricity Board. The company, however, may not pull out of the proje= ct yet, considering its lenders, who met on Monday, opposed such a move and= favoured renegotiations. Sources present during both the meetings said tha= t though foreign lenders supported Enron on the termination issue, domestic= financial institutions, led by the Industrial Development Bank of India, p= revailed over the deliberations to oppose any such drastic move. Enron need= s the lenders' consent to file a pre-termination notice for pulling out fro= m the project. The decision to empower DPC chief Wade Cline to issue a term= ination notice was taken with six votes in favour against a single IDBI vot= e against such a move.=20 Another significant development during the entire proceedings was that the = financial institutions made it clear that further funding of Phase II of th= e project will depend on the Government of India assuring payment mechanism= s. Institutions are yet to disburse about 30 per cent of the sanctioned pac= kage, which is crucial for completing the Phase II expansion project. ``The= board has given powers to Wade Cline to issue a pre-termination notice. Bu= t the meeting quite unanimously felt the need of the hour is not to termina= te the project but to initiate serious re-negotiation proceedings,'' said M= SEB Chairman Vinay Bansal, who attended the board meeting. ``MSEB presented= their views to the board members and it was understood by Enron which also= included the Rs 401 crore penalty issue which is heading for arbitration p= roceedings. ``We have also made it clear that the tariff structure of Enron= is quite high and a downward revision of tariffs is unavoidable," Bansal a= dded.=20 ``They cannot issue a termination notice without our consent since our expo= sure in the project is quite large and the lenders should approve any plans= in that direction,'' said a top banker who was present during the lenders'= meet. ``There is a general consensus that the project must be completed an= d the proposal to terminate the PPA should be kept in abeyance,'' he added.= The global arrangers for the DPC include ANZ Investment Bank, Credit Suiss= e First Boston, ABN-AMRO, Citibank and the State Bank of India, where all t= hese parties conducted separate meetings with the company officials. Howeve= r, some bankers said the company can file a termination notice even if one = lender with a minimum 5 per cent exposure on the project favours such proce= edings.=20 Meanwhile, in a clear reversal of roles, Maharashtra Chief Minister Vilasra= o Deshmukh said that the state government was not keen on terminating the P= PA. ``We will ask them to refrain from taking any such harsh steps since th= at would be bad news for all of us, including DPC,'' Deshmukh said. Deshmuk= h was echoing Union Power Minister Suresh Prabhu's sentiments, who said tha= t the government wanted an amicable settlement of the payment row. He, howe= ver, added that termination of the project would not hurt foreign investmen= ts, and dismissed warnings by analysts that winding up the $2.9 billion pro= ject would 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= arbitration notices on the state government over non-payment of dues amoun= ting to Rs 213 crore and interest towards the bills due for December 2000 a= nd January 2001. Meanwhile, MSEB officials said in Mumbai that the March bi= lls amounting to Rs 134 crore was paid on Thursday as protest payment, desp= ite 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 Man= aging Director, Mr Neil McGregor, to issue the notice of intent to terminat= e its power purchase agreement (PPA) with the Maharashtra State Electricity= Board (MSEB) ``at an appropriate time''. The decision was taken at a board= meeting held in London yesterday. ``While MSEB, which is an `interested pa= rty', was not allowed to vote, it made a presentation clarifying its stand = on the matter,'' a senior State Government official said.=20 The resolution to authorise the management to issue the termination notice = was carried by six votes to one. IDBI voted against the decision, the offic= ial said. The serving of the preliminary termination notice will lead to a = six-month ``suspension period''. According to clause 17.8 of the Terminatio= n Procedure, of the PPA: ``Following the giving of a preliminary terminatio= n notice, the parties shall consult for a period of six months (or such lon= ger period as they may agree) as to what step shall be taken with a view to= mitigating the consequences of the relevant event having regard to all the= circumstances...''=20 IDBI and State Bank of India, the principal Indian lenders, had earlier per= suaded the overseas lenders to hold their consent to the termination notice= for some more time. At least one lender has to consent for the company to = serve termination notice. It is understood that overseas lenders are in fav= our of termination of the project and are prepared to consent. However, dom= estic lenders are worried about the security of their advances if the PPA i= s abandoned mid-way.=20 According to institutional sources, Indian lenders are trying to get all th= e parties concerned to thrash out outstanding issues. The Maharashtra and C= entral Governments too are in favour of a conciliation. Mr Vilasrao Deshmuk= h, Chief Minister of Maharashtra, yesterday went on record that the State d= id not want the project terminated. Mr Yashwant Sinha, Union Finance Minist= er, is also understood to be of the same opinion. ``The DPC will now have t= o decide what is the `appropriate time' to serve the notice,'' the official= said. MSEB pays Rs 134 crore: Meanwhile, MSEB has paid DPC Rs 134 crore to= wards its March 2001 bill. MSEB officials confirmed that the bill was paid = `in protest'' today morning. ``They (DPC) had billed us for an amount of Rs= 146 crore. We do not agree with some of the items included,'' a senior MSE= B 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 State Electricity Board (MSEB), the Maharashtra State Government and the= Centre for an early resolution to the prolonged dispute between them, if t= he DPC Board of Directors' decision to authorise its managing director to s= erve a contract termination notice to the MSEB is any indication. The DPC Board, in its meeting in London on Wednesday, empowered the company= management to sever its power supply agreement with MSEB, a move that coul= d inflict a financial liability of Rs 2,840 crore on the Centre. The decisi= on to authorise the DPC management to issue a termination notice to MSEB wa= s taken by a vote of six to one after the Maharasthra Government representa= tives were prevented from voting on the ground of "interested party". When contacted, the company's Mumbai-based spokesperson, Mr Jimmy Mogal, de= clined to comment on the reports about the decision taken by the DPC Board.= "We have nothing to say on the reports emanating from London. We will expr= ess our views after a few days," he said. However, Maharashtra Chief Minist= er Vilasrao Deshmukh on Thursday termed the DPC board's decision as "unfort= unate". "We have already requested the company not to take any harsh decisi= on", Mr Deshmukh said in Mumbai.=20 Official sources in the State Energy Ministry interpreted the DPC Board's d= ecision as a pressure tactic employed by the Enron subsidiary to force the = MSEB to clear the pending power bills without any further delay. Through it= s tough posture, the DPC wants to make its position stronger before it can = formally agree for re-negotiations with the MSEB, the Centre and the State = Government for cutting the price of power supplied by it to the State elect= ricity board. The sources said that the DPC's reported decision to authoris= e its managing director to stop electricity supply to the MSEB did not mean= that the Enron subsidiary would actually go ahead with the scrapping of th= e power contract with the MSEB. "If anything, the DPC's reported decision is to mount additional pressure o= n the MSEB for clearance of pending power bills and put itself in a stronge= r position in settling its dispute with the MSEB. As part of its plan to ar= m itself with powers to break a contract in case situation goes beyond its = control, the DPC had recently served a political force majeure to the MSEB,= the Centre and the State Government," the sources said.Not surprisingly, t= he DPC's London decision comes on the heels of the Maharashtra Government's= decision to set up a high-level committee, comprising representatives of t= he MSEB, the Centre and the State Government to re-negotiate with the Enron= 's subsidiary company for reducing the cost of power supplied to the State = electricity board.Meanwhile, amidst the threat of a possible termination no= tice hanging on its head, the MSEB on Thursday made a "protest payment" of = 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 Power Company when it won an authorisation from the company's board to s= top 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 per cent and the MSEB 15 per cent, was attended by state energy secretary= V M Lal and MSEB technical director P Paunikar and it came days after its = lenders discussed payment problems and a possible termination.The Centre's = liability, if Enron decides to snap the agreement, will be a year's power b= ill and a termination fee of $ 300 million. However, the company will have = to wait for six months from the day it serves the notice before it pulls th= e plug.The Centre shrugged off the move, saying there would not be any adve= rse effect on foreign investment in power if Enron walks out. "We do not se= e FDI inflows into the power sector being hit," power minister Suresh Prabh= u said.MSEB officials said the ball is now in the court of DPC, which said = its corporate policy did not allow it to comment on proceedings at board me= etings. The decision coincided with a Rs 134-crore 'protest payment' by the= cash-strapped 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 at Enron's hub in Houston, and because it was rattled by the sudden turn = of events in the past few days during which the dispute had come to a head.= MSEB officials brushed away the allusions, saying the cheque was ready on = Wednesday but could not be handed over to DPC because of the state-wide ban= dh. "We have a disputed payment of Rs 12.64 crore, which will be taken up a= t the dispute-resolution forum," a board official said. Last week, DPC told= the state government and MSEB it would no longer accept protest payments i= n a move to fortify its legal position.=20 MSEB officials say Bechtel and General Electric, the other partners who hol= d around 20 per cent in DPC, are willing to go along with Enron Corp in ter= minating the deal but financial institutions such as IDBI are not game beca= use it puts their loans at risk. Investments made by Indian institutions ar= e not covered under the Centre's and state's counter-guarantees, unlike tho= se made by international lenders.Maharashtra chief minister Vilasrao Deshmu= kh called Enron's decision unfortunate. "We had told state government offic= ials attending the Enron board meeting to stop the company from winding up = its operations in the state as it will harm both parties." 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 = Company deciding to authorise the managing director, Mr K Wade Cline, to se= rve a notice of termination on the contract for the first phase of the $2.9= billion power project.The decision, which could lead to the cessation of D= abhol's power supply to the state, was taken at the meeting held yesterday = in London according to reports quoting the chairman of the Maharashtra Stat= e Electricity Board, Mr Vinay Bansal.=20 While DPC officials refuse to comment on anything, it is learnt that MSEB w= as itself prepared to serve a legal notice of termination just two days bef= ore the meeting.MSEB was said to have been dissuaded by the Nationalist Con= gress Party president, Mr Sharad Pawar, and union power minister Mr Suresh = Prabhu, who had talks in New Delhi with the Maharashtra chief minister, Mr = Vilasrao Deshmukh, and an MSEB delegation last Monday. The state government has been served two arbitration notices while the Cent= re is ready to go for conciliation with the DPC for failing to honour its c= ounter-guarantee.Further, the DPC has already slapped a notice of political= force majeure which protects itself against undeserved claims in the event= of exigencies that force it to take an extreme step.The union power minist= er, Mr Suresh Prabhu, contended in Delhi that since DPC contributed only 0.= 7 per cent of the total energy output of the country, its termination would= not have such a phenomenal impact on the power situation.=20 However, if terminations proceedings go through, Enron Corp, a 65 per cent = share-holder in the Dabhol Power Company, would stand to net a hefty amount= in damages. The union power secretary has been quoted as saying that termi= nation of the DPC would cost the Centre Rs 1,800 crore, which is the total = of one years' electricity bill and a termination fee of $300 million. Accor= ding to an energy analyst, Mr Pradyumna Kaul, the total liability would not= cross Rs 350 crore. However Mr Prabhu said in the Lok Sabha today that the= that scrapping of the agreement would cost the Centre Rs 2,840 crore.It is= learnt that on 20 April, Mr Deshmukh had given the go-ahead to the MSEB to= prepare a legal notice to be issued to Enron during the meeting of the DPC= 's Board of Directors on Wednesday. At the meeting, the energy minister, Pa= damsinh Patil, energy secretary, Mr Vinay Mohan Lal and MSEB chairman Mr Vi= nay Bansal, were also present.The notice was prepared over the past weekend= and taken by the delegation when they called on Mr Prabhu on 24 April. How= ever, the politicians convinced them that Enron would not get tough, given = its huge stake in the project, and that such a notice would not be necessar= y. The meeting thus ended with the decision to renegotiate the power tariff= , with Enron's consent. Among those present at the London meeting were Mr Lal, Mr Bansal and MSEB t= echnical director, Mr P Paunikar, in their capacity as directors. However, = they abstained from voting since they were deemed an interested party. The = only vote to go against the decision was that of the IDBI which is also rep= resented on the board, it is learnt.The chief minister, Mr Vilasrao Deshmuk= h, said the state was not in favour of terminating the project. This could = mean that the latest manoeuvre to arm-twist the Indian authorities could ac= hieve its immediate target of getting the arrears accumulated over the past= three months cleared.The MSEB owes Enron Rs 146.64 crore for March 2001 an= d Rs 229 crore for December 2000 and January 2001.The Centre today put up a= brave face on Enron's decision saying there would not be any adverse effec= t on foreign investment in power sector in the country, PTI reported from N= ew Delhi. "There will be no adverse impact as a result of any action by any domestic = or foreign company. As far as we are concerned there will be no adverse imp= act on FDI in power sector," Power Minister Suresh Prabhu told reporters wh= en asked about DPC's decision to authorise management to issue a terminatio= n notice to MSEB.Emphasising that there would be no fallout of such decisio= n, Prabhu said after the meeting of the Cabinet Committee on Economic Affai= rs "we are expecting cooperation from many Scandinavian countries as well a= s European nations in the power sector."In fact not only the Power Minister= but also the Prime Minister of Norway was here to inaugurate a seminar on = power and he promised lot of cooperation in the sector." MID DAY 'DPC may not wind up' Maharashtra Chief Secretary V Ranganathan has said that though Neil McGrego= r, managing director of the Dabhol Power Corporation (DPC), has been given = complete powers with regard to DPC's operations in the state, including the= authority to wind up operations, it does not necessarily mean that McGrego= r will issue such a termination notice. McGregor was given the powers at a = meeting of the DPC board in London on Wednesday. Ranganathan said that stat= e officials, including Maharashtra State Electricity Board (MSEB) Chairman = Vinay Bansal and Power Secretary V M Lal, have reported back to him about t= he meeting in London. With regard to the state's failure to pay Enron, Ranganathan said, " Bills = are prepared as per the Power Purchase Agreement (PPA) and DPC owes some mo= ney to us. Our people informed Enron officials about this.. In fact, there = was no reason to give powers to the MD to slap a termination notice."In the= London meeting, MSEB and Industrial Development Bank of India (IDBI) repre= sentatives insisted that the DPC must pay Rs 411 crore since it could not s= upply power whenever needed.=20 Chief Minister Vilasrao Deshmukh has already termed as unfortunate the deci= sion of the board of the Enron-promoted DPC to give McGregor powers to wind= up operations. Deshmukh added, " We have already requested Enron not to ta= ke any harsh decision."Deshmukh had earlier said, " We have directed state = Government officials attending the DPC board meeting to desist the energy c= ompany from winding up operations in the state, as it would be harmful to b= oth of us." Enron officials are keeping mum on the issue. McGregor said, " I am not goi= ng 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 (DP= C), promoted by the US energy major Enron, was held here yesterday apparent= ly to discuss fate of its $900-million power project in Maharashtra, but th= ere was no official word on the Indian and state Governments' decision to r= enegotiate the contract.=20 An Enron spokesman declined to divulge what transpired at the meeting, sayi= ng the issues discussed at the meeting were 'confidential' . " We have not = received any direct communication. Unless we get it and evaluate the detail= s, we have no comments to make," the spokesman said when asked about the pr= oposed decision on re-negotiation of the project in which the Maharashtra S= tate Electricity Board (MSEB) has 15 per cent stake. Asked whether the Board had taken a decision on empowering DPC Managing Dir= ector Neil McGregor to wind up its operations in India, the spokesman said = he had nothing to say on them. Enron has reportedly authorised Mcgregor to = look at various options including selling the company's stake in DPC. Mahar= ashtra Chief Minister Vilasrao Deshmukh said in Mumbai that the state Gover= nment would pay up the undisputed dues to the company. He said the Maharash= tra government " is not in favour of terminating the 2184-MW project, but w= anted 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 Company will be appointed by this evening, Chief Minister Vilasrao Deshm= ukh said today. Addressing media persons after his meeting with the noted s= ocial reformer Anna Hazare at his official residence Varsha, Deshmukh said = the committee would be formed by this evening or by tomorrow, at the most.H= e termed as unfortunate the Enron board decision empowering DPC chief Neil = McGregor to serve a preliminary termination notice on the Maharashtra State= Electricity Board and said the state was willing to negotiate the issue wi= th power company. " Renegotiations will be held as per the suggestions made by the Godbole co= mmittee and the center will also depute its representative on the renegotia= ting committee. We don't want to take any hasty decision," Deshmukh saidHe = pointed that the only bone of contention with the DPC had been its expensiv= e tariff and hoped that the issue would be resolved amicably.When pointed t= hat the Enron board had taken a decision to serve the notice despite state= =19 s willingness to appoint a renegotiating committee, Chief Minister said= it was unfortunate. Earlier, in his meeting with Hazare, Deshmukh promised to make necessary am= endments to the Right to Information law recently passed by the state so th= at the information was easily accessed by the common people. He also gave a= patient hearing to Hazare on his complaints of corruption in various state= departments and promised action against guilty after a thorough inquiry wi= thin 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 Da= bhol Power Project and leave the shores may not actually materialise, thoug= h the Dabhol Power Company chief, Mr. Wade Cline, has been authorised to do= so, since the lenders for the project would have a decisive say in the mat= ter.=20 Disclosing this, Chief Minister Vilasrao Deshmukh confirmed this morning th= at the state government would churn out a compromise formula by which the p= ower project at Dabhol could be continued, and at the same time Enron did n= ot feel slighted. "Enron has not yet conveyed to us about this decision. We= are waiting for their letter," he said. When asked what sort of compromise= the state government plans to forge, Mr. Deshmukh said, "Let our officers = come back. After that we will decide a future course of action. But we are = definitely going in for renegotiation of the project. It is very difficult = to predict the outcome of Enron's decision but as of now the project is sti= ll on." When asked whether the project could be moved to another state, if = wound up from Maharashtra, Mr. Deshmukh said, that was not possible as per = the terms of the agreement between the US company and the state government.= However, it was difficult for the project to move out of the state itself,= he indicated. He also confirmed that both parties would face considerable = losses if the project was terminated.=20 The board of directors of the Dabhol Power Company, which met in London on = Wednesday, decided to put an end to all controversies surrounding the proje= ct once and for all by empowering the DPC chief to terminate the project, i= f he deemed it fit. However, this decision, as of now, does not necessarily= indicate the death knell for the project. The Enron project, which had bee= n riddled with controversies right from its inception, had been a pretext f= or the political parties in the state to drag each other on the mat from ti= me to time. The previous Sena-BJP government, which had been out to termina= te the project, however, chose to continue with it following renegotiations= with Enron's top visiting officials like Ms. Rebecca Mark. And, the Democr= atic Front government inherited the controversial project when the governme= nts changed hands a year and a half ago.=20 Meanwhile, State Energy Minister Dr. Padamsinh Patil, when contacted at the= Osmanabad Circuit House, said the state government and the central governm= ent have decided to appoint a joint committee to renegotiate the project wi= th Enron. "It is not easy for them to walk out of the project just like tha= t. They will have to go in for litigation and this would prove costly for b= oth sides," he said. In case the project is terminated, the government can = still manage the power needs of the state, though it would be a bit tough j= ob, he added.=20
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