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Power Trader Tied to Bush Finds Washington All Ears
The New York Times, 05/25/01 Enron Unit's Cline on Dispute With Indian Province: Comment Bloomberg, 05/25/01 U.S. Energy Regulator May Be Replaced, New York Times Reports Bloomberg, 05/25/01 Energy Antics: Oh, Behave! Los Angeles Times, 05/25/01 Lockyer comes out swinging at oilman / Davis has plenty of company in depths of poll The San Francisco Chronicle, 05/25/01 Latest move in dispute threatens Enron project Houston Chronicle, 05/25/01 Indian State Moves To End Power Pact With Enron's Dabhol The Wall Street Journal, 05/25/01 Markets / Your Money Dow, Nasdaq Make Modest Gains Wall St.: Politics and economic concerns weigh down some stocks prior to slated talk by Fed Chairman Alan Greenspan. Los Angeles Times, 05/25/01 Dot-coms may be down and out, but the internet is still transforming corporations The Globe and Mail, 05/25/01 India Enron Panel Lacks Authority to Solve Dispute, Expert Says Bloomberg, 05/25/01 India's Negotiator Gokak on Dispute With Enron Unit: Comment Bloomberg, 05/25/01 India Govt: State Bd To Likely Pay Dabhol Apr Elec Bill Dow Jones Energy Service, 05/25/01 PGE sees gains despite power costs Associated Press Newswires, 05/25/01 India: Pachauri rejects Godbole's remarks Business Line (The Hindu), 05/25/01 India: India, Australia sign pact on energy, mining Business Line (The Hindu), 05/25/01 India: MSEB slaps notice on DPC Business Line (The Hindu), 05/25/01 AUSTRALIAN FIRMS EYE INDIAN POWER AND MINING SECTOR Asia Pulse, 05/25/01 Bechtels out if dues not paid by May 31 The Economic Times, 05/25/01 Govt in a fix over asking NTPC to take over Dabhol Business Standard, 05/25/01 MSEB rescinds Dabhol PPA Business Standard, 05/25/01 USA: Business school grads rediscover energy business. Reuters English News Service, 05/24/01 State utility cancels agreement Enron power purchase pact Associated Press Newswires, 05/24/01 El Paso's Chairman to Testify in Gas-Price Hearing (Update1) Bloomberg, 05/24/01 National Desk; Section A Power Trader Tied to Bush Finds Washington All Ears By LOWELL BERGMAN and JEFF GERTH 05/25/2001 The New York Times Page 1, Column 1 c. 2001 New York Times Company Curtis Hebert Jr., Washington's top electricity regulator, said he had barely settled into his new job this year when he had an unsettling telephone conversation with Kenneth L. Lay, the head of the nation's largest electricity trader, the Enron Corporation. Mr. Hebert, chairman of the Federal Energy Regulatory Commission, said that Mr. Lay, a close friend of President Bush's, offered him a deal: If he changed his views on electricity deregulation, Enron would continue to support him in his new job. Mr. Hebert (pronounced A-bear) recalled that Mr. Lay prodded him to back a national push for retail competition in the energy business and a faster pace in opening up access to the electricity transmission grid to companies like Enron. Mr. Hebert said he refused the offer. ''I was offended,'' he recalled, though he said he knew of Mr. Lay's influence in Washington and thought the refusal could put his job in jeopardy. Asked about the conversation, Mr. Lay praised Mr. Hebert, but recalled it differently. ''I remember him requesting'' Enron's support at the White House, he said of Mr. Hebert. Mr. Lay said he had ''very possibly'' discussed issues relating to the commission's authority over access to the grid. As to Mr. Hebert's job, Mr. Lay said he told the chairman that ''the final decision on this was going to be the president's, certainly not ours.'' Though the accounts of the discussion differ, that it took place at all illustrates Enron's considerable influence in Washington, especially at the commission, the agency authorized to ensure fair prices in the nation's wholesale electricity and natural gas markets, Enron's main business. Mr. Lay has been one of Mr. Bush's largest campaign contributors, and no other energy company gave more money to Republican causes last year than Enron. And it appears that Mr. Hebert may soon be replaced as the commission's chairman, according to Vice President Dick Cheney, the Bush administration's point man on energy policy. Mr. Lay has weighed in on candidates for other commission posts, supplying President Bush's chief personnel adviser with a list of preferred candidates. One Florida utility regulator who hoped for but did not receive an appointment as a commissioner said he had been ''interviewed'' by Mr. Lay. Mr. Lay also had access to the team writing the White House's energy report, which embraces several initiatives and issues dear to Enron. The report's recommendations include finding ways to give the federal government more power over electricity transmission networks, a longtime goal of the company that was spelled out in a memorandum Mr. Lay discussed during a 30-minute meeting earlier this spring with Mr. Cheney. Mr. Cheney's report includes much of what Mr. Lay advocated during their meeting, documents show. Both men deny discussing commission personnel issues during their talk. But Mr. Lay had an unusual opportunity to make his case about candidates in writing and in person to Mr. Bush's personnel adviser, Clay Johnson. And when Mr. Bush picked nominees to fill two vacant Republican slots on the five-member commission, they both had the backing of Enron, as well as other companies. Mr. Lay is not shy about voicing his opinion or flexing his political muscle. He has transformed the Houston-based Enron from a sleepy natural-gas company into a $100 billion energy giant with global reach, trading electricity in all corners of the world and owning a multibillion-dollar power project in India. He has also led the push to deregulate the nation's electricity markets. Senior Bush administration officials said they welcomed Mr. Lay's input but did not always embrace it: President Bush backed away from curbing carbon-dioxide emissions, an effort supported by Enron, which had looked to trade emission rights as part of its energy business. ''We'll make decisions based on what we think makes sound public policy,'' Mr. Cheney said in an interview, not what ''Enron thinks.'' The Bush-Lay bond traces back to Mr. Bush's father and involves a personal and philosophical affinity. Moreover, Enron and its executives gave $2.4 million to federal candidates in the last election, more than any other energy company. While some of that went to Democrats, 72 percent went to Republicans, according to an analysis of election records by the Center for Responsive Politics, a nonprofit group. ''He's for a lot of things we're for,'' said Mr. Johnson. But when it came to deciding on nominees for the commission, Mr. Johnson said that Mr. Lay's views were not that crucial. The two most important advisers, he said, were Andrew Lundquist, the director of Mr. Cheney's energy task force, and Pat Wood 3rd, the head of the Texas public utility commission. As governor, Mr. Bush named Mr. Wood to the utility commission. This year, when the White House filled the two Republican slots on the federal agency, Mr. Wood was the first choice, Mr. Johnson said. Consumer advocates and business executives praise Mr. Wood. But Mr. Lay also had a role in promoting him. Shortly after Mr. Bush was elected governor in 1994, Mr. Lay sent him a letter endorsing Mr. Wood as the ''best qualified'' person for the Texas commission. In all, there are five seats on the commission, two held by Republicans, two by Democrats and one held by a chairman who serves at the pleasure of the president. Mr. Hebert, who became a commissioner in 1997, was named chairman by Mr. Bush in January. The Federal Energy Regulatory Commission's mandate to ensure fair prices in wholesale electricity and natural gas markets makes it crucial to sellers like Enron as well as consumers. The movement toward deregulation sometimes leaves the commission caught in a tug of war: power marketers like Enron are trying to break into markets and grids controlled by old-line utilities, which operate under state regulation. The commission's chairman has considerable latitude in setting its agenda. As part of its oversight of the wholesale electricity markets, the commission ordered several companies to refund what it considered excessively high prices this year in California. One lesser offender named in the commission's public filings -- $3.2 million, of a total of $125 million -- was an Enron subsidiary in Oregon. Enron owns few generating assets, but buys and sells electricity in the market. Many of those transactions resemble the complicated risk-shifting techniques used by Wall Street for financial instruments. Mr. Hebert, after he became chairman, initiated an examination into the effects those techniques have on the electricity markets. ''One of our problems is that we do not have the expertise to truly unravel the complex arbitrage activities of a company like Enron,'' he said, adding, ''we're trying to do it now, and we may have some results soon.'' William L. Massey, one of the agency's two Democratic commissioners, said he supported the inquiry but had not been aware of it -- an indication of the chairman's ability to set the commission's agenda. Finally, the commission is trying to speed the pace of electricity deregulation by opening up the nation's transmission grid, much of which is owned by privately owned utilities that enjoy retail monopolies. Some Enron officials say the commission has been moving too slowly to open the grid. They attribute some of the problem to utilities. But they also fault Mr. Hebert. ''Hebert still has undeserved confidence in some of the vertically integrated companies coming to the table and dealing openly'' with transmission access issues, said Richard S. Shapiro, an Enron senior vice president. The utilities, however, maintain that they provide cheap and reliable service for their customers. Washington lobbyists for one Southern utility said that Enron was really interested in focusing on the utility's big-business clients, which under state regulation pay higher rates than residential customers. Since 1996, about half the states have moved to open their retail markets to competition, and the commission has begun to make it easier for outsiders to use the nation's transmission grid. But the promise of cheaper rates has been largely unfulfilled. So the push for more deregulation, in which Enron has been a leader, has slowed, especially when California's flawed program led to skyrocketing rates and chaotic markets. Mr. Hebert is a free-market conservative who favors deregulation but also recognizes the importance of state's rights. A former Mississippi regulator, he is a protege of Trent Lott, the Senate Republican leader from Mississippi. Mr. Hebert said Mr. Lott was instrumental in his nomination to the commission in 1997 by President Clinton. President Bush elevated Mr. Hebert to chairman on Inauguration Day, a move Mr. Lay said he told the White House he supported. Mr. Johnson, the White House personnel chief, said that Mr. Lott and Mr. Hebert had both been told that Mr. Hebert could remain chairman at least until the administration's nominees -- Mr. Wood and Nora Brownell, a Pennsylvania utility regulator -- are confirmed by the full Senate. The Senate energy committee voted earlier this week to approve the two nominees, after a hearing last week indicated strong support. It is widely expected that President Bush will name Mr. Wood to replace Mr. Hebert as chairman after the Senate acts. In an interview for a forthcoming episode of ''Frontline,'' the PBS series, Mr. Cheney suggested as much. ''Pat Wood's got to be the new chairman of the F.E.R.C., and he'll have to address'' various problems in the electricity markets, he said. Mr. Hebert said that no one had told him he was being replaced. If someone else is named chairman, Mr. Hebert can remain a commissioner until the end of his term, which expires in 2004. It was a few weeks after President Bush made him chairman that Mr. Hebert said he spoke by telephone with Mr. Lay. Mr. Lay told him that ''he and Enron would like to support me as chairman, but we would have to agree on principles'' involving the commission's role in expanding electricity competition, Mr. Hebert said of the conversation. A senior commission official who was in Mr. Hebert's office during the conversation said Mr. Hebert rebuffed Mr. Lay's offer of a quid pro quo. The official said that he heard Mr. Hebert's side of the conversation and then, after the call ended, learned the rest from him. Mr. Hebert said that he, too, backed competition but did not think the commission had the legal authority to tell states what to do in this area. Concerning the issue of opening transmission access through the creation of regional networks, Mr. Hebert supports a voluntary process while Enron seeks a faster and more compulsory system. Mr. Lay said that while he might have discussed issues relating to the commission's authority concerning access to the grid, ''there was never any intent'' to link that or any other issue to Mr. Hebert's job status. The commission is a quasijudicial agency, so decision-makers like Mr. Hebert must avoid private discussions about specific matters pending before the commission. Mr. Hebert and Mr. Lay both said that line was not crossed, but Mr. Hebert said he had never had such a blunt talk with an energy-industry executive. Mr. Lay added that his few recent conversations with Mr. Hebert were nothing special. ''We had a lot of access during the Clinton administration,'' he said. And he said that while making political contributions ''probably helps'' to gain access to an official, he made them ''because I'm supporting candidates I strongly believe in.'' Last June, Enron executives were asked to make voluntary donations to the company's political action committee. The solicitation letter noted that the company faced a range of governmental issues, including electricity deregulation. This year, some people who sought but did not get nominations to the commission said that Mr. Lay and Enron had had a role in the process. One was Joe Garcia, a former Florida utilities regulator and prominent Cuban-American activist. He said he had been ''interviewed'' by a few Enron officials, including Mr. Lay, who he said had not been as ''forceful or insistent'' as the other Enron officials. But in their conversation, Mr. Garcia said, Mr. Lay made clear that he would be visiting the White House, adding that ''everyone knew of his relationship and his importance.'' Mr. Johnson, the White House personnel chief, could not cite another company besides Enron that sent him a list of preferred candidates for the commission, but he remembered hearing the views of Tom Kuhn, who heads the utility industry trade group, the Edison Electric Institute. Mr. Kuhn was a classmate of Mr. Johnson and Mr. Bush at Yale. As for his conversation with Mr. Garcia, Mr. Lay said he was comfortable with his candidacy but ''I'm not sure what I told him about my friends at the White House.'' This article is part of a joint reporting project with the PBS series ''Frontline,'' which will broadcast a documentary about California's energy crisis on June 5. Photos: Kenneth L. Lay, left, chairman of the country's largest energy trader, and Curtis Hebert Jr., chairman of the Federal Energy Regulatory Commission, differ in their accounts of a conversation about energy deregulation. (Photographs courtesy WGBH/''Frontline'')(pg. A18) Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Unit's Cline on Dispute With Indian Province: Comment 2001-05-25 03:53 (New York) New Delhi, May 25 (Bloomberg) -- Wade Cline, managing director of Enron Corp.'s Dabhol Power Co., on the dispute with the western Indian province of Maharashtra over dues. He was speaking to reporters in New Delhi after meeting A.K. Basu, secretary to the ministry of power. ``We won't renegotiate on the basis of the Godbole committee report. We are going back to Maharashtra tomorrow to work on the problem.'' Dabhol Power said yesterday the Maharashtra State Electricity Board, its sole customer, served notice that it's canceling their seven-year-old power purchase contract. The notice came six days after Dabhol gave the board a ``preliminary termination notice'' because of an unresolved six- month dispute over bills owed by the board. Madhav Godbole, also the Indian government's chief negotiator in the current dispute, headed a committee set up by the Maharashtra provincial government to suggest ways to lower the cost of power supplied by Dabhol. U.S. Energy Regulator May Be Replaced, New York Times Reports 2001-05-25 06:04 (New York) Washington, May 25 (Bloomberg) -- Enron Corp. gave more money to Republican causes last year than any other energy company and the head of the Federal Energy Regulatory Commission, whose policies the company object to, may soon be replaced, the New York Times reported. Enron Chairman Kenneth Lay objected to Curtis Hebert Jr's views on electricity deregulation, telling him he would continue to support the regulator if he changed perspective, the Times reported. Hebert may soon be ousted, the Times reported Vice President Dick Cheney as saying. Lay drew up a shortlist of candidates he would like to see named as Hebert's replacement, the Times said. One Florida utility regulator who hoped to win the job was interviewed by Lay, it added. ``We'll make decisions based on what we think makes sound public policy,'' Cheney told the Times. The decision won't be based on what ``Enron thinks.'' California; Editorial Writers Desk Energy Antics: Oh, Behave! 05/25/2001 Los Angeles Times Home Edition B-14 Copyright 2001 / The Times Mirror Company Admit it: The only comic relief in this energy crisis has been watching our leaders go at suppliers and each other like pro wrestlers or Jerry Springer guests. In his State of the State address last January, Gov. Gray Davis accused the big private electric power generators of legalized highway robbery and threatened to seize their plants if necessary. Then he really got angry, calling them "the biggest snakes in the world." This past week, Atty. Gen. Bill Lockyer boosted the rhetoric a notch by declaring he would like to personally escort the chairman of Enron Corp. "to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey."' Meanwhile, President Bush and Vice President Dick Cheney have blamed California for causing its own problems with a "harebrained" deregulation scheme and mocked the state's power purchases and conservation programs. It's been fun. Now it's time for our leaders to act like adults. Davis and Bush always will have their political differences, but the economies of both the state and the nation are endangered by California's energy situation. These leaders need to work together as cooperatively as possible, starting next week when Bush makes his first visit to California as president. Davis wrote Bush Wednesday offering to meet with him during his California visit. Bush spokesman Ari Fleischer said the president looks forward to discussing energy and other issues. Good start. Let's hope the conversation is civil and that the civility spreads. No matter how much California has been abused by the power companies, and it absolutely has, the state still needs them to help solve the crisis caused by shortages of electric power generation this year and next. Usually, the biggest targets of official and public wrath are the investor-owned utilities such as Southern California Edison and Pacific Gas & Electric Co. But not this time because, in the view of the state, the utilities have been bled dry by the power generators' stratospheric prices. The state had to take over the purchase of power when the generators refused to extend any more credit to Edison and PG&E. Legal recourse should be pursued, but the threatening rhetoric needs to subside. State lawmakers are right to be upset with the White House for refusing to use its authority to set reasonable temporary wholesale price controls. And Davis is justifiably upset with Bush and with Cheney, who said the only solution was to build more power plants--ignoring the fact that the state is building 10 plants now, with five more on the way, and that the only way to control wholesale power rates is for Washington to cap them. If the state hadn't bought the power, the generators would have let the lights go out. Davis needs to deliver that message, quietly and persuasively, while Bush is in California. And Bush needs to listen respectfully, like an adult. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS MATIER & ROSS Lockyer comes out swinging at oilman / Davis has plenty of company in depths of poll Phillip Matier, Andrew Ross 05/25/2001 The San Francisco Chronicle FINAL A.21 (Copyright 2001) The reaction from Gov. Gray Davis' camp to yesterday's poll showing him in the dumper was quick and blunt. "Tell me something I don't already know," adviser Paul Maslin said after being hit with the news that the latest Field Poll showed Davis' job rating down 18 points since January. "None of this is news to us," Maslin said. Heck, these days even nuclear power is more popular than Davis. But to Maslin, who has been watching his client's popularity drop with every rolling blackout, the question isn't how Davis is doing today. It's how he looks in a year and a half when he faces re- election that counts. And on that score, Davis & Co. seem to be oddly relieved at all the bad poll numbers that have come out this week. Because while their guy is definitely in trouble, everyone else is even deeper in trouble -- especially George W. Bush. The only announced Republicans running for governor -- Secretary of State Bill Jones and businessman William Simon Jr. -- aren't even the first picks of GOP voters. That honor goes to outgoing Los Angeles Mayor Richard Riordan -- who actually does very well when matched up against Davis. In fact, if he ran, the polls show it would be a dead heat. At this point, however, the only person who seems to think the 72- year-old Riordan is going to run is his good San Francisco buddy and adviser Clint Reilly, who has been spending a lot of time in Los Angeles of late. As for a challenge to Davis from within Democratic ranks? Well, the most frequently mentioned possibles -- Attorney General Bill Lockyer and Treasurer Phil Angelides -- both trail Davis in job performance ratings. There was one interesting twist that wasn't in the Field Poll. From what we hear, an energy company recently did a survey of its own that included a matchup between Davis and Sen. Dianne Feinstein, of all people. The result: DiFi cleans Gray's clock. RAIDER REVENGE: The Oakland Raiders may be eating more than crow after losing their big lawsuit against the National Football League. They may also have to eat upwards of $10 million in lawyers fees - - and not just for their own lawyers. It turns out that under NFL rules, they may also get socked with the bills for hundreds of hours of depositions, expert witnesses and the NFL's team of eight to 10 lawyers who charged an average of $350 to $400 an hour. Not to mention all those weeks the legal team was holed up at Los Angeles' tony Omni Hotel on Bunker Hill fighting the Raiders' claim to the Los Angeles market. And just to add further insult, Commissioner Paul Tagliabue says league owners haven't ruled out fining and suspending Raiders' boss Al Davis for bringing his lawsuit against the NFL in the first place. The Raiders are still considering whether to appeal this week's jury verdict -- a roll of the dice that would further drive up the legal tab if the team comes up craps. As for the odds that Tagliabue might give Davis a pass on paying the league's trial costs? "Not a prayer," says one lawyer on the case. On the other hand, Big Al could always sue them back. FUNNY NUMBERS: The question of whether there are 3,600 "unaccounted for" votes from November's election isn't the only funny thing going on down at the San Francisco Department of Elections. There's the department's spend-happy ways as well. "Unbelievable," was how Budget Analyst Harvey Rose summed up the department's recent request: $1.4 million so it can move from its digs in the basement of City Hall to a $678,000-a-year office space on Market Street. All in the name of "efficiency," of course. THE WILD ZONE: The World Wildlife Fund held its first-ever West Coast fund-raiser last weekend at the new Presidio park. The $1,000-a-head fund-raiser, which featured the band B-52's, drew upwards of 1,200 partygoers to a pair of lavishly decorated hangars -- and included honorary chairwoman Lauren Hutton, comic Drew Carey and a bevy of local and New York socialites. Presiding over it all was World Wildlife Fund chairman Bill Reilly, who also happens to be a member of the Presidio Trust board that oversees the park. We're happy to report that unlike University High's Decorator Showcase -- which has its own board connections and is getting free rent at the Presidio -- the World Wildlife Fund ponied up $10,600 in rent. Not a bad investment, considering that the party brought in close to $700,000, according to event organizers. QUOTE OF THE WEEK: State Attorney General Bill Lockyer has never been known as a loose cannon, so when he told the Wall Street Journal this week that he would love to personally escort Enron Corp. Chairman Kenneth Lay into "an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey,' " more than a few eyes popped wide. So what's up? "I want these generators in Texas and elsewhere to know that we are coming after them," Lockyer tells us. "And we're not talking about a 10-year fight to get our money back -- if we have the facts right, we're going to put them in prison." Besides, Lockyer says, his "missile" wasn't really meant for "home consumption" -- rather, it was aimed at the Big Money crowd back East. PHOTO (2); Caption: (1) Al Davis, (2) Gray Davis Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. May 25, 2001 Houston Chronicle Latest move in dispute threatens Enron project By MICHAEL DAVIS Copyright 2001 Houston Chronicle Indian officials have upped the ante in the standoff with Enron Corp. over unpaid power bills at the Houston company's Dabhol Power project. The latest wrinkle in the longstanding dispute raises questions about the future of the beleaguered $3 billion project. Enron received notice Thursday from its sole customer, the Maharashtra State Electricity Board, that it was canceling a 7-year-old power purchase agreement. The board has refused to pay for power from the plant, saying the bills should be lower because Enron is not living up to its contract. Indian officials say Enron is not supplying power at full capacity within three hours of being restarted after a shutdown, as required by the deal. Enron responded with a statement describing the move as a "deliberate attempt to further delay the resolution of difficult issues" confronting the board. Termination of the project at this late stage could trigger an estimated $2 billion in future obligations by India's state and federal governments. This latest round in the battle capped off a week of turmoil between the Houston company and Indian political officials over the project. Last weekend, Enron started proceedings to end the contract by serving the board a "preliminary termination notice" because of large unpaid power bills. Enron is owed about $64 million for power sold in December and January. Then Wednesday, a negotiator trying to resolve the payment dispute between the company and the electricity board resigned and then retracted his resignation the same day. The standoff between Enron and the electricity board and Indian politicians is expected to continue into next week, when formal negotiations are scheduled to begin. Enron is maintaining that the board does not have the right to cancel the agreement on the grounds it has stated. There has been speculation that Enron is looking to sell its 65 percent share of the project, and this latest round of fighting has revived that talk. The company has answered such questions in the past by saying it is committed to the project. "Even if this is resolved, Enron still wants to free itself altogether from this investment," said Carol Coale, energy analyst with Prudential Securities in Houston. "What investors are afraid of is a write-off. Enron has $850 million in equity in the project; the rest is debt." Currently, the first phase of the project is running at about 37 percent capacity and providing Enron with a 5 percent return on its investment, Coale said. That ranks it among the company's poorest-performing investments. Finding a buyer that would pay fair value for the plant with all of its political baggage could be difficult. Potential buyers are believed to be Reliance, one of India's largest industrial concerns, or China Light & Power. India's federal and state governments have guaranteed the payment for power from the plant as well as loans for the project, the largest single foreign investment in India. An Enron spokesman in India described the board's latest move as a "long shot." "We have said for some time that there was going to be a lot of noise associated with this and legal maneuvering," Enron spokesman John Ambler said. "The odds of this being successful are very small." Enron is committed to working out a resolution to the dispute, Ambler said, and is helping to find credit-worthy electric customers that might be able to step in and buy power that the state of Maharashtra does not need. Enron has faced ongoing problems in India, almost from the time of its initial investment in the project in the early 1990s. In 1995 the state government, then headed by the Hindu ultranationalist party Shiv Sena, scrapped the project, saying the price of its power was too high. The project was idled in the midst of the construction of the first phase, costing Enron an estimated $100,000 a day while work was halted. The project was eventually restarted after voters chose another slate of politicians in the region. The project's first phase of 740 megawatts is on line. The second phase of 1,444 megawatts is scheduled to go into operation later this year, but Ambler would not confirm when it will actually start operating, if at all. International Indian State Moves To End Power Pact With Enron's Dabhol 05/25/2001 The Wall Street Journal A12 (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -- The sole customer of Enron Corp.'s troubled power project in India said it is rescinding its contract to buy electricity from the company, escalating the bitter fight between the two sides over unpaid bills. The project, Dabhol Power Corp., said it received a letter from the Maharashtra State Electricity Board announcing the move. But Dabhol said in a statement that the board "does not have the right to rescind the [power-purchase agreement] as attempted in their letter." The chairman of the state electricity board wasn't available to comment. The $3 billion Dabhol project, India's largest foreign investment, is under attack by critics who say its rates are too high. Dabhol disputes that claim. The electricity board's action puts Dabhol in the position of defending a contract that it, too, has recently indicated a willingness to abandon. About a week ago, Dabhol gave notice it was formally initiating a procedure to cancel the contract in six months if the dispute isn't resolved. Dabhol says it is owed $48 million in unpaid bills by the electricity board. The electricity board, in turn, claims the bills are offset by millions of dollars in fines that Dabhol owes due to service lapses. Dabhol holds guarantees from India's central government to cover bill defaults, and the government has said it wants to help find a resolution to the standoff. A meeting with government officials is set for Tuesday, and Dabhol has said it is interested in hearing about prospects for selling power to other customers. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business; Financial Desk Markets / Your Money Dow, Nasdaq Make Modest Gains Wall St.: Politics and economic concerns weigh down some stocks prior to slated talk by Fed Chairman Alan Greenspan. From Associated Press 05/25/2001 Los Angeles Times Home Edition C-4 Copyright 2001 / The Times Mirror Company Stocks ended an uneven session with moderate gains Thursday as investors vacillated between optimism and fear about the economy. The market also was trying to determine the effect of the change in leadership in the Senate. The Dow Jones industrial average closed up 16.91 points, or 0.2%, at 11,122.42 after falling 60 points earlier in the session. Wall Street's broader indicators followed the Dow's path, advancing late in the session. The Nasdaq composite index rose 38.54 points, or 1.7%, to 2,282.02, while the Standard & Poor's 500 index moved up 4.12 points, or 0.3%, to 1,293.17. Thursday's trading was choppy from the start when Vermont Sen. James M. Jeffords announced, as expected, that he is leaving the Republican Party to become an independent, ending GOP control of the Senate. "Everyone is sort of going through their own analysis of what effect the change in the legislature is going to have for various sectors in the market," said Charles White, portfolio manager for Avatar Associates. But analysts said the market's fluctuation mostly came amid unease over the health of the economy. Investors were trading cautiously ahead of a speech Federal Reserve Chairman Alan Greenspan was scheduled to deliver Thursday night before the Economic Club of New York. "The next quarter or two are going to be weak," White said. "We already know that. What we want to hear from the Fed chairman tonight is that the fourth quarter is going to bring recovery. "The reason we have been rallying [recently] is on the hopes and dreams of the fourth quarter." Adding to investors' nervousness about the economy were weak housing and employment news. The Commerce Department reported that new-home sales posted their largest decline in four years in April as rising layoffs made Americans feel less secure about making big-ticket purchases. And the Labor Department said new claims for state unemployment insurance rose more sharply last week than analysts expected. It was more difficult to gauge precisely how Jeffords' move was affecting Wall Street, where some profit taking had been expected following the market's big run-up since early last month. Stocks have advanced primarily because of the five interest rate cuts by the Fed this year. The Dow has jumped 1,732.94 points, an 18.5% increase, from its March low of 9,389.48. Nasdaq has gained 643.22, or 39%, from its April 4 low of 1,638.80. The market can't be expected to sustain such upward momentum as long as investors have reason to worry about the economy, said Alan Ackerman, executive vice president of Fahnestock & Co. "The averages moved too far too fast without any real strong earnings development," Ackerman said. "The market has overreacted to the cumulative Fed rate cuts." The economy and politics aside, stocks still managed to post widespread gains. Microsoft rose $2.02 to $71.72, and General Motors advanced $1.41 to $56.59. Home Depot moved up 83 cents to $53.45, and Intel rose 41 cents to $29.21. However, analysts said politics pulled down pharmaceutical and energy shares, sectors that typically benefit from a Republican Congress. Merck dropped $1.50 to $72.50 and Enron fell $1.19 to $54.16. The slowing economy hurt makers of semiconductor equipment, which reported late Tuesday that customer orders for April dropped 41% from March. Triquint Semiconductor plunged $4.22 to $20.59. Advancing issues traded about evenly with decliners on the New York Stock Exchange, where consolidated volume was slightly below Wednesday's trading pace. * Market Roundup, C6, C7 GRAPHIC-CHART: Daily Diary: Thursday, May 24, 2001; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Report on Business Magazine DIGITAL ECONOMY Dot-coms may be down and out, but the internet is still transforming corporations DON TAPSCOTT 05/25/2001 The Globe and Mail Metro 27 "All material Copyright © Bell Globemedia Publishing Inc. and its licensors. All rights reserved." The pendulum of irrational exuberance of 18 to 36 months ago is swinging back to irrational orthodoxy. Typical is Harvard competitiveness guru Michael Porter's article in the March issue of Harvard Business Review, "Strategy and the Internet," in which he joins the chorus exhorting business leaders to "return to fundamentals" and abandon misguided thoughts of new business models or e-business strategies. Porter's line of reasoning is this: The internet arrived. Many companies attempted to build businesses based on the net. They were called dot-coms. Most crashed and burned. Therefore, building a company based on the net is foolhardy. Porter asserts that "the experiences companies have had with the internet thus far must be largely discounted and that many of the lessons learned must be forgotten." Success in today's economy "does not require a radically new approach." Companies should stick to their time-tested processes, using the net as a "complement to traditional ways of competing." Porter divides the world into two camps: the dot-com zealots and the traditionalists like him. The former raved about web site stickiness and first-mover advantage, while the latter support concepts such as value creation, differentiation and profitability. And we can all see who won. Framed this way, much of Porter's reasoning seems rock solid. After all, who can defend the dot-com recklessness of 1999 and early 2000? Our grandchildren will marvel at the era of insta-billionaires and IPO frenzy. But even after a 3,000-point Nasdaq plunge, must we inescapably conclude, as Porter argues, that the internet is more or less inconsequential? The answer is, no. Porter's analysis falls short for two key reasons. First, he grossly underestimates what the internet is and where it is headed. Second, he doesn't understand its impact on the nature of the firm. On the first point, Porter maintains the net is just "the latest stage in the ongoing evolution of information technology." Porter makes the all-too-common mistake in assuming that today's internet--a network connecting desktop computers--is basically the same as tomorrow's. This, of course, is nonsense. The net continues to soar in ubiquity, bandwidth and function. More than one billion people will be on-line by 2005. It is the means not only by which computers will connect, but the mechanism by which individuals and organizations will collaborate, exchange money and conduct transactions. Mobile computing devices, broadband access, wireless networks, and computing power embedded in everything from refrigerators to automobiles are converging into a global network. All other communications technologies, such as telephone, radio and television, are being sucked into the net's maw. The internet of tomorrow will be as dramatic a change from the internet of today as today's internet is from the primitive, unconnected, proprietary computing networks of yesterday. This leads to Porter's second major error. He fails to appreciate that this complex and ever-expanding communications medium will precipitate deep and profound changes to the structures of successful businesses. The 20th-century corporation did everything-it was vertically integrated. This model worked best because the costs and difficulties of collaborating with partners outside the firm were greater than performing such activities inside the corporate walls. But the digital economy is bringing forward myriad new models-fluid congregations of businesses, sometimes tightly structured, sometimes amorphous-that use the net to create value for customers in unprecedented ways. These new models are possible because the net smashes the costs of partnering. Companies can now focus on their core capabilities and partner to do the rest. When done properly, such business webs create better and less costly products and services than the old corporation. Established businesses such as Enron, Citibank, American Airlines, Nortel, Schwab and many product divisions of GE are now transforming themselves by partnering in areas that were previously unthinkable. Boeing CEO Phil Condit calls his company a systems integrator, not an aircraft manufacturer. IBM is a computer company that doesn't make its computers-its partner network does. Newer companies based on the internet, such as eBay, Travelocity and E*Trade, are competing well despite volatility in their stock prices. Napster is causing chaos in the music industry and forcing every company to rethink its value. Linux and the open-source movement pose a huge threat to Microsoft. And this is just the beginning. Yet Porter continues to champion the old, vertically integrated model, and his HBR article criticizes corporations for partnering. But we can already see that the traditional model is an increasingly less effective vehicle. It is akin to entering a Formula One race with a golf cart. No matter how well-built and skillfully driven, it will never win. Don Tapscott is chair of itemus (www.itemus.com) and co-author of Digital Capital. He can be reached at dtapscott@itemus.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India Enron Panel Lacks Authority to Solve Dispute, Expert Says 2001-05-25 07:16 (New York) India Enron Panel Lacks Authority to Solve Dispute, Expert Says Mumbai, May 25 (Bloomberg) -- Indian negotiators lack the authority to solve a dispute that has shut down Enron Corp.'s $3 billion power plant, India's single biggest foreign investment, said a former member of the negotiating committee. The negotiators will meet Enron officials on Tuesday next week, though any proposals made will not be binding on either Dabhol Power Co., 65 percent owned by Enron, and the Maharashtra State Electricity Board, the official said. Maharashtra, Dabhol's sole customer, has refused to pay some of its power bills. ``Where is the guarantee Enron and the government will accept what the committee recommends,'' said R.K. Pachauri, director- general at the Tata Energy Research Institute, a research organization. Pachauri said he quit the committee because it was being asked to renegotiate the project, when it was set up to solve the payment dispute. Maharashtra yesterday served Dabhol notice canceling the power purchase contract, six days after Dabhol gave the board notice it was set to pull out of the project in six months. The board has refused to pay Dabhol 3 billion rupees for power supplied in December and January, saying the bills should reflect a 4 billion rupee penalty it imposed on the company Jan. 28 for failing to supply power at full capacity. Meeting Other India officials said the two parties can't afford not to negotiate as there is too much at stake. Mahrashtra and Dabhol serving each other notices is ``simply legal maneuvering,'' said Kirit Parikh, an economist on the prime minister's economic advisory council. ``It won't affect the process of finding a solution because ``the ground reality is neither Enron nor Maharashtra can afford not to find a compromise'' to the dispute, Parikh said. The government needs a solution as it could be left footing the bill. India's federal and state governments, which have guaranteed the board's payments for power and some of the loans to help fund the project, may have to pay Dabhol more than 170 billion rupees ($3.6 billion) if it terminates the 2,184 megawatt power project. ``We are going back to Maharashtra tomorrow to work on the problem.'' Dabhol managing director Wade Cline said. Cline was in New Delhi to meet A. K. Basu, secretary to the ministry of power. India's Negotiator Gokak on Dispute With Enron Unit: Comment 2001-05-25 05:35 (New York) Mumbai, May 25 (Bloomberg) -- A.V. Gokak, the Indian federal government's nominee in discussions with Enron Corp.'s Dabhol Power Co. on a dispute over dues with the western province of Maharashtra, on the next meeting of the negotiating panel. ``According to me, the committee is still there. Till the committee is formally dissolved we exist.'' Dabhol Power said yesterday the Maharashtra State Electricity Board, its sole customer, served notice that it's canceling their seven-year-old power purchase contract. ``I have been told even today that the meeting is as scheduled on May 29 and I will be there to attend it. ``There have been any number of instances where such developments take place and the committee continues its negotiation.'' India Govt: State Bd To Likely Pay Dabhol Apr Elec Bill 05/25/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- India's Maharashtra State Electricity Board is likely to pay its electricity bill for April to U.S. energy major Enron Corp.'s (ENE) Indian unit, Dabhol Power Co., a senior Power Ministry official said Friday. "My understanding is that MSEB will pay up its bill for April to Dabhol Power under protest," the official said without elaborating. Jimmy Mogal, Enron India's spokesman declined to comment on the size of the April bill. MSEB Chairman Vinay Bansal wasn't available for comment. Media reports have speculated that the bill was around 1.37 billion Indian rupees ($1=INR46.95). Dabhol has come under fire because of the relatively high cost of its power. Critics object to Dabhol charging INR7.1 rupees a kilowatt-hour, compared with INR1.5/KWh charged by other suppliers. The $3 billion Dabhol project has been mired in financial disputes since its main customer, the Maharashtra State Electricity Board, has failed to pay several of its bills. DPC confirmed Thursday that the MSEB has declared its contract to purchase power from the US$3 billion Dabhol plant null and void, but it said the move by its client was without merit. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. PGE sees gains despite power costs 05/25/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. PORTLAND, Ore. (AP) - Power prices may have hit an all-time high, but Portland General Electric showed record revenues in the first part of the 2001. With earnings of $43 million for the quarter ended March 31, a 10 percent increase from year-ago levels, PGE clearly has stepped-up sales activity as wholesale electricity prices have surged. Utility officials have told state regulators that if the good times continue, they will share some of the benefits with customers through credits or refunds. But the cost of buying electricity for 728,000 Oregon customers has climbed dramatically, and the volatility casts doubt on the possibility of refunds for PGE customers this fall. PGE's quarterly report showed revenue from wholesale power sales rose to $480 million, three times the posting for the same period a year earlier. "We were able to do fairly well," said James Piro, chief financial officer for PGE. But costs also climbed dramatically. Because PGE's power plants produce less than half the electricity needed to serve the utility's residential and business customers, it buys power on the same high-priced markets into which it sells. It also buys natural gas to fuel some of its generators - an increasingly expensive commodity. The costs of electricity and fuel totaled $582 million for the quarter ended March 31, almost twice PGE's tab for the same period of 2000. PGE's success on the wholesale market involved luck as well as trading savvy. The utility anticipated a cold winter, along with the increase in demand, and bought an extra cushion of electricity supplies. When the season proved unusually mild, PGE found itself with a surplus to sell. Because prices were on the rise, PGE benefited from subsequent trades. Dry weather, however, is cutting into PGE's hydropower resources, and wholesale prices are easing slightly. These conditions could crimp PGE's ability to continue to profit from power sales and hold down earnings. On the other hand, if a heat wave sweeps through the region and PGE still has extra power to sell outside Oregon - to the Southwest, for example - sales revenue could surge as prices rise. Under a plan approved by regulators to help deal with volatile electricity markets, PGE will track all power costs incurred from January through September. If costs exceed certain levels, a rate increase will result. If profits exceed certain thresholds, refunds will occur. Whether increase or refund, regulatory review is required. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Pachauri rejects Godbole's remarks 05/25/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire NEW DELHI, May 24. DR R.K. Pachauri, a member of the Review Committee set up by the Maharashtra Government on the Dabhol controversy, has voiced his concern on a fellow member's recent statement in a leading national daily on the issue. In a press statement released here, Dr Pachauri has contended Mr Godbole's statement that, "The committee has also suggested that the judicial enquiry, headed by a service or a retired Supreme Court judge should be initiated as soon as possible." According to Dr Pachauri, this statement needs to be seen in the context of the fact that three out of the five members in the committee recorded their strong dissent with this view. "Can the view of two members of the committee, clearly a minority, be read as 'the committee has also suggested...'," Dr Pachauri has argued. According to him, "Can a judicial enquiry really force Enron back to the negotiating table?" In the press statement, he has thrown up several other questions -Can the Maharashtra Government renegotiate a deal with Enron if a judicial enquiry is in progress, and would the public accept any such deal till the enquiry is over? And till it is over, the Maharashtra Government would continue to run up huge bills even as the State is unable to absorb the power generated by Dabhol. Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: India, Australia sign pact on energy, mining 05/25/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire NEW DELHI, May 24. INDIA and Australia have signed a protocol for strengthening bilateral cooperation in the areas of mining, power, non-conventional energy sources and coal. The protocol followed two days of deliberations by the Indo-Australia Joint Working Group on Energy and Minerals set up in 1999. After the signing ceremony here on Thursday, the leader of the Australian delegation, Mr Tim Mackey, Deputy Chief Executive Officer, Department of Industry, Science and Resources, said that a lot of investments from Australia may flow into India following the recent policy changes initiated by the Indian Government. There are potential opportunities for enhanced cooperation between the private sectors of the two countries, he said and added that there will be at least three joint venture projects coming up in the power sector, some in LNG and gas pipelines and a few technology transfers. In view of the ongoing controversy about Enron Corporation's Dabhol power project, Mr Mackey said that Australian companies are not bothered with the controversy and it will not have any impact on their entry into the Indian power sector. He said that there are three proposals for supplying of liquefied natural gas (LNG) to potential terminals in the eastern coast of India involving investments worth $3 billion. Australian firm Woodside, he said, is a partner in Dakshin Bharat Energy Consortium Ltd selected by Tamil Nadu Industrial Development Corporation (TIDCO) to establish an LNG terminal at Ennore. Another Australian firm - Broken Hill Proprietaries (BHP) - to set up an LNG terminal in the eastern coast for which the spot is yet to be identified. BHP also has plans to enter the power sector in India. The head of the Indian team, Dr Aruna Bagchee, Joint Secretary, Ministry of Mines, said that this second meeting of the joint working group has yielded very positive results in terms of enhancing bilateral ties between the two countries and will go a long way in promoting Australian business community to come and explore the opportunities thrown open in India's mining sector. Australia has agreed to assist in enhancing the capacities of Indian mining regulatory and developmental oriental organisations like the Indian Bureau of Mines and the Geological Survey of India to strengthen customer and user-friendly basic data. The next meeting of the joint working committee will be held in Sydney next year. Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: MSEB slaps notice on DPC 05/25/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, May 24. THE Maharashtra State Electricity Board (MSEB) today issued a legal notice to Enron under the Indian Contract Act, claiming the power purchase agreement (PPA) with Dabhol Power Company (DPC) as "void". In the notice, MSEB has said it had been forced to "rescind" the PPA with DPC and is "avoiding" the contract. DPC had "misrepresented material facts" while drawing up the PPA and hence it is "no more bound by the contract", it said. The notice, which has been served under Section 19 of the Indian Contract Act, claims misrepresentation in performance of the plant as per clauses 6 and 7 under schedule 6 of the PPA. A senior MSEB official said, "we were expecting a certain level of performance from the plant. The contract was entered into as per assurance about a certain level of plant performance from DPC, which we found to be a misrepresentation. We are now exercising the option under Indian law of avoiding the contract." "MSEB does not have the right to rescind the PPA as attempted in their letter," DPC said in a statement issued here. " It would appear that MSEB's notice is a deliberate attempt to further delay the resolution of difficult issues confronting MSEB. The board has chosen an obscure and improper justification for attempting to rescind a contract that, in any event, was signed more than seven years ago. In any case, this basis and many of MSEB's related claims are already subject of a pending arbitration initiated by DPC." According to the MSEB official, although DPC is free to contest the notice, they can do so only in Indian courts. The relevant clauses of the PPA relate to making power available at full capacity within three hours. MSEB has been claiming that DPC has not been generating power at full capacity and had slapped three penalties of Rs 400 crore each. It had also sought that its bills be adjusted against the amount. The issue had led to protracted quarrels between DPC and MSEB which ended up in conciliation, arbitration and now, finally, the termination notices. According to State Government sources, Enron had an inkling of what was coming. They also hinted that it could have prompted DPC to serve the preliminary termination notice (PTN). Banking sources too said the company had "feared" that MSEB may serve a termination notice. The board official said MSEB would henceforth not be under any obligation to buy power from DPC. "But since the plant cannot be shut down, we have offered to purchase power as per the PPA. Of course, they too are not obligated to supply power," he said. The legal notice is, however, not likely to affect the renegotiation. Dr Madhav Godbole, Chairman of the renegotiation panel, told Business Line that the legal notice would not affect the normal course of the proceedings. "The two processes would continue alongside," Dr Godbole said. * * * Centre awaits negotiations NEW DELHI, May 24. THE Centre is willing to consider any worthwhile idea emerging out of the negotiating committee for the settlement of the dispute between Dabhol Power and MSEB, according to the Union Power Minister, Mr Suresh Prabhu. An official release issued today states that any such proposal has to be acceptable to both the MSEB as well as the DPC. Industry sources, however, point out that the Centre's stated position is not likely to provide a breakthrough since the Centre has endorsed a consensus-driven approach with its involvement restricted to the participation of its member Mr A.V. Gokak in the negotiating committee. A meeting between Dabhol Power Company and Ministry of Power is slated to be held on Friday following DPC's request to the meet the Power Secretary, Mr A.K. Basu. Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. AUSTRALIAN FIRMS EYE INDIAN POWER AND MINING SECTOR 05/25/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, May 25 Asia Pulse - The Enron controversy notwithstanding, the Australian transnational companies plan to invest US$3 billion in the Indian energy sector over the coming years. This was announced at the end of two-day meeting of India-Australia Joint Working Group on Mines and Energy, here. "Our companies plan to invest $3 billion in the energy sector over the next few years", Tim Mckey, Head of the Australian delegation said here. On the mining front Mckey announced that Australian firms were interested in investing in development of science and technology for cleaning up mines. Indian delegation headed by Aruna Bagchee, the Joint Secretary (Mines), briefed the Australian counterparts about the recent changes in the investment policies aimed at atrracting foreign direct investment. The meeting also discussed possibilities of cooperation in other areas like non conventional energy sources. The working group has identified specific proposals for follow up action including a projects for mineral processing and benefication of minerals. (PTI) 25-05 1051 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Bechtels out if dues not paid by May 31 Anto T Joseph 05/25/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) FRUSTRATED by a series of payment defaults, US-based Bechtel has threatened the Enron-promoted Dabhol Power Company that it will withdraw from the controversial project by May 31, if its dues are not paid. In a letter written to DPC, Bechtel which is the EPC contractor for the 2,184 mega-watt project and also a minority stake holder (10 per cent) in DPC has said it was stopping civil work at the site in coastal Maharashtra. Sources from financial institutions said that the unit I of the projects phase-II, which was slated to be operational commercially by June, will not be ready by then, after Bechtel stopped work at the site. Around 10 to 15 per cent of the work is yet to be completed, sources added. Both Bechtel and DPC refused to comment on these developments. FI sources said the issue will be discussed threadbare at the meeting in New Delhi on Friday called by the Centre. While Bechtel issued the May 31 deadline to DPC to make its outstanding payments, lenders have refused to bail out the project with any further debt disbursements. The preliminary termination notice issued by the cash-starved DPC has compounded the matter, according to FI sources. The ongoing payment impasse, involving MSEB and the state and central governments, has resulted in delays in payments to vendors for the second phase of the power project. On May 2, Aric Oakf, project director of Bechtel India, had said his company was concerned about the payment defaults. He had said that the company was exploring various options as per the EPC contract. On May 3, the Economic Times had reported that Bechtel was considering pulling out of the project. Though there were defaults and delays in payment, the company had continued with the construction work at the site. Sources said DPC was not in a position to change the situation, unless lenders soften their stance and start funds disbursal. The lenders have held back around $250 million payment out of the committed debt, after the project ran into a series of controversies. Bechtel, one of the largest engineering construction firms in the world, has set up more than 450 power plants, installed more than 6,800 kilometers of high voltage transmission lines, and is the leading builder of independent power projects worldwide. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Govt in a fix over asking NTPC to take over Dabhol Santosh Tiwary & P Vaidyanathan Iyer NEW DELHI 05/25/2001 Business Standard 2 Copyright © Business Standard The possibility of National Thermal Power Corporation (NTPC) being roped in to keep the 2,184 mw Dabhol power project running has been discussed at the highest level in the government. Enron can sell its 65 per cent stake in the $1 billion (Rs 4,700 crore) equity of DPC even during the six month period before the lapse of the preliminary termination notice, according to its PPA with Maharashtra State Electricity Board. The sale however will have to be routed through the MSEB. The government however faces a major dilemma over asking NTPC to take over the project given the political ramifications of the move which could be construed by other states as direct bailing out of Maharashtra, sources said. Given the composition of the Vajpayee-led NDA government, any move towards taking over Dabhol through NTPC would immediately invite the ire of other strong allies including Andhra Pradesh chief minister N Chandrababu Naidu. Several IPPs in Andhra Pradesh and other states are still awaiting financial closure. Sources said though NTPC's involvement in DPC at present was not advisable, they noted that the Rs 19,220-crore public sector Navratna had all the resources and expertise to chip in if Enron exited. With NTPC having piled up huge reserves of over Rs 15,000 crore, shelling out $ 650 million (Rs 3,055 crore) to acquire Enron's 65 per cent stake will not be a big deal if the Centre gives a green signal. Besides, NTPC also has expertise in handling dual-fuel projects based on gas and naphtha. They said NTPC had seven such gas/naphtha-based projects including Anta, Auriaya, Kawas and Gandhar. NTPC officials however declined to comment on this issue. The possibility of a private player picking up Enron's equity in the $ 3 billion power project has also not been ruled out. Sources said given the fact that Madhav Godbole committee recommended keeping the project alive, MSEB would not pose any hurdle in Enron transfering its equity to any serious Indian private sector company. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. MSEB rescinds Dabhol PPA Our Regional Bureau MUMBAI 05/25/2001 Business Standard 1 Copyright © Business Standard The Maharashtra State Electricity Board today rescinded the power purchase agreement (PPA) it had entered into with the Dabhol Power Company (DPC) on May 23, 1993, in response to the preliminary termination notice (PTN) issued to it by the power major on Saturday. The notice issued to Enron India managing director C Wade Kline (dated May 23, 2001) by MSEB chairman Vinay Bansal said: "We are now convinced that your conduct is not bona fide and as such we are constrained to rescind the PPA with immediate effect." The MSEB will file a case tomorrow with the state electricity regulatory commission. DPC, in a release issued here, confirmed having received the termination notice and added: "In any case, many of MSEB's related claims are already the subject of a pending arbitration initiated by DPC. Our arbitration notice of April 12, 2001, should serve as evidence of our confidence in DPC's legal position and we expect that the issues in arbitration will be resolved to our satisfaction." The MSEB notice for its part noted: "On January 28, 2001, to meet our urgent requir
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