Enron Mail

To:kenneth.lay@enron.com, jeff.skilling@enron.com, joseph.sutton@enron.com
Subject:India "CPIL" Supreme Court Case
Date:Wed, 30 Aug 2000 06:39:00 -0700 (PDT)

The Supreme Court hearing for the case in India regarding the alleged
improper bidding and award of the Panna/Mukta block concluded today. Our
legal team's opinion is very optimistic based on the way the proceeding
progressed and also on the actions of the chief judge during the concluding
arguments of the case today in India.

The panel of three judges will now take approximately 2 months to write their
opinion and that should complete this case. While I probably shouldn't
speculate on the outcome, I will summarize my opinion of the important
points: 1) there is little doubt that the Panna/Mukta award to
Enron/Reliance/ONGC will stand, and 2) it is highly unlikely that the judges
will request the PSC to be renegotiated, the contract was portrayed and
generally accepted by the panel as a very fair deal for the GOI. According
to my general counsel, Stephen Wallace, the only concern our team has is that
the judges were quite critical of the CBI (the government group that
investigated Reliance for wrong doing in the bid process) during that portion
of the testimony and there is a possibility that they could request an
additional investigation. Our team puts the likelihood of the judges
ordering a new investigation at less than 50%. There is downside to such a
decision in that it creates uncertainty, but the focus would be on Reliance,
not Enron.

Enron was very prepared on the commercial and the legal front and our team,
as expected, carried the load for this case even though we were not the
primary defendants. Enron presented the major rebuttal to the CPIL
assertions because the others were not prepared and then later "coached" the
others to help them prepare appropriately. This was a much more intensive
case than people were assuming it would be last year and we were very
fortunate to be extremely well prepared and well represented.

Based on the above information, I do not think this issue "CPIL lawsuit"
should impact any future decisions we make regarding the Panna/ Mukta/Tapti
assets. This outcome basically eliminates one of the two issues impeding the
progress of the project I showed Joe, our proposal to sell
Panna/Mukta/Tapti, that we call Project Janus. We believe we have a unique
opportunity to realize exceptional value for these assets through an
arrangement with our partner. The strategy we have mapped out should allow
us to close the transaction prior to year-end and it has very positive cash
flow and neutral financial implications (minimal if any gain due to the
step-up last year) for the company. The only remaining hurdle is a tax
issue that we are currently working.