From: richard.sanders@enron.com
To: bruce.lundstrom@enron.com
Date: 2001-01-09 07:27:00+00:00
Subject: Re: Dabhol - An Update on Legal Efforts

Thanks for your note. Let me know if their is anything I can do.



	Bruce Lundstrom@ENRON_DEVELOPMENT
	01/08/2001 08:59 AM
		 
		 To: Richard B Sanders@ECT
		 cc: Gail Brownfeld/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
		 Subject: Dabhol - An Update on Legal Efforts

Richard -

Gail's participation has been very helpful to this effort.  Her presence in 
Bombay will help us with the likely "real time" India action to be taken in 
the next week or so.

Bruce

---------------------- Forwarded by Bruce Lundstrom/ENRON_DEVELOPMENT on 
01/08/2001 09:02 AM ---------------------------


Bruce Lundstrom
01/08/2001 08:56 AM
To: Stephanie Harris@ENRON, Mark E Haedicke@ECT
cc: Rob Walls/NA/Enron@Enron 

Subject: Dabhol - An Update on Legal Efforts

Gentlemen -

We are currently in the processing of serving/delivering the GOM Guarantee 
demand and the PPA Meet and Discuss Letter.  Ken Lay approved the delivery in 
a conference call this morning.  Our attention will then turn to the GOI 
Guarantee demand (can be served a week from today), the Notice of Arbitration 
under the GOM Guarantee and anticipation of injunctive relief being sought by 
our counterparties to stay any arbitration and collection/payment on the 
guarantees.

We are scheduled to meet with the lenders in NY tomorrow.

Bruce

---------------------- Forwarded by Bruce Lundstrom/ENRON_DEVELOPMENT on 
01/08/2001 08:54 AM ---------------------------


Bruce Lundstrom
01/05/2001 01:57 PM
To: Stephanie Harris@ENRON, Mark E Haedicke@ECT
cc: Rob Walls/NA/Enron@Enron 

Subject: Dabhol - An Update on Legal Efforts

Jim/Mark -

I know that Rob has been keeping you generally apprised, but I thought that I 
would update you both on the quickly evolving Dabhol situation.

The commercial situation at Dahbol Power Company is deteriorating pretty 
rapidly.  MSEB is now approx. 45 days late on payment in full of the October 
invoice.  They have paid only a relatively modest portion of that bill.  
Payment on the November bill is about 15 days late.  The MSEB Chairman says 
that MSEB can't pay these invoices.

At present, the Governments of Maharashtra and India are refusing to engage 
in a constructive dialogue on solving the non-payment issue and the 1400 MW 
that will come on line as part of Phase II.  They say that they recognize 
their obligations as guarantors of MSEB's obligations but are not interested 
in helping in any different capacity (e.g., GOI buys some or all of Phase II).

Until just a few days ago, the lead India bank was refusing to fund even 
their own ongoing interest obligation.  At present, they are refusing to 
continue funding any other Phase II draw request.  The India banks have a 
great deal to lose and, in our opinion, should strongly consider continuing 
to fund Phase II.  It would seem that the lead India bank is scared, knaive 
or, worse yet, very pessimistic about Dabhol's future -- perhaps there are 
other reasons for their current position.

We are meeting with the international banks in NY on Tuesday.  Our main goal 
is to convince them to continue to fund and to use their influence to have 
the India banks do the same.

The current India legal crisis team is nearly identical to the 1995 India 
legal crisis team.  The same law firms and lawyers (both Indian and 
international) are continuing to play much the same roles.

We have not identified any particular "holes" in Dabhol's legal position.  
While the India newspapers have offered up various theories that might allow 
MSEB to cancel the PPA (frustration of purpose, etc.), none seem compelling.  
No counterparty has offered up any of these theories directly to DPC.

In the short term, we are preparing (1) a demand under the GOM guarantee and 
(2) a "meet and discuss" letter under the PPA.  The current plan is to serve 
these next week.  We are also preparing (3) an arbitration notice under the 
GOM guarantee, (4) a demand under the GOI guarantee and (5) an action against 
MERC.  MERC is the Maharashtra Energy Regulatory Commission.  They have 
issued "orders" over the last year limiting the amount of power that MESB 
buys from Dabhol.  We do not believe that they have jurisdiction to do so.  
We may or may not ultimately file this action.

Let me know if I can provide any further information.

Bruce