dhabol jeff ,
we shall forward to you shortly a copy of the message from sandeep with the
numbers you have
requested . what follows below are the extracts from two recent articles on
the power situation in india
published by the financial times .
the first article describes recent power outage in northern india affecting
millions of people .
one possible line of defense is pointing out to the value of output lost due
to power
shortages . it is obvious that the value of lost production exceeds the cost
of power produced
by the dhabol plant ( expensive as it may be ) . the power cut affected 230
million people .
the second article is enron specific .
vince
asia - pacific : power failure hits north india
financial times ; jan 3 , 2001
by angus donald
tens of millions of people were left without electricity
in northern india
yesterday after a power grid breakdown .
electricity was gradually switched on in some areas and
most parts of the
capital new delhi , with 60 to 70 per cent of supply
expected to be restored
by the end of the day , according to power grid
officials .
the associated chambers of commerce and industry
( assocham ) , a
leading business organisation , expressed " deep concern "
and called for a
mechanism to prevent future disruption that could
" cripple the economy " .
the power failure across eight indian states , including
new delhi , disrupted
train services , water supplies and the telephone network
and forced
hospitals to switch to emergency generators .
the fault occurred on the northern grid , which provides
electricity for 226 m
people , and affected the states of delhi , haryana ,
punjab , uttar pradesh ,
himachal pradesh , madhya pradesh , rajasthan and jammu
and kashmir .
a breakdown at a sub - station in kanpur in uttar pradesh ,
india ' s most
populous state , caused an overload of power on other
lines , which then
failed as well .
trains stopped running for most of the day and signals
systems were
damaged . new delhi international airport was also
slightly affected before
its own power supply could be engaged .
" we will probe into the reasons for the failure . it is
most likely to be a
technical failure , but we will investigate why it
happened , " suresh prabhu ,
the power minister , was quoted as saying by press trust
of india .
india suffers regularly from power problems because of
lack of funding to
upgrade infrastructure . theft of supplies is also a big
problem . thirty per
cent of the country ' s electricity is stolen , according
to analysts . in new
delhi as much as 50 per cent is stolen .
two years ago , a power failure blacked out uttar pradesh
and delhi for
hours .
assocham issued a statement , saying that increasing
industrial demand
would exacerbate the problems already faced by india ' s
inefficient power
sector . " the slow progress , particularly in
strengthening the transmission
and distribution system , and ever increasing theft will
contribute to
worsening the power supply situation further . "
copyright : the financial times limited
, copyright the financial times limited 2000 . " ft " and " financial times "
are trademarks of the financial times . privacy policy | terms jan 3 , 2001
by khozem merchant
enron , the us energy producer and a constant target of
criticism in india , is
hitting back with a campaign to reverse its image as a
profiteering
multinational .
its " myth and reality " offensive in local newspapers
follows the west indian
state of maharashtra ' s decision to review the tariff it
pays the texas - based
company , whose dollars 2 . 2 bn electricity generating
plant at dabhol is
india ' s biggest single foreign investment .
maharashtra ' s tariff has more than doubled since 1993
and is three times
greater than that charged by other independent power
producers ( ipps ) .
the tariff has risen because of the depreciation of the
rupee against the
dollar and the high but now falling price of naphtha
fuel . the state also pays
a fixed capacity charge of rs 970 m ( dollars 21 m ) a month ,
reflecting the
huge project cost and , controversially , irrespective of
consumption .
a showdown looks inevitable , reminiscent of a clash six
years ago that
damaged india ' s appeal to foreign investors . a former
official of the world
bank , which has criticised the deal , says enron is
emerging " as the east
india company of the 21 st century " - a reference to the
british trader that
colonised key areas of the indian economy in the 19 th
century .
the stand - off is the latest blot on india ' s power
sector . the uk ' s powergen
and cogentrix of the us have quit india recently ,
frustrated by long approval
procedures , inadequate payments mechanisms or because of
higher
returns elsewhere .
" india has lost time and opportunity and has driven
returns down by six
percentage points , " says gerry grove - white , former india
general manager
of powergen , which has sold its 655 mw plant in gujarat
to china light &
power of hong kong .
india ' s national plan for the five years to 2002 says
generating capacity
must rise by 40 , 000 mw to about 120 , 000 mw . but since
1992 , ipps have
added only 3 , 000 mw and 2 , 500 mw remains under
construction . this is
insufficient to support official projections of 6 to 8
per cent economic
growth .
enron was a bellwether of india ' s liberalisation ,
winning fast - track project
approval in the early 1990 s . phase 1 , a 740 mw plant
fuelled by expensive
naphtha came on stream in may 1999 , and phase 2 , a
dollars 1 . 87 bn plant
of 1 , 624 mw capacity that will run on cheaper liquefied
natural gas ( lng ) ,
will be completed this year . only two of seven other
fast - track proposals
have achieved financial closure .
from the outset enron encountered attacks , culminating
in maharashtra ' s
then nationalist government cancelling the project
before renegotiating
terms no less onerous . vilasrao deshmukh , chief minister
of the successor
government , says the power purchase agreement is
unaffordable .
enron , whose attackers also include cultural
chauvinists , wants to maintain
good political relations in a hostile but lucrative
environment . enron views
india as a testing ground for its evolution from a
traditional manager of
power plants to a broad - based trader of commodities ,
such as energy , gas
and bandwidth .
to support these ambitions enron hopes to trade energy
between power
surplus and deficit states , once legislation is passed
this year . it is building
an lng terminal and pipelines to trade imported natural
gas . and it is
laying a 15 , 000 km fibre - optic network to trade bandwidth
space in a country
desperately short of this new economy commodity .
in any event , enron believes it has a watertight
contract . it is supported by
many that believe any subversion of the contract would
confirm investor
perception of maharashtra , india ' s financial and
industrial hub , as an
unreliable destination for investment .
mr deshmukh - who has avoided the language of his
predecessor , which
threatened to " dump dabhol into the arabian sea " - is
under pressure from
radical members of his wobbly coalition . but his options
are limited .
scrapping the project would be ruinous for an
economically troubled state
that would have to compensate shareholders .
maharashtra state electricity board , the local utility
and enron ' s main
client , is obliged to dispatch or " off - take " 90 per cent
of dabhol ' s output . yet
mseb has never honoured these guarantees . its off - take
has averaged 60
per cent since the plant opened and , in effect , mseb has
been paying a lot
more while consuming a lot less power .
one reason off - take is low is because the state ' s tough
new regulator has
told mseb to buy from cheaper sources . enron says the
tariff would be
rs 4 . 02 / kwh if mseb ' s off - take averaged 90 per cent . but
with off - take a
third lower , the average tariff is rs 4 . 94 per unit , and
often higher . in
october , the tariff was rs 6 . 91 per unit , when off - take
was about 49 per
cent . enron says tariffs should come down when phase 2 ,
run on cheaper
lng , starts .
these cost pressures have forced mseb to take up only
half of a 30 per
cent equity option in phase 2 . enron has acquired the
balance and
mandated bankers to find a buyer .
enron ' s difficulties have undermined the appeal of ipps ,
which have failed to
deliver the flood of investments . potential ipps feared
they would never be
paid by state generating boards that have become a
byword for corrupt
management of power .
reform of state electricity boards , whose uneconomic
pricing means
industrial users subsidise poor farmers , as well as
transmission and
distribution ( t & d ) services to check huge theft and
technical losses , is
overdue . " given the limited resources , money would be
better spent on t & d
rather than on new plant , " says oliver blackaby ,
managing director of n m
rothschild in india , which is advising karnataka on the
privatisation of its
distribution network .
for the moment , attention is fixed on enron ' s ability to
satisfy the
competing interests of investors and clients . as sanjay
bhatnagar , chief
executive officer of enron india , said in a recent trade
magazine , one of the
key lessons learned from phase 2 is " having flexibility
to deal with
externalities " .
copyright : the financial times limited
, copyright the financial times limited 2000 . " ft " and " financial times "
are trademarks of the financial times . privacy policy | terms & conditions .
dhabol
jeff ,
we shall forward to you shortly a copy of the message from sandeep with the
numbers you have
requested . what follows below are the extracts from two recent articles on
the power situation in india
published by the financial times .
the first article describes recent power outage in northern india affecting
millions of people .
one possible line of defense is pointing out to the value of output lost due
to power
shortages . it is obvious that the value of lost production exceeds the cost
of power produced
by the dhabol plant ( expensive as it may be ) . the power cut affected 230
million people .
the second article is enron specific .
vince
asia - pacific : power failure hits north india
financial times ; jan 3 , 2001
by angus donald
tens of millions of people were left without electricity
in northern india
yesterday after a power grid breakdown .
electricity was gradually switched on in some areas and
most parts of the
capital new delhi , with 60 to 70 per cent of supply
expected to be restored
by the end of the day , according to power grid
officials .
the associated chambers of commerce and industry
( assocham ) , a
leading business organisation , expressed " deep concern "
and called for a
mechanism to prevent future disruption that could
" cripple the economy " .
the power failure across eight indian states , including
new delhi , disrupted
train services , water supplies and the telephone network
and forced
hospitals to switch to emergency generators .
the fault occurred on the northern grid , which provides
electricity for 226 m
people , and affected the states of delhi , haryana ,
punjab , uttar pradesh ,
himachal pradesh , madhya pradesh , rajasthan and jammu
and kashmir .
a breakdown at a sub - station in kanpur in uttar pradesh ,
india ' s most
populous state , caused an overload of power on other
lines , which then
failed as well .
trains stopped running for most of the day and signals
systems were
damaged . new delhi international airport was also
slightly affected before
its own power supply could be engaged .
" we will probe into the reasons for the failure . it is
most likely to be a
technical failure , but we will investigate why it
happened , " suresh prabhu ,
the power minister , was quoted as saying by press trust
of india .
india suffers regularly from power problems because of
lack of funding to
upgrade infrastructure . theft of supplies is also a big
problem . thirty per
cent of the country ' s electricity is stolen , according
to analysts . in new
delhi as much as 50 per cent is stolen .
two years ago , a power failure blacked out uttar pradesh
and delhi for
hours .
assocham issued a statement , saying that increasing
industrial demand
would exacerbate the problems already faced by india ' s
inefficient power
sector . " the slow progress , particularly in
strengthening the transmission
and distribution system , and ever increasing theft will
contribute to
worsening the power supply situation further . "
copyright : the financial times limited
, copyright the financial times limited 2000 . " ft " and " financial times "
are trademarks of the financial times . privacy policy | terms jan 3 , 2001
by khozem merchant
enron , the us energy producer and a constant target of
criticism in india , is
hitting back with a campaign to reverse its image as a
profiteering
multinational .
its " myth and reality " offensive in local newspapers
follows the west indian
state of maharashtra ' s decision to review the tariff it
pays the texas - based
company , whose dollars 2 . 2 bn electricity generating
plant at dabhol is
india ' s biggest single foreign investment .
maharashtra ' s tariff has more than doubled since 1993
and is three times
greater than that charged by other independent power
producers ( ipps ) .
the tariff has risen because of the depreciation of the
rupee against the
dollar and the high but now falling price of naphtha
fuel . the state also pays
a fixed capacity charge of rs 970 m ( dollars 21 m ) a month ,
reflecting the
huge project cost and , controversially , irrespective of
consumption .
a showdown looks inevitable , reminiscent of a clash six
years ago that
damaged india ' s appeal to foreign investors . a former
official of the world
bank , which has criticised the deal , says enron is
emerging " as the east
india company of the 21 st century " - a reference to the
british trader that
colonised key areas of the indian economy in the 19 th
century .
the stand - off is the latest blot on india ' s power
sector . the uk ' s powergen
and cogentrix of the us have quit india recently ,
frustrated by long approval
procedures , inadequate payments mechanisms or because of
higher
returns elsewhere .
" india has lost time and opportunity and has driven
returns down by six
percentage points , " says gerry grove - white , former india
general manager
of powergen , which has sold its 655 mw plant in gujarat
to china light &
power of hong kong .
india ' s national plan for the five years to 2002 says
generating capacity
must rise by 40 , 000 mw to about 120 , 000 mw . but since
1992 , ipps have
added only 3 , 000 mw and 2 , 500 mw remains under
construction . this is
insufficient to support official projections of 6 to 8
per cent economic
growth .
enron was a bellwether of india ' s liberalisation ,
winning fast - track project
approval in the early 1990 s . phase 1 , a 740 mw plant
fuelled by expensive
naphtha came on stream in may 1999 , and phase 2 , a
dollars 1 . 87 bn plant
of 1 , 624 mw capacity that will run on cheaper liquefied
natural gas ( lng ) ,
will be completed this year . only two of seven other
fast - track proposals
have achieved financial closure .
from the outset enron encountered attacks , culminating
in maharashtra ' s
then nationalist government cancelling the project
before renegotiating
terms no less onerous . vilasrao deshmukh , chief minister
of the successor
government , says the power purchase agreement is
unaffordable .
enron , whose attackers also include cultural
chauvinists , wants to maintain
good political relations in a hostile but lucrative
environment . enron views
india as a testing ground for its evolution from a
traditional manager of
power plants to a broad - based trader of commodities ,
such as energy , gas
and bandwidth .
to support these ambitions enron hopes to trade energy
between power
surplus and deficit states , once legislation is passed
this year . it is building
an lng terminal and pipelines to trade imported natural
gas . and it is
laying a 15 , 000 km fibre - optic network to trade bandwidth
space in a country
desperately short of this new economy commodity .
in any event , enron believes it has a watertight
contract . it is supported by
many that believe any subversion of the contract would
confirm investor
perception of maharashtra , india ' s financial and
industrial hub , as an
unreliable destination for investment .
mr deshmukh - who has avoided the language of his
predecessor , which
threatened to " dump dabhol into the arabian sea " - is
under pressure from
radical members of his wobbly coalition . but his options
are limited .
scrapping the project would be ruinous for an
economically troubled state
that would have to compensate shareholders .
maharashtra state electricity board , the local utility
and enron ' s main
client , is obliged to dispatch or " off - take " 90 per cent
of dabhol ' s output . yet
mseb has never honoured these guarantees . its off - take
has averaged 60
per cent since the plant opened and , in effect , mseb has
been paying a lot
more while consuming a lot less power .
one reason off - take is low is because the state ' s tough
new regulator has
told mseb to buy from cheaper sources . enron says the
tariff would be
rs 4 . 02 / kwh if mseb ' s off - take averaged 90 per cent . but
with off - take a
third lower , the average tariff is rs 4 . 94 per unit , and
often higher . in
october , the tariff was rs 6 . 91 per unit , when off - take
was about 49 per
cent . enron says tariffs should come down when phase 2 ,
run on cheaper
lng , starts .
these cost pressures have forced mseb to take up only
half of a 30 per
cent equity option in phase 2 . enron has acquired the
balance and
mandated bankers to find a buyer .
enron ' s difficulties have undermined the appeal of ipps ,
which have failed to
deliver the flood of investments . potential ipps feared
they would never be
paid by state generating boards that have become a
byword for corrupt
management of power .
reform of state electricity boards , whose uneconomic
pricing means
industrial users subsidise poor farmers , as well as
transmission and
distribution ( t & d ) services to check huge theft and
technical losses , is
overdue . " given the limited resources , money would be
better spent on t & d
rather than on new plant , " says oliver blackaby ,
managing director of n m
rothschild in india , which is advising karnataka on the
privatisation of its
distribution network .
for the moment , attention is fixed on enron ' s ability to
satisfy the
competing interests of investors and clients . as sanjay
bhatnagar , chief
executive officer of enron india , said in a recent trade
magazine , one of the
key lessons learned from phase 2 is " having flexibility
to deal with
externalities " .
copyright : the financial times limited
, copyright the financial times limited 2000 . " ft " and " financial times "
are trademarks of the financial times . privacy policy | terms & conditions .