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Date: Mon, 30 Jul 2001 13:31:37 -0700 (PDT)
From: j.kaminski@enron.com
To: vkaminski@aol.com
Subject: FW: From The Enron India Newsdesk - July 28 - 30 Newsclips
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 -----Original Message-----
From: =09Kohli, Sandeep =20
Sent:=09Monday, July 30, 2001 9:02 AM
To:=09Kaminski, Vince J
Subject:=09FW: From The Enron India Newsdesk - July 28 - 30 Newsclips

Vince,

This may interest you.  It appears that we havemade public our desire to pu=
ll out of Dabhol.

Regards,
Sandeep.

 -----Original Message-----
From: =09Varma, Nikita =20
Sent:=09Monday, July 30, 2001 8:29 AM
To:=09Varma, Nikita
Subject:=09From The Enron India Newsdesk - July 28 - 30 Newsclips


Monday, July 30, 2001, http://216.34.146.167:8000/servlet/Form
Enron wants govt to buy Dabhol stake=20

THE TIMES OF INDIA
Saturday, July 28, 2001, http://timesofindia.indiatimes.com/articleshow.asp=
?catkey=3D-2128682902&art_id=3D2002500911&sType=3D1
Enron wants govt to buy its Dabhol stake=20

Similar articles as above were also reported as follows:

THE HINDU
Monday, July 30, 2001, http://www.hinduonnet.com/thehindu/2001/07/28/storie=
s/0128000d.htm
Enron wants to pull out of Dabhol project=20

THE HINDU
Monday, July 30, 2001, http://www.hinduonnet.com/thehindu/2001/07/29/storie=
s/0229000k.htm
Enron wishes to sell DPC stake , Mahesh Vijapurkar=20

THE HINDU BUSINESSLINE
Monday, July 30, 2001, http://www.blonnet.com/stories/0230562a.htm
Sale of stake best option, says Enron=20
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THE ECONOMIC TIMES
Monday, July 30, 2001, http://economictimes.indiatimes.com/today/30infr03.h=
tm
FIIs okayed DPC loans as provided for Int arbitration=20
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THE ASIAN AGE
Monday, July 30, 2001, http://www.asianageonline.com
DPC lenders offered loan on neutral basis
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BUSINESS STANDARD
Monday, July 30, 2001, http://www.business-standard.com/today/test2.asp?men=
u=3D4
Centre to keep off Dabhol spat=20
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THE FINANCIAL EXPRESS
Monday, July 30, 2001, http://www.financialexpress.com/fe20010730/eco2.html
MSEB, FIs plan roping in Centre for picking Enron equity in DPC , Sanjay Jo=
g
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THE TIMES OF INDIA
Saturday, July 28, 2001, http://timesofindia.indiatimes.com/articleshow.asp=
?catkey=3D-2128682902&art_id=3D1386716043&sType=3D1
'Four states not to buy power at current rates'=20
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THE TIMES OF INDIA
Saturday, July 30, 2001, http://timesofindia.indiatimes.com/articleshow.asp=
?catkey=3D-2128682902&art_id=3D1865483429&sType=3D1
Maharashtra's offer unrealistic: DPC=20
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THE HINDU BUSINESSLINE
Saturday, 28 July 2001, http://www.blonnet.com/2001/07/28/stories/1428564j.=
htm
Demand for DPC power only at `particular' price=20
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THE ECONOMIC TIMES
Monday, July 30, 2001, http://economictimes.indiatimes.com/today/30infr01.h=
tm
Maharashtra to pay Rs 788cr penalty to MSEB, Girish Kuber=20
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THE ECONOMIC TIMES
Monday, July 30, 2001, http://216.34.146.167:8000/servlet/Form
Enron wants govt to buy Dabhol stake=20
=20
US energy group Enron on Saturday said it wanted to sell its stake in the D=
abhol Power Company either to the Indian government or to the project's len=
ders. "As the largest investor in the DPC, Enron believes that selling its =
interest either to the government of India or to the project's lenders is t=
he best approach to resolve the protracted dispute," a spokesman for its In=
dian unit said. This follows comments made by Enron chairman Kenneth Lay in=
 Friday's issue of Financial Times that Enron is looking to exit from its I=
ndian venture. The Dabhol Power Company, 65 per cent owned by the Enron, is=
 locked in a bitter dispute with a local utility over a payments default. "=
We want out," said Enron's Chairman Kenneth Lay in an interview with the Fi=
nancial Times. DPC which is India's biggest direct foreign investment, had =
signed a contract to supply power to a state-owned utility, the Maharashtra=
 State Electricity Board, from its gas-based plant on the state's west coas=
t. But MSEB stopped buying power in May calling it expensive and defaulted =
on payments jeopardising the project's future.=20

"We have made it pretty clear to the government leadership we are now at a =
point where we would like to be taken out and we think most of our partners=
 do," Lay said in the Financial Times. Besides Enron, the other shareholder=
s in DPC are US group General Electric and Bechtel which own 10 per cent ea=
ch and MSEB with 15 per cent. Earlier this month Lay had a meeting with Ind=
ia's finance minister Yashwant Sinha to try and resolve the issue but talks=
 ended without any solution. "We have fought this once before, put it back =
together, fixed the contracts, but we don't want to do that again and have =
the same problems in a few years," Lay was quoted by the paper as saying. D=
PC's power plant is being built in two phases. The first phase of 740 mw is=
 up and running and the second phase of 1,444 mw is 97 per cent complete. S=
ome analysts say India's attempts to resolve the Enron dispute is a test ca=
se of its ability to attract more foreign investment. Last week US assistan=
t secretary of state on South Asian affairs, Christina Rocca, said the prob=
lems surrounding India's investment climate could be summed up in a five-le=
tter word, "Enron". "I have to emphasise that it will be difficult for inte=
rnational investors to view India favourably until it (Enron issue) is reso=
lved and in a reasonable manner," she said. (Reuters
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THE TIMES OF INDIA,Monday, July 30, 2001
Enron wants govt to buy its Dabhol stake=20

US energy group Enron Corp said on Saturday it wants to sell its stake in t=
he Dabhol Power Company either to the Central government or to the project'=
s lenders."As the largest investor in the DPC, Enron believes that selling =
its interest either to the government of India or to the project's lenders =
is the best approach to resolve the protracted dispute," a spokesman for it=
s Indian unit told Reuters. This follows comments made by Enron chairman Ke=
nneth Lay in Friday's issue of Financial Times that Enron is looking to exi=
t from its Indian venture. The Dabhol Power Company (DPC), 65 percent owned=
 by the Enron Corp, is currently locked in a bitter dispute with a local ut=
ility over a payments default. "We want out," said Enron's Chairman Kenneth=
 Lay in an interview with the Financial Times.

DPC, which is India's biggest direct foreign investment, had signed a contr=
act to supply power to a state-owned utility, the Maharashtra State Electri=
city Board (MSEB), from its gas-based plant on the state's west coast. But =
MSEB stopped buying power in May calling it expensive and defaulted on paym=
ents jeopardising the project's future. "We have made it pretty clear to th=
e government leadership we are now at a point where we would like to be tak=
en out and we think most of our partners do," Lay said in the Financial Tim=
es interview. Besides Enron, the other shareholders in DPC are U.S. group G=
eneral Electric and Bechtel which own 10 percent each and MSEB with 15 perc=
ent. Earlier this month Lay had a meeting with Finance Minister Yashwant Si=
nha to try and resolve the issue but talks ended without any solution. "We =
have fought this once before, put it back together, fixed the contracts, bu=
t we don't want to do that again and have the same problems in a few years,=
" Lay was quoted by the paper as saying.

DPC's power plant is being built in two phases. The first phase of 740 MW i=
s up and running and the second phase of 1,444 MW is 97 percent complete. S=
ome analysts say India's attempts to resolve the Enron dispute is a test ca=
se of its ability to attract more foreign investment. Last week U.S. assist=
ant secretary of state on South Asian affairs, Christina Rocca, said the pr=
oblems surrounding India's investment climate could be summed up in a five-=
letter word, "Enron". "I have to emphasise that it will be difficult for in=
ternational investors to view India favourably until it (Enron issue) is re=
solved and in a reasonable manner," she told a meeting in New Delhi.
( REUTERS )
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THE ECONOMIC TIMES, Monday, July 30, 2001
FIIs okayed DPC loans as provided for Int arbitration=20

INTERNATIONAL lenders of Enron's Dabhol Power Company, including the US gov=
ernment's Overseas Private Investment, have said they extended loans worth =
about $444 million to the project only because the PPA provided for settlem=
ent of disputes by neutral international arbitration. "Had the PPA not prov=
ided for settlement of disputes before arbitration panel in a neutral forum=
, we would not have disbursed loans worth about USD 444 million," DPC's 11 =
foreign lenders have submitted in an application seeking intervention in th=
e energy major's petition, to be heard by the Supreme Court next week. "The=
 PPA constitutes the project's backbone as DPC's entire revenues were to be=
 received from Maharashtra State Electricity Board and were the basis for o=
ur decision to extend the said loans to the $3-billion project". The FIIs s=
ay that MSEB knew that the cost of developing and building the project woul=
d be obtained, in substantial part, from loans provided to DPC on a "non-re=
course" basis by them and other lenders. "MSEB had expressly confirmed, agr=
eed and acknowledged that monies due to DPC from itself would be paid direc=
tly to an account (escrow in this case) created for our benefit and securit=
y", they said. Emphasising for international arbitration in dispute resolut=
ion between DPC and MSEB, the FIIs submitted before the Supreme Court that =
the arbitration provision to be held in London, a neutral international loc=
ation under the UNCITRAL rules, was "critical factor in their decision to f=
und the project". (PTI)=20
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THE ASIAN AGE, Monday, July 30, 2001
DPC lenders offered loan on neutral basis

Dabhol Power Company's lenders, including the US government's Overseas Priv=
ate Investment Corporation, have said that they extended loans worth about =
$444 million (Rs 2,088 crore) to the project only because the PPA provided =
for settlement of disputes by neutral international arbitration."Had the PP=
A not provided for settlement of disputes before the arbitration panel in a=
 neutral forum, we would not have disbursed loans worth about $444 million,=
" DPC's 11 foreign lenders said in an application submitted to the Supreme =
Court seeking intervention in the energy major's petition, to be heard by t=
he Court next week. "The PPA constitutes the project's backbone as DPC's en=
tire revenues were to be received from Maharashtra State Electricity Board =
and were the basis for our decision to extend the said loans to the $3 bill=
ion project." The FIIs say that MSEB knew that the cost of developing and b=
uilding the project would be obtained, in substantial part, from loans prov=
ided to Dabhol Power Co on a "non-recourse" basis by them and other lenders=
. (PTI)
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BUSINESS STANDARD, Monday, July 30, 2001
Centre to keep off Dabhol spat=20

The Centre is unlikely to intervene directly in the Dabhol problem despite =
Enron's willingness to sell its interest in the 2184 mw project to the gove=
rnment. Power ministry sources said the government has made its intentions =
very clear on this issue on several occasions that any direct intervention =
by the Centre was highly unlikely as it would face severe opposition from o=
ther states. "There is absolutely no change in that stance at present," sai=
d an official. The Centre was inclined to play the role of facilitator only=
 in arriving at a solution to the problem, and the central government's rep=
resentative in the re-negotiation committee set up by the Maharashtra gover=
nment had already been asked to expedite the proceedings, he said. Enron in=
 a statement on Saturday said that as the largest shareholder in Dabhol Pow=
er Company (DPC), the company believed that selling its interest either to =
the central government or to the project's lenders was the best approach to=
 resolve the protracted dispute between DPC and the Maharashtra State Elect=
ricity Board (MSEB). It stressed that any sale would need to be on terms pr=
oviding a complete recovery of capital costs and related expenditures. The =
company pointed out that the Dabhol issue was clearly having an adverse eff=
ect on the confidence of potential foreign investors to India. "Pursuing a =
buyout option could help resolve the dispute in a timely manner protecting =
India's investment climate and interests of DPC's stakeholders," said the s=
tatement. The company said that while DPC remained open to discussing other=
 viable solutions, it had serious concerns about getting embroiled in a ser=
ies of re-negotiations. It pointed out that no realistic proposal was offer=
ed to the company as yet, and no progress had been made in securing creditw=
orthy buyers that can purchase power at a price that was reasonable for new=
-generation plants. The statement said that until the issue was resolved DP=
C intended to continue pursuing all other remedies under the PPA, such as i=
nternational arbitration, to resolve the issue in a way that protected the =
rights of DPC sponsors, lenders, fuel suppliers and LNG ship owners.=20

Pressure tactic, says lenders=20
Lenders to DPC are unmoved by the company's demand that they take over the =
project and dubbed it as a pressure tactic. The company had said in a press=
 release on Saturday that the best solution would be for the Union governme=
nt or the lenders to take over the project. "We need to run our banks and i=
nstitutions and not a power project," said one senior banker involved in th=
e project. The lenders however accept the fact there is a sense of urgency =
and the government must get into the act faster. At the London meeting last=
 week, DPC showed its willingness to run Phase II of the project on naphtha=
 but MSEB is not willing to give its nod to commissioning of the Phase II=
=20
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THE FINANCIAL EXPRESS, Monday, July 30, 2001
MSEB, FIs plan roping in Centre for picking Enron equity in DPC , Sanjay Jo=
g

Maharashtra State Electricity Board (MSEB) and Indian financial institution=
s (IFIs) are planning to make a last ditch effort to rope in the BJP-led go=
vernment at the Centre for picking up the Enron equity in the Dabhol projec=
t through its undertaking as their funds amounting to over Rs 2,500 crore i=
n addition to a guarantee of Rs 3,900 crore to offshore lenders are involve=
d in the project.The MSEB has contributed nearly Rs 800 crore to pick up 30=
 per cent equity in the Dabhol phase-I and the IFIs have collectively lent =
Rs 1,738 crore for both the phases plus a guarantee of Rs 3,900 crore to of=
fshore lenders. MSEB and IFIs sources told The Financial Express that the E=
nron chairman Kenneth Lay's statement on Enron's desire to pull out of Dabh=
ol project has not come as a rude shock, but as an expected one. However, t=
hese sources said that if Enron wants to be out of 2,184 mw Dabhol project,=
 their exist should take place after "tough" negotiations with an active in=
volvement of the Union government.

They have projected various scenarios including the Enron, General Electric=
 and Bechtel collectively agreeing to recover about 50 to 60 per cent of th=
e total equity of $900 million in the Dabhol project from the Industrial De=
velopment Bank of India, which is a rupee lender consortium leader. The MSE=
B and IFIs are aware that the Enron and other equity holders will insist on=
 the full capital recovery and that they will be quite keen on purchase of =
their equity with interest at par by the new buyer.
However, MSEB and IFIs sources are of the view that due to their hard barga=
ining in the presence of the Centre, the Enron and other stakeholders may a=
rrive at certain compromise so that they can recover a substantial amount b=
locked in the project. Secondly, in view of cut in the equity, the loan amo=
unting to over $1.2 billion could be restructured at the lower interest of =
12 per cent and that the moratorium period should be increased. Thirdly, th=
e Centre will lend a financial support to its undertaking to pick up majori=
ty equity and take over the Dabhol project, they feel. According to MSEB an=
d IFIs, in another scenario, the state-run Gas Authority of India Ltd (Gail=
) and Indian Oil Corporation (IOC) should be asked to take over the liquifi=
ed natural gas (LNG) project in a serious bid to cut the tariff. The per un=
it tariff, which has been average at Rs 8.80, may come down to Rs 2.20 to R=
s 2.40 per unit. The Dabhol Power Company is believed to have spent nearly =
Rs 2,500 crore on the LNG project.

Moreover, the MSEB, which is at present doubtful over the fate of its equit=
y of Rs 800 crore, may pick up 51 per cent equity and appeal to the Mumbai =
based utilities Tata Power and BSES for taking up the balance equity in the=
 Dabhol project. The MSEB and IFIs are keen that the impending issue be res=
olved amicably, especially to avoid the legal battle in India and arbitrati=
on in London. A section of MSEB is confident that the power purchase agreem=
ent (PPA) on the issue of misdeclaration and default on the availability of=
 power by DPC can be proved null and void and there will be no need for the=
 payment of any compensation to DPC. This will enable the take over of Dabh=
ol project by an Indian entity quite possible. Lay seems using pressure tac=
tics Mr Lay's statement on Enron pull out is being seen in the political ci=
rcle as a pressure tactic, especially when the Supreme Court is hearing the=
 DPC's petition on August 6.
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THE TIMES OF INDIA, Saturday, July 28, 2001
'Four states not to buy power at current rates'=20

Maharashtra deputy chief minister Chhagan Bhujbal said on Saturday that tho=
ugh four states have expressed their willingness to purchase power from the=
 Enron-promoted Dhabol power project they are not in a financial position t=
o buy them at the prevailing tariff. "All wish to purchase power but not at=
 the current rate", Bhujbal said after a function organised by ex-serviceme=
n. Four states, Madhya Pradesh, Delhi, Karnataka and Punjab had agreed to b=
uy power from Enron's troubled Dabhol Power Project at a tariff as low as R=
s 1.65 to Rs 2.60 per unit during a meeting Godbole Renegotiations Committe=
e had with prospective buyer states on July 26 here. Replying to a query re=
garding the US giant's desire to pull out of the power project in India, he=
 quipped, "jinko jaana hai wo jayenge, unko koi rok nahi sakta" (those who =
wish to leave will leave, no one can stop them). He, however, expressed hop=
e that the current Enron imbroglio would be settled after the Supreme Court=
 delivers its verdict. The state government would deal with the issue depen=
ding on the verdict of the Supreme Court, Bhujbal added.( PTI )
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THE TIMES OF INDIA,Monday, July 30, 2001
Maharashtra's offer unrealistic: DPC=20

US energy major Enron's Dabhol Power Company (DPC) on Friday said that pric=
e proposals made by four states to draw power from the Dabhol project "were=
 totally unrealistic", even as Godbole renegotiations committee reported a =
stalemate in the talks with DPC. Referring to the offer of Karnataka, Delhi=
, Madhya Pradesh and Punjab to buy power at a tariff as low as Rs 1.65 and =
Rs 2.60, DPC said, "unfortunately these are totally unrealistic proposals, =
unattainable by new generation liquid plants, including those set up by the=
 public sector". On the other hand, after meeting DPC officials on Friday m=
orning, Madhav Godbole told reporters that currently talks with DPC had rea=
ched a stalemate with interested states quoting lower prices than the US en=
ergy major's expectation. After discussions with four states and receiving =
communications from Haryana and Rajasthan, he said that all these were read=
y to draw DPC's 1,444 mw phase-II power at an average rate of Rs 2 to Rs 2.=
25 per unit. "An overall demand for DPC power is at around 800 mw to 1,000 =
mw, but not all of these is a base load one. Moreover, it is for more than =
half a year, mainly non-monsoon months of November to May," Godbole said. H=
e added that the states had informed the commission that each of them had a=
 regulatory framework in the form of an electricity regulatory authority in=
 place and was bound by a merit dispatch order, which did not allow them to=
 buy costly power (like DPC's) so long as cheaper tariff was available in t=
heir own state.( PTI )
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THE HINDU BUSINESSLINE, Saturday, 28 July 2001
Demand for DPC power only at `particular' price=20
=20
THE Godbole panel today conveyed the power-offtake proposals of six States =
to Dabhol Power Company (DPC) officials. The company was told that there wa=
s combined demand for 800-1000 MW power at not more than Rs 2.50 per unit. =
``One thing is abundantly clear. There is demand for (DPC) power at a parti=
cular price. If the price increases the demand may not be large'' Dr Godbol=
e told reporters. `` We have told Enron that the need for 800 to 1000 MW DP=
C power is not at baseload, nor is it an all-year-round demand. The States =
will require this power only between the months of April to November and th=
e demand will fall during the rainy season,'' he said.=20

Karnataka, Punjab, Delhi and Madhya Pradesh made representations to the pan=
el yesterday. Rajasthan and Haryana have presented written proposals asking=
 for 300 and 100 MW each. While Madhya Pradesh has asked for power at Rs 1.=
65 per unit, other States have said they will not pay more than Rs 2.25 to =
Rs 2.40 per unit. According to Dr Godbole, the company officials will ``tak=
e up the matter with lenders and collaborators'' before the next meeting wh=
ich is expected to be held in August. Meanwhile, according to DPC, the powe=
r purchase proposals presented by various States ``are totally unrealistic =
and unattainable by new generation liquid fuel plants including even those =
in the public sector such as NTPC's Kayamkulam''. Dr Godbole had suggested =
that DPC power ``at competitive rates'' could replace captive power in a nu=
mber of States. He said though DPC had earlier agreed to reduce tariffs by =
50 paise, this would no longer be easy as the project has seen cost escalat=
ion after stoppage of phase II work. `` Our dialogue with Enron is bogged d=
own by two issues-- the plant load factor at which the unit is run and the =
price of power,'' Dr Godbole said. He said there was a need to take a `` se=
rious look at whether demand projections in the country are realistic''.=20
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THE ECONOMIC TIMES, Monday, July 30, 2001
Maharashtra to pay Rs 788cr penalty to MSEB, Girish Kuber=20
=20
MAHARASHTRA has decided to pay Rs 788 crore to the ailing Maharashtra State=
 Electricity Board to compensate it for the damage it has caused the power =
utility through tariff concessions to various sectors. Padmasinh Patil, the=
 state's energy minister, had wanted to give tariff concessions to farmers,=
 which was objected to by MSEB. Even the Maharashtra Electricity Regulatory=
 Commission asked the state's energy department to restrain its generosity.=
 The MERC had asked the government not to offer concessions at the cost of =
its SEB and directed it to make a budgetary provision if it wanted to go ah=
ead with its plan. Accordingly, Mr Patil announced last year that the state=
 government will compensate the board. The MERC had set a deadline of Octob=
er 2001 for sanctioning the compensation. The supplementary demand presente=
d to the state assembly makes this provision. "It has been decided to give =
subsidy to MSEB to compensate the loss arising from supplying electricity a=
t concessional rate to agricultural and powerloom consumers with effect fro=
m May 1, 2000," said the demand by the state's finance ministry.=20

Currently, concessions of 55 per cent and 33.33 per cent in the electricity=
 bills is given to powerloom and agricultural consumers. The total expendit=
ure involved in the proposal is estimated to be around Rs 788 crore. The is=
sue of offering concessions to powerloom and agriculture consumers has been=
 hanging fire for the last couple of years. The board last year had raised =
the tariff for agriculture and powerloom consumers which was opposed by the=
 state government for obvious reasons. The government announced a roll-back=
 of the tariff hike only to be prevented by the MERC from doing so. The MSE=
B will now be charging Rs 600 per one horse power pump, bringing down the r=
ate from Rs 1,400, and Rs 185 per loom down from the earlier rate of Rs 300=
. The government has also decided to waive 55 per cent of the Rs 110 crore =
unpaid dues from powerlooms. Delayed payment charges for the defaulters has=
 also been waived and they have been granted three instalments for clearing=
 old dues. According to MSEB's own admission, more than 118 lakh of the tot=
al 130 lakh consumers are being supplied subsidised power.=20
