Hi Sara, I ‘m going to have a two part question for you today and


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Hi Sara, I ‘m going to have a two part question for you today and wanted to give you information first so as not to confuse. . I will Attach a case study of the Dabhol Power Project in India. The final goal of the my question is to perform a Risk Analysis on this case study ~2 pages, this I would need by May 10 ~Noon EST. The first part involves just an Outline of 3 or 4 Risks topics, a couple of sentences for each that would be addressed in the final paper. The outline I would need by Wednesday May 6 ~ 6 pm EST. So I will make the deadline for May 6 and then change it to May 10 once I get outline. As always I will pay you for your efforts what you feel is fair. Is this OK? Jimmy PowerProjectWeek#9.pdf Construction Finance, Accounting, and Risk 17. Innovative Project Vehicles More Case Studies 17.1 Resources Pretorius, Frederik, Paul Lejot, Arthur McInnis, Douglas Arner, and Berry Fong-Chung Hsu. (2008). Project Finance for Construction and Infrastructure. Blackwell Publishing. Lecture Notes reference Chapters 8-9 of Pretorius et al 2008 17.2 Dabhol Power Project 17.2.1 Setup In 1992, Indian public sector entered into an agreement with Enron Corporation to build a gas-fired power plant. This project represented the world’s largest independent power project and the largest single foreign investment in India. 17.2.1.1 India India instituted self-reliance from foreign influence by restricting foreign investment and imposing high import tariffs in order to protect domestic industries. Due to the political and economic climate of the 1990s, India began considering foreign commercial interests to strengthen the domestic economy. In 1991, a program of liberalization began which relaxed control of industrial licensing and opened the economy to foreign investors. 17.2.1.2 India’s Power Sector The energy sector became open for private investors without restriction on foreign ownership. The power sector was critical to India’s economic development. At this time, power generation in India was not efficient and not capable of meeting the demand. Additionally, consumers would illegally tap into the grid and steal electricity to avoid paying for it. The government induced foreign investment for 8 power sector projects; Phase I of the Dabhol Power Plant was to be the first project. 17.2.1.3 Enron Enron sought to move into newly privatized non-US markets in the early 1990s by becoming the largest distributor of liquefied natural gas. This long-term plan would set up two liquefied natural gas terminals and would provide a 15% annual return for Enron. As a result, Enron strove to build, own, and operate the Dabhol Power Project. Enron along with General Electric Corporation and Bechtel Enterprises Inc. formed the Dabhol Power Company to provide the gas turbines, engineering procurement, construction contracts, and operations and maintenance. Almost a decade later, Enron collapsed due to falsification of revenue. Enron eventually filed for bankruptcy and was dismantled. 17.2.2 Development of the Dabhol Power Project Enron visited the project site to gather information regarding the project in June 1992. Enron was awarded the contract by the state government without any competitive bidding. Additionally, the state government did not perform a financial appraisal of the project or enlist independent technical assistance of any kind. The state government and Enron signed a memorandum of understanding regarding the project and each organization’s prospective roles. 1 Construction Finance, Accounting, and Risk 17.2.2.1 Project Structure The Dabhol Power Project was to be constructed in 2 Phases. The first phase would be constructed by December 1997 and the second phase would be constructed by December 2001. 17.2.2.2 Objections Both Enron and the central government attempted to secure loans from the World Bank; however financial analysis from the World Bank concluded that the Dabhol Power Project did not meet a le

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