...majority owner of Dabhol, which was a large combined cycle power plant situated on the western coast of the Maharashtra state in India. The project of Dabhol power plants was commenced in 1992 and took a total of nine years to begin operations of the plant. The total project cost of Dabhol was 2.9 million dollars, with Enron owning 65 percent of the plant followed by, Bechtel Enterprises owning 10 percent, General Electric owning 10 percent, and the state of Maharashtra Electricity Board holding 15 percent. Enron asserted that the Dabhol power plant is the largest gas-fired power plant in the world producing 2, 184 megawatts of electricity. The plant ceased operations in June 2001 that had arisen from a payment[pic] and contract dispute between the owners of the plant and the state of Maharashtra government. The paper will analyze the critical success factors (CSFs) as applied to the various facts found in the case study in “Politic, Institutions and Project Finance: The Dabhol Power Project”. The paper will also attempt to determine the benefits of the project, organizational readiness, and risk culture of the company with facts stated in the case study. By analyzing the CSFs and other components project risk recommendations will be given after a thorough analysis of the criteria. Critical Success Factors (CSFs) of Dabhol Power Project The term critical success factors are used to define the elements or components that are mandatory for an organization or project to achieve its...
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...Enron Development Corporation: The Dabhol Power Project in Maharashtra, India if you are Rebecca Mark in 1995, what will you do? After nine years of an obvious debacle, it seems that Enron and the Indian government have reached a state of impasse, where a sustainable long term relationship cannot be achieved. Enron has chosen to terminate the agreement by offering to the Indian Prime Minister Enron's 65% equity in DPC for US$1.2 billion and offshore debt for US$1.1 billion. Various political parties have consistently used Enron as an issue to gain the masses' approval and thus political power. Given the size and the "foreign" nature of the investment, Enron will constantly stir political unrest unless it gives in to the terms of the party in power. Difficulty in predicting and understanding local political conditions and coping with the constant threat of forced re-negotiation The agreement (PPA) was flawed from the beginning and unless the company sees the error of its ways, reviews from the World Bank and other committees would always reflect that there was a one-sided deal and would lead to a protracted debate of legitimacy. MSEB's capacity to pay DPC in the next few months is seriously doubtful. Though the Indian government has a guarantee, paying DPC will likely bankrupt MSEB and will lead to a threatening major dispute between MSEB and DPC. If Enron had wanted to cut its losses, it should have let the project end in Phase 1. It need not have negotiated for Phase 2 financing...
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...Eric Bani Professor James Young “Politics, Institutions, and Project Finance: The Dabhol Power Project. Strayer University 2011 Project risk management has been identified as the number one cause of project failure by most if not all organizations. In view of that project risk management is given prominent place in any project undertaken by businesses. Project managers are therefore are under immersed pressure to practice the best risk analysis methods in order to complete projects in time and within budget for the organization to be profitable. Project risk management is a science if you will, that uses several methods in identifying and accessing the risk factors and opportunities associated with a particular project and devising an effective response plan to avoid, mitigate, transfer or accept the risk. The project manager should assemble a professional team of different technical skills needed to complete the project making sure the project specifications are met. As a leader the project manager has to possess leadership qualities and most importantly communications skills to be effective in managing his/her team. The Dabhol power project was a good idea designed to generate additional electricity to India’s growing population but there were several problems including political, institutional and financial from the onset. Politically, India was a communist country aligned with the former Soviet Union thus the country was run by the central Government...
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...Enron was building in Qatar. While the general idea behind the projects had been approved at the highest levels of the federal government, final approval on many aspects needed to be approved by local bureaucrats. One of the plants, Dabhol, was located on India’s fast growing western seaboard near Bombay. Receiving approval was a slow process that was helped by the fact that the state government was run by the same Congress Party as controlled the federal government. During early stages of the project, state elections took place. The opposition party took the position that this was a corrupt project, with bribes and favors going to Congress party officials. When the Congress Party lost the state elections, the new administration decided to pull the plug on the project. Although investigations showed no bribes had taken place, the new government needed to assert its authority. Enron responded on multiple fronts. It filed a lawsuit for breach of contract, which required that the state reimburse Enron $300-800 million. On legal grounds its position seemed very strong. It also appealed directly to the people, taking out advertisements extolling the benefits of the project for India. Political pressure was also placed on the federal government, suggesting that such a decision would be injurious to India’s goals of attracting additional foreign investment. After careful negotiations, the project was restarted and expanded. Given the larger scale of the plant...
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...their negotiations overseas. I will also analyze the implications of globalization and technology on negotiation. International Negotiation Situation Article The article chosen for this paper involves Enron and their negotiations with the government of India and the Maharashtra State Electricity Board. The project proposal was for the construction of a US$3 billion power-plant in the town of Dabhol, situated on the Indian Ocean. There were many problems with the proposed project and the negotiations process that was undertaken by Enron. World Bank, acting as a consultant to the Indian government said that the project would produce an excess capacity of electricity for years and would be too costly in comparison to the more traditional sources of fuel, such as coal, already in use ("Enron’s Indian Negotiation Debacle " 1996-2012). The project was also too costly for the people and businesses who would be consuming the energy. A tariff was proposed to cover the cost of the project, and this expense was too costly for the consumers. This caused public opposition to the project and raised concerns over the electricity tariff, government official bribery, and about the project not being open to competitive...
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...Enron Corp.: Credit Sensitive Notes Solution Posted on January 28, 2013 by admin — No Comments ↓ This case investigates an innovative bond issue by Enron. The coupon on the bond is indexed to the company’s credit rating, making it a credit derivative structure.« Hide by Sanjiv Das, Stephen Lynagh Source: Harvard Business School 16 pages. Publication date: Feb 28, 1997. Prod. #: 297099-PDF-ENG Case Study 2 – Enron and Arthur Andersen Enron Corporation Case Study 2 – Enron and Arthur Andersen Enron Corporation began as a small natural gas distributor and over the course of 15 years grew to become the seventh largest company in the United States. Soon after the federal deregulation of natural gas pipelines in 1985, Enron was born by the merging of Houston Natural Gas and InterNorth, a Nebraska pipeline company. Initially, Enron was merely involved in the distribution of gas, but it later became a market maker in facilitating the buying and selling of futures of natural gas, electricity, broadband, and other products. However, Enron’s continuous growth eventually came to an end as a complicated financial statement fraud and multiple scandals sent Enron through a downward spiral to bankruptcy. During the 1980s several major national energy corporations began lobbying Washington to deregulate the energy business. Their claim was that the extra competition resulting from a deregulated market would benefit both businesses and consumers. Consequently, the national government began...
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...From providing education to many underprivileged children through its own school to enriching the lives of thousands of workers at its sites, Punj Lloyd is committed to the cause of community enrichment. HISTORY OF THE COMPANY:- 1988 The dawn of Punj Lloyd Engineering Private Limited 1989:- Renamed Punj Lloyd Private Limited 1992:- Becomes Public Limited and wins its first overseas pipeline contract in Indonesia 1993:- Gets its first Middle East Contract for Field Development 1995:- Gets its 1st EPC contract in Oil & Gas sector in India 1998:- Awarded a project for the construction of India’s first LNG and regasification terminal at Dabhol, India gets its first Refinery project, De-sulphurisation unit, IOCL’s Mathura Refinery 1999:- Gets its 1st Road project, Vadodara-Halol Tollway, India 2001 Gets its first highway project in the Golden Quadrilateral – Belgaum – Maharashtra road project 2002 Gains entry into the Caspian with KAM pipeline, Kazakshtan Gets its...
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...Enron Case Study Seven years after the fact, the story of the meteoric rise and subsequent fall of the Enron Corporation continues to capture the imagination of the general public. What really happened with Enron? Outside of those associated with the corporate world, either through business or education, relatively few people seem to have a complete sense of the myriad people, places, and events making up the sixteen years of Enron’s existence as an American energy company. Some argue Enron’s record-breaking bankruptcy and eventual demise was the result of a lack of ethical corporate behavior attributed, more generally, to capitalism’s inability to check the unmitigated growth of corporate greed. Others believe Enron’s collapse can be traced back to questionable accounting practices such as mark-to-market accounting and the utilization of Special Purpose Entities (SPE’s) to hide financial debt. In other instances, people point toward Enron’s mismanagement of risk and overextension of capital resources, coupled with the stark philosophical differences in management that existed between company leaders, as the primary reasons why the company went bankrupt. Yet, despite these various analyses of why things went wrong, the story of Enron’s rise and fall continues to mystify the general public as well as generate continued interest in what actually happened. The broad purpose of this paper is to investigate the Enron scandal from variety perspectives. The paper begins with a narrative...
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...which a group of review commitees grades employees and fires the bottom fifteen percent. Skilling was also described as having a soft spot for “guys with spikes”; which made him recruit J. Clifford Baxter, a manic-depressive; and Lou Pai, the CEO of Enron Energy Services which was known for using shareholder money to pay strippers. Enron managed to get a myriad of profits during the dot-com bubble by using the process known as “pump and dump”: pushing up their stock prices and taking the massive options. Enron also tried to get public’s attention by launching a series of PR campaign, which gave it the impression of being a profitable company, although performing poorly elsewhere. Enron failed in several projects, such as weather trading, movies on demand by broadband, and Dabhol Power Company. However, due to mark-to-market accounting, nonexistent profits are...
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...stock trading company who focused their ideas on the basis of fraudulent behavior that was made acceptable by the CEO (Jeffrey Skillings). A structured company such as Enron made sure that the employees shared the same mentality the management team aspired; to make more profitable earnings. ‘Ask why?’ was the known phrase for the skilled accountants working behind the desk who scammed their way through stock trading; trading stock with the advantage of choosing the winning side because of the made up corporations that invested money into Enron. Regulating and selling stock that they didn’t have tangible access, managing these exchanges to the outside world was an easy task to carry out due to Andrew Fastow. Fastow hid the debt of failed projects that sky rocketed to an x-amount of billions of dollars in actual debt instead of return investments on stocks. The major ethical issues that we found arising from the video (Enron) for our management theory and practice course; are the accounts that were not adding up on behalf of the shareholders and analyst who noticed that the dots were not connecting when money was coming out of made up corporations. Consequently, Skilling’s and Lay acted on bribery, insider trading, money laundering, monopoly dictatorship and conspiracy because of their unethical morals. The accountants were masking a form of illegal trading and reporting for the profits instead of declining losses. The spiraling effect of unethical morals behind the management team...
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...beginning. Within a few years after the company was found the first scandals began. This scandal involved two traders betting on the oil markets which resulted in consistent profits. It was also discovered that the CEO, Louis Borget, had been diverting company money to offshore accounts. Lay encouraged them to continue making money for the company after the auditors discovered their schemes. Only when it was discovered that the traders gambled away ENRON’s reserves did the traders get fired. Lay denied knowing anything about the issues. After Borget leaves the company Lay hires Jeffrey Skilling who implements mark-to market accounting which allowed the company to book potiental profits on certain project immediately after the deals were signed not knowing the if the project was successful or not. This give ENRON the ability to look like it was making profits even if it was not. A review committee was established by Skilling that graded the employees. They would they fire the bottom fifteen percent which made the...
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...General Awareness Dec’2013 * East Timor film ‘Beatriz’s War’ bagged Golden Peacock award for Best Film at 44th International Film Festival of India. * World AIDS Day was observed on 1 December 2013 across the globe to raise awareness about the HIV/ AIDS. * Tripura on 30 November 2013 introduced for the first time in the country PVC Electoral Photo Identity Card as mandated by Election Commission of India. * India’s Mars Orbiter Spacecraft successfully placed in Mars transfer trajectory on 1 December 2013 by ISRO scientists. * Indian shuttler PV Sindhu on 1 December 2013 won the Women's Singles trophy at the Macau Open Grand Prix Gold Badminton Tournament. * International Day for Abolition of Slavery was observed on 2 December 2013 across the world to create awareness about abolition of slavery. * Paul Walker, the star of the "Fast & Furious" movie series, died in a car accident in Southern California, US on 30 November 2013. * An Egyptian constitutional panel on 1 December 2013 approved a new draft constitution for Egypt. * China on 2 December 2013 successfully sent an unmanned lunar probe with a robotic rover to soft land on the Moon, and to explore moon’s surface. * India cricket team has retained its top position in the latest ICC ODI rankings and second position in the Test cricket rankings. * President of India Pranab Mukharjee on 1 December 2013 inaugurated the Nagaland's traditional Hornbill Festival in Nagaland * Department...
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...TAB B TOPICS: THE CASE OF ENRON REQUIRED: After reading the case and articles in the Tab B readings, answer the questions below. You should download this document and include the question above your answer to make it easier to grade. Your answers should be in complete sentences. Based on the nature of the questions, one or two short paragraphs for each question should be adequate. You should print out your article write-up and submit it in class on the due date. 1. What was the nature of Enron’s business in 1985? How about in 2000? In 1985, it was a natural gas pipeline company. By 2000, it built leading businesses in energy trading and international energy-asset construction. 2. How could Enron earn money by trading in gas contracts? They would buy natural gas at spot prices instead of bundles (which was what was required before the deregulation of gas). This made the price of gas more volatile. Skilling suggested that Enron sell the gas in long-term fixed-price contracts with customers. To prevent the company from losing money due to price fluctuations, Enron would also enter long-term fixed-price contracts with producers by using swaps and forward and future contracts to make sure it met the energy requirements of customers. 3. Enron expanded its trading model to markets other than gas. What other markets did they expand into? Were there any concerns from expanding to these other markets? They...
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...A new strategy Enron was the biggest seller of natural gas in North America in 1992, their EBIT was 122 million dollar. Enron used differentiation strategy which aimed to develop and operated with different assets such as pipelines, services, paper plants, water plants and electricity plants. Enron did not just make profit on its assets but also traded with contracts of the assets and service in order to reach higher profit. This is how Enron became a favourite among investors in the ‘90s and its stock price increased 311%. The growth did not stop until the year of 2000. Enron’s market value was above 60 billion dollars and its stock price was 83,13 dollars the 31 December of 2000. The Commodity Futures Modernization Act of 2000 helped them with their derivatives businesses. “One example was during the California electricity crisis (2000-2001) where they manipulated the California energy market and sent electricity prices surging by at least a factor of eight. During that time, the price of natural gas was trading as much as $60 per thousand cubic feet in California (which was previously selling for about $3 per thousand cubic feet). This kind of manipulation increased Enron's stock price and revenues. But this not so clever manipulation of Enron made itself a political target and accelerated the ruins of their finances.” Enron’s downfall Mark-to-market Accounting The use of mark-to-market accounting later struck back. The Enron’s aggressive accounting had corrupted...
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...MULTINATIONAL MANAGEMENT COURSE OUTLINE (2007-09) The globalization of the world economy and the related liberalization of the Indian economy are radically changing the business landscape. The international capital flows into India have increased several-fold since the onset of liberalization; Indian companies are becoming multinationals in their own right--a trend certain to intensify in the coming years. All in all, multinationals are becoming more ubiquitous as an instrument of economic and business activity. The business leaders of tomorrow need to be trained today in the unique requirements of multinational management. It is toward this objective that the proposed course in Multinational Management is being offered. The course combines a number of sub-disciplines from the fields of social sciences and business administration. It is broad in sweep; its depth is pitched at the PGP level. The overall course is divided into four modules, as follows: Module I--International Business Context-- provides an historical perspective on globalization and presents a viewpoint on its future direction. It also covers some of the globalization drivers including international trade and investment and how they spawn multinational activity. The phenomenon of domestic and cross-border corruption and bribery, often an inherent part of such activities, is discussed. Finally, it postulates how countries and companies can develop competitive advantage and defines the implications...
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