Management Enron & the Dabhol Power Project Negotiations Questions

I need you to answer these questions based on the document attached.

1. Why do you think the results of the first negotiationwere so skewed in favor of Enron?

2. In the second round, Enron appears to have traded offequity ownership for increased capacity. Its reductionin tariff of 1 cent per KwH appears to have beenabsorbed by the larger production quotas and the useof lower-priced naphtha fuel. Why was Enron willing tomake this trade-off? Why did the state of Maharashtraget more for its willingness to allow Enron to restartthe project?

3. What can be learned from the first two rounds of theDabhol power project negotiations about engaging inbig foreign direct investment projects that are highlyvisible on the world economic scene?

4. How did GE and Bechtel’s filing for arbitration move thedispute along?

5. What is the difference between GE’s deal versusBechtel’s deal? Both had the same amount of equity inthe DPP, so why was Bechtel able to get $15 millionmore?

6. What general principles can you come up with for foreigndirect investors using interests, rights, and power toprotect their investments in developing countries?

7. What general principles can you come up with forgovernments negotiating with foreign direct investors?