VZCZCXRO0280
RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHPW
DE RUEHNE #4759/01 2991151
ZNR UUUUU ZZH
R 261151Z OCT 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 9003
INFO RUEHCG/AMCONSUL CHENNAI 1767
RUEHCI/AMCONSUL KOLKATA 1091
RUEHLH/AMCONSUL LAHORE 4181
RUEHBI/AMCONSUL MUMBAI 0853
RUEHPW/AMCONSUL PESHAWAR 4676
RUEHIL/AMEMBASSY ISLAMABAD 4086
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

UNCLAS SECTION 01 OF 03 NEW DELHI 004759 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD 
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR 
DEPT PASS TO USTR DHARTWICK/CLILIENFELD/AADLER 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA/ABAUKOL 
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN 
STATE FOR SCA/INS AND EB/TRA JEFFREY HORWITZ AND TOM ENGLE 
USDA PASS TO DUS TERPSTRA, FAS/OCRA, RADLER 
 
E.O. 12958: N/A 
 
TAGS: EFIN ECON
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF 
OCTOBER 22-26, 2007 
 
NEW DELHI 00004759  001.2 OF 003 
 
 
¶1.  (U) Below is a compilation of Economic highlights from Embassy 
New Delhi for the week of October 22-26, 2007. 
 
EXPANSION PROJECTS AT SOUTHERN 
AIRPORTS SHOW PROFITS 
----------------------- 
 
¶2.  (SBU) The expansion of runways, apron areas and terminals at 
Chennai, Bangalore, Hyderabad, Coimbatore, Vizagapatnam, Kozhikode 
and Trivandrum airports brought scaled-up operations and profits to 
all seven of these South Indian airports in fiscal year 2006-2007, 
the Regional Director of the Airports Authority of India (AAI) told 
Consulate Chennai.  He said that most of the profit came from 
carriers servicing domestic routes.  He added that the terminal 
expansion at Coimbatore provided the needed infrastructure to handle 
international operations, noting that the Singapore-based, low-cost 
carrier Silk Air, carrier will begin operations there on October 28. 
 Not wanting to rest on the sector's laurels, he said that Chief 
Ministers from several Indian states will meet in early December to 
discuss problems faced by the civil aviation sector. 
 
EX-IM OFFICIALS DISCUSS INFRASTRUCTURE 
FINANCING OPPORTUNITIES 
----------------- 
 
¶3.  (U) On October 17, Export-Import (EX-IM) Bank's Senior Vice 
President John McAdams and General Counsel Howard Schweitzer met 
with Dr. V. K. Garg, Chairman and Managing Director of the Power 
Finance Corporation (PFC), to discuss potential for EX-IM to finance 
the development of energy infrastructure. 
 
¶4.  (SBU) Asked about the Ultra-Mega Power Plants (UMPPs), Dr. Garg 
explained that contracts have already been granted to Tata and 
Reliance for two UMPPs and that proposals for a third are due on 
October 24.  He said there had been two or three foreign bidders for 
each of the first two projects, and the process remains open to 
foreign players.  Garg added that the only criteria considered in 
awarding contracts are the ability to successfully complete a 
project on the scale of the UMPPs and the eventual tariff the 
company intends to charge for electricity, though he assured McAdams 
that companies could win contracts with a tariff that would still 
yield a good profit.  He said that 50 percent of the components for 
the two UMPPs underway were imported and that there are only four or 
five manufacturers of the critical technology used in these power 
plants.  For the first two, Tata and Reliance purchased equipment 
from China, which Garg said had the same licenses and technology as 
U.S. manufacturers but offered cheaper prices.  The PFC is planning 
to award contracts for two more UMPPs this year and another two in 
the near future, with the possibility of yet another two down the 
road.  Mr. McAdams notified Garg that EX-IM is interested in 
financing UMPPs, has a "couple billions dollars" in India now, with 
no cap, has a AAA rating, and could offer a positive pricing 
differential if companies use U.S. exporters with EX-IM.  He also 
said that EX-IM would encourage U.S. companies to respond to future 
tenders. 
 
¶5.  (SBU) Turning to other opportunities, Dr. Garg suggested 
investment in the development of windmills with horizontal blades 
that could be placed on top of tall buildings.  He said that India 
is the world's fifth-largest harnesser of wind energy but that 
capital costs are too high to make wind efficient right now.  He 
believes local manufacture of windmills is the key to solving this 
problem.  He also suggested that EX-IM look into the development of 
one- to three-megawatt power plants that would serve very small 
areas and operate on vegetable waste like sugarcane stalks and 
coconut husks.  He foresees such plants, which would reduce the 
costs and inevitable power loss of long-distance transmission, 
operating on a franchise model, with the PFC getting small amounts 
of equity from franchisees, offering them training, and connecting 
them with local experts, such as those at the National Thermal Power 
 
NEW DELHI 00004759  002.2 OF 003 
 
 
Corporation, so they could deal with any problems. 
 
¶6.  (SBU) Dr. Garg further expressed his excitement about the 
prospect of satellite-based solar-energy stations and suggested that 
EX-IM speak with the Space Island Group 
(http://www.spaceislandgroup.com/solarsat.htm l), with whom he had 
met earlier. 
 
¶7.  (U) McAdams and Schweitzer also met with the Ministry of Civil 
Aviation and the Airports Authority of India to discuss EX-IM's 
interest in financing aviation infrastructure. 
 
USTDA - MAKING A DIFFERENCE IN 
INDIA's ENERGY AND AVIATION SECTORS 
----------------------------------- 
 
¶8.  (SBU) Henry Steingass, new Regional Director of the 
(reorganized) South and Southeast Asia region of the United States 
Trade and Development Agency (USTDA), visited Delhi last week to 
participate in the Asia Pacific Partnership (APP) on Clean 
Development and Climate Ministerial Meeting on October 15 and hold 
bilateral meetings.  Steingass discussed USTDA grants with key 
project partners in the energy and aviation sectors.  USTDA is 
likely to provide the new Petroleum and Natural Gas Regulatory Board 
technical assistance in developing regulatory procedures, methods, 
and tools. 
 
¶9.  (SBU) After two years, the Petroleum Planning and Analysis Cell 
(PPAC) has approved the draft request for proposal (RFP) for a grant 
with USTDA valued at USD a USD 690,000 signed in June 2006 for PPAC 
to undertake a National Gas Grid feasibility study with the Ministry 
of Petroleum and Natural Gas.  The study will help India meet its 
energy security goals and focus on the following areas:  physical 
interconnections of pipelines and related capacity issues; 
management and control of the gas grid as an integrating operating 
system with a high degree of reliability; options for natural gas 
storage; pipeline integrity and safety from both designs as well as 
a operations perspective; and gas transportation tariffs and 
practices, along with related technologies.  Through implementation 
of the study's recommendations, India will be better equipped to 
meet its increasing energy demands since expanded access to and 
utilization of natural gas is expected to facilitate economic growth 
and maintain sufficient energy supplies as demand increases.  The 
recommendations will also help expand the gas market and possibly 
open the doors for export of U.S. technologies and serices. 
 
¶10.  (SBU) USTDA is also working to finalize a USD 503,252 grant 
with the Airport Authority of India (AAI) for a central navigation 
systems/air traffic management (CNS/ATM) transition plan.  The grant 
will help upgrade India's CNS/ATM planning and associated systems at 
India's growing airports.  To date, the agreement is pending with 
the Department of Economic Affairs in the Ministry of Finance for 
final approval and is likely to be signed within the next few days. 
 
 
U.S. IMAGE SULLIED BY REPORTS 
AMERICAN COMPANY "DUMPED MUNICIPAL 
WASTE" ON KERALA 
------------------- 
 
¶11. (SBU) Recent reports that "municipal waste" from the United 
States had been "dumped" in the southern Indian state of Kerala 
figured prominently in the Indian media.  The controversy centered 
on the contents of three shipping containers that arrived at Kochi 
port in the first week of October.  The importer told ConGen Chennai 
that the containers were supposed to contain sixty-one tons of 
"brown mix" (old corrugated cartons and other paper products) to be 
recycled in India.  Upon arrival, however, customs officials 
reportedly discovered "substantial quantities" of plastics and 
broken glass, used gloves, and rotten food in the containers.  A 
 
NEW DELHI 00004759  003.2 OF 003 
 
 
Kochi Customs official told ConGen Chennai that the Kerala Pollution 
Control Board confirmed the presence of these materials and asked 
Customs to direct the consignment back to the port of origin. 
 
¶12. (SBU) Predictably, Kerala's ruling Communist Party of India 
(Marxist) used the opportunity to bash the United States.  According 
to media reports, Kerala Health Minister P.K. Sreemathy said, "We 
must see this as an attempt to dump waste from the U.S. in India and 
not merely as something concerning the Kochi Port or Kerala," and 
that "the government views the matter with utmost seriousness, 
especially against the backdrop of reports that waste, including 
biomedical waste, was being dumped in Third World countries such as 
India and of the outbreak of various epidemics in Kerala in recent 
times."  A popular Malayalam newspaper wrote on October 22:  "In 
these kinds of matters, one has to be very wary of the United 
States.  If it already engages in actions like these, what wouldn't 
it do against India if we engage in the nuclear deal with that 
country?" 
 
¶13. (SBU) The Indian company that imported the containers expressed 
dismay at the turn of events.  "We are a small company; we are 
totally broke. Our reputation is seriously damaged and we don't know 
what actions the government is planning to take," the Executive 
Director said.  He noted that they had imported other types of 
material from the American supplier in the past with no difficulty. 
COMMENT:  The Kochi incident appears to be an innocent sorting error 
on the part of the U.S. supplier.  But in Kerala's charged 
anti-American political environment it provided a convenient 
opportunity for the Left parties to beat up on American industry and 
the U.S.-India civil nuclear agreement.  Although the media storm 
quickly died down, it underscores the degree to which an innocent 
mistake on the part of an American business can impact Indian 
impressions of the United States.  END COMMENT. 
 
¶14.  (U)  Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
Mulford