California Blame Game Yields No Score --- Probes Reveal Little Evidence 
Suppliers Acted Illegally
The Wall Street Journal, 05/22/01

Enron Unit Moves to End India Contract For Power
The New York Times, 05/22/01

The State GOP Criticizes Davis' Choice of PR Aides Capitol: Legislative 
leaders call the pair political operatives who are too partisan to represent 
the state during energy crisis.
Los Angeles Times, 05/22/01

BUSINESS DIGEST
The New York Times, 05/22/01

World Watch
The Wall Street Journal, 05/22/01

IN BRIEF / ENERGY Enron Withdraws from Qatar Project
Los Angeles Times, 05/22/01

INDIA: UPDATE 1-Indian state spurred by Enron reopens power deals.
Reuters English News Service, 05/22/01

INDIA: India utility may slap 4bln rupee fine on Enron unit.
Reuters English News Service, 05/22/01

IXEurope creates a Storm in colocation
M2 Presswire, 05/22/01

Power corrupts...
The Economic Times, 05/22/01

The Godbole findings
Business Standard, 05/22/01

SMARTMONEY.COM: Power Grab
Dow Jones News Service, 05/22/01

Malaysian LNG Sales to India Threatened by Enron Power Dispute
Bloomberg, 05/22/01

LEADER: India unplugged 
Financial Times; May 22, 2001

Enron pulls out of venture drilling in Qatar's waters 
Houston Chronicle, 05/22/01

Enron exploring commodity trading 
Houston Chronicle, 05/22/01

Plains Resources Gets New Officers
Houston Chronicle, 05/22/01



Economy
California Blame Game Yields No Score --- Probes Reveal Little Evidence 
Suppliers Acted Illegally
By John R. Emshwiller
Staff Reporter of The Wall Street Journal

05/22/2001
The Wall Street Journal
A2
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LOS ANGELES -- California may be struggling to keep its lights on, but one 
thing there is no shortage of is accusations over who is to blame for an 
electricity crisis that has sent power prices skyrocketing. 
In recent days, top California officials have stepped up their rhetoric 
against a handful of merchant power companies, many of them Texas-based, that 
supply the state with much of its juice. Gov. Gray Davis says companies such 
as Reliant Energy Inc., of Houston, have engaged in "unconscionable price 
gouging." Loretta Lynch, president of the California Public Utilities 
Commission and a Davis appointee, proclaims that a "cartel" of electricity 
producers has created artificial shortages. Lt. Gov. Cruz Bustamante is 
backing a bill that would make energy price fixing a felony, and as a private 
citizen he is suing several major power producers in Los Angeles state court.
About half a dozen investigations are being conducted by entities ranging 
from state legislative committees to the California attorney general's 
office. So far, these probes -- some of which have been under way for months 
-- haven't yet yielded either civil or criminal charges. 
While the energy suppliers are generating "unconscionable profits," the 
question remains "whether they are illegal profits," says California Attorney 
General Bill Lockyer, who has offered rewards of as much as hundreds of 
millions of dollars for information about lawbreaking in the energy business. 
Mr. Lockyer says he believes his office will eventually file civil charges 
against suppliers. He would very much like to add criminal counts. "I would 
love to personally escort [Enron Corp. Chairman Kenneth] Lay to an 8 x 10 
cell that he could share with a tattooed dude who says `Hi my name is Spike, 
honey,'" adds Mr. Lockyer. Houston-based Enron is a major energy-trading 
company. Like other such firms, Enron has denied wrongdoing in the California 
market. 
Mark Palmer, Enron's vice president for corporate communications, said Mr. 
Lockyer's comment about Mr. Lay "is so counterproductive that it doesn't 
merit a response." 
Investigators and academics say there is abundant evidence that individual 
firms have been exercising "market power." This term is used to denote 
efforts to influence wholesale-electricity prices, such as by withholding 
supplies. The California Independent System Operator, or ISO, which manages 
the state's electric transmission grid, estimates that by exercising market 
power, suppliers may have added about $6.8 billion to the cost of electricity 
in the state since early last year. 
A single firm exercising such power isn't necessarily illegal, says Severin 
Borenstein, director of the University of California Energy Institute. If a 
company is a large supplier in the state and "you're not exercising market 
power, you are not doing your job" on behalf of shareholders, he says. 
Mr. Borenstein and others say that there are steps that should be taken 
against suppliers. They note that under federal power law, the Federal Energy 
Regulatory Commission can order refunds for wholesale prices that are above 
"just and reasonable" levels. So far, FERC has tentatively ordered California 
suppliers to make tens of millions of dollars of such refunds, as part of 
that agency's ongoing inquiry into the California market. Critics of the 
suppliers and FERC say the refunds should be in the billions of dollars. 
The power industry, not surprisingly, says there is nothing to accusations of 
price manipulation or collusion. Executives point to a botched 
state-utility-deregulation plan that relies heavily on volatile spot-market 
purchases. Suppliers note that over the past decade, California didn't build 
enough new power plants to keep up with demand growth. The allegations of 
manipulation are "a lot of sound and fury and they won't produce anything," 
says Gary Ackerman, executive director of the Western Power Trading Forum, an 
industry trade group. 
Power generators also point to sharp increases in some of their costs, 
particularly natural gas, which is a major power-plant fuel. This rise in 
natural-gas prices also has set off a flurry of investigations over possible 
manipulation. One such case, involving El Paso Corp., Houston, is the subject 
of probes by federal and state officials. El Paso denies any wrongdoing. 
While power-industry officials say they have been cooperating with the 
investigations, law-enforcement officials say they have hit some roadblocks. 
For instance, Mr. Lockyer's office has gone to San Francisco state court to 
enforce subpoenas against Reliant, Houston-based Dynegy Inc., and Southern 
Co. and Mirant Corp., both of Atlanta, after the companies resisted turning 
over certain business documents they deemed confidential. 
Investigators have zeroed in on the increased frequency with which plants are 
going out of service for unscheduled outages. At times, several thousand 
fewer megawatts of capacity are available than a year ago. A thousand 
megawatts can power about one million homes. 
Generators say that this increased "forced outage" rate shows that tight 
supplies over the past year have required them to run plants, some of them 
more than 40 years old, for long periods without routine maintenance. This 
combination has produced more breakdowns. "Plants have been running flat 
out," says Tom Williams, a spokesman for Duke Energy Co., Charlotte, N.C., 
which says that its California power plants produced 50% more electricity in 
2000 than in 1999. 
At the same time, during periods of lower demand, the number of unplanned 
outages often seems to rise enough to keep supplies tight, says Frank Wolak, 
a Stanford University professor and chairman of the ISO's market surveillance 
committee. "Clearly, something is going on here." However, he and others say 
that it is almost impossible to tell why a particular pipe failed or whether 
such a failure was a legitimate reason to reduce output. 
Some of the most intriguing evidence to date about forced outages surfaced in 
a federal case. FERC officials said an investigation had raised questions 
about whether two major power companies had taken plants out of service in 
order to reap higher electricity prices. The charges against AES Corp., 
Arlington, Va., which owns the plants, and Williams Cos., Tulsa, Okla., which 
markets their output, asserted that those actions allowed the companies to 
reap an extra $10.8 million in revenue. 
In one instance, according to case filings, a Williams employee "indicated" 
to AES officials that his firm wouldn't financially penalize AES for 
extending an outage at one plant. This conversation, which was voluntarily 
divulged by Williams, could be an indication of collusion. Williams and AES 
settled the case without admitting any wrongdoing by paying back $8 million 
to the ISO and by taking certain other measures. A Williams spokeswoman says 
the employee who talked to AES was "counseled not to enter into any 
conversations of that nature" in the future. 
Another issue raised by the FERC case touched on maintenance procedures. 
According to the filings, AES stopped doing a certain procedure to keep its 
plant's cooling system from getting clogged. The clogging of the system was 
cited as a reason for one of the forced outages. Mark Woodruff, president of 
the AES unit that operates the plant in question, says the company 
substituted what it felt was an equally effective maintenance procedure. 
If someone was looking to keep supplies tight and prices high, changes in 
maintenance procedures would be an easy way to ensure that plants, 
particularly old ones, have frequent forced outages, says a senior 
utility-industry executive. By restricting maintenance resources, he says, an 
operator can simply allow a plant "to take itself out of service." 
--- 
Journal Link: What is California doing to alleviate the energy crisis? See a 
video report of California State Treasurer Philip Angelides discussing the 
state's plans, in the online Journal at WSJ.com/JournalLinks. 
--- Investigations Aplenty

In the year since California's energy deregulation plan began
resulting in higher prices and even blackouts, a flurry of
investigations has gotten under way. Here are the main ones:

AGENCY: Federal Energy Regulatory Commission
INVESTIGATION: Whether generators are charging more than "just and
reasonable" rates as demanded by the Federal Power Act; whether El
Paso Corp. used its position as a major natural-gas supplier to the
state to illegally drive up the price of fuel used to generate
electricity.

AGENCY: California Public Utilities Commission and the State Attorney 
General
INVESTIGATION: Whether generators and power traders have acted
illegally through collusion or other means to artificially inflate
electricity prices.

AGENCY: PUC and California Independent System Operator
INVESTIGATION: Whether generation plants were shut down for spurious
reasons in order to create supply shortages and, thus, to raise
electricity prices.

AGENCY: California Electricity Oversight Board
INVESTIGATION: Whether patterns of bidding and pricing in
California's electricity auction indicate collusive or otherwise
illegal behavior.

Sources: state and federal agencies

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


Business/Financial Desk; Section W
Enron Unit Moves to End India Contract For Power
By SARITHA RAI

05/22/2001
The New York Times
Page 1, Column 6
c. 2001 New York Times Company

BANGALORE, India, May 21 -- Fed up with its main customer's refusal to pay 
its bills, the Enron Corporation's Indian power-generating venture served 
formal notice on Saturday that it would terminate its power supply contract 
and pull out. 
The move by the Dabhol Power Company, 65 percent owned by Enron, starts the 
clock ticking on a six-month notice period before the contract is voided, 
during which negotiations to settle the dispute are expected. The $2.9 
billion Dabhol project represents the largest single foreign investment in 
India.
Separately, Enron said today that it was withdrawing from a pipeline project 
in Qatar, which would have supplied some gas to Dabhol. The company said that 
the two steps were unrelated. 
The Dabhol project has been the subject of a series of wrangles between the 
company and the governments of India and of the western Indian state of 
Maharashtra. The state-owned utility company that contracted to buy power 
from the Dabhol plant has defaulted on some $64 million in unpaid power 
bills, and has accused Dabhol of charging too much. 
Dabhol said it was left with little choice but to issue the termination 
notice after both governments failed to honor their contractual commitments 
to buy and pay for its output. 
But in a statement issued over the weekend, Dabhol said it was ''still open 
to constructive discussion on the solutions.'' The company said a ''lasting 
and feasible solution'' to the dispute would require that the two governments 
either honor their obligations to buy Dabhol's power or find other 
creditworthy buyers to take the power instead. 
The first phase of the project now generates 740 megawatts of power, and the 
second phase, adding another 1,444 megawatts of capacity, is scheduled to go 
on line next month. 
Under the contract, the termination that Enron has set in motion would oblige 
the federal and state governments to pay damages to Enron and the lenders 
that financed the project, possibly as much as $500 million -- the value of a 
year's output of power plus the project's $300 million in debt -- if it is 
shut down.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 



California; Metro Desk
The State GOP Criticizes Davis' Choice of PR Aides Capitol: Legislative 
leaders call the pair political operatives who are too partisan to represent 
the state during energy crisis.
DAN MORAIN
TIMES STAFF WRITER

05/22/2001
Los Angeles Times
Home Edition
B-8
Copyright 2001 / The Times Mirror Company

SACRAMENTO -- Republican legislative leaders Monday blasted Gov. Gray Davis' 
decision to spend $30,000 a month in taxpayer money to retain communications 
consultants known for their highly partisan work. 
Labeling consultants Mark Fabiani and Chris Lehane as "cut-throat," Senate 
GOP leader Jim Brulte of Rancho Cucamonga and Assembly Republican leader Dave 
Cox of Fair Oaks said in a letter to Davis that the hiring "undermines the 
assertions you have made both publicly and privately throughout this crisis."
Davis announced Friday that he retained the duo and that the state will pay 
them a combined $30,000 a month for at least the next six months. 
"We're not going to support the hiring of political hacks on government 
payroll," Brulte said in an interview. "Lehane and Fabiani are very talented. 
The issue is which payroll is appropriate. . . . These are political 
opposition research attack dogs. If the governor wants them, he ought to pay 
for them with his $30-million political war chest." 
Some consumer advocates also criticized the move, citing the consultants' 
work on behalf of Southern California Edison. In their private consulting 
business, Fabiani and Lehane are working to win over public and political 
support for Davis' $3.5-billion plan to rescue Edison from its financial 
difficulties. Legislation embodying aspects of the deal is pending in 
Sacramento. 
On Monday, Brulte and Cox also complained about the consultants' dual role. 
"California taxpayers should not be asked to finance political consultants or 
individuals who have a vested business interest with the state," the letter 
said. 
Fabiani and Lehane had worked in the Clinton administration, and in Vice 
President Al Gore's presidential campaign, where they gained a reputation as 
attack-oriented operatives. Lehane on Monday defended the governor's decision 
to use tax money to pay their fees, saying government often hires outside 
experts and that he and Fabiani will "serve as communications advisors to 
help the governor fight against these generators." 
"The Republicans," Lehane added, "ought to be spending time writing letters 
to George W. Bush to get him to stop the Texas generators from gouging 
California. . . . That is the real issue here." 
Davis, meanwhile, returned to California on Monday after a weekend of 
fund-raisers. He was in Texas on Saturday for a Dallas event that had been 
scheduled for April 11. It was postponed when Pacific Gas & Electric filed 
for bankruptcy protection. 
"There is a very large fund-raising base for Democrats in Texas," Davis' 
campaign strategist, Garry South, said of the state that is home to some of 
the generators that Davis has criticized. 
Davis traveled to Chicago for another fund-raiser Sunday, then met Monday 
with city officials to discuss how Chicago deals with electrical blackouts. 
After blackouts crippled downtown Chicago in the summer of 1999, Mayor 
Richard M. Daley demanded that the city's electricity provider, Commonwealth 
Edison, give advance notice of power cuts. Customers now sometimes receive 
warnings two or three days in advance. 
Davis emerged from the meeting saying "the utilities have got to tell us in 
advance when they're going to have a planned blackout." 
It was not, however, readily apparent how Chicago's solutions would translate 
to California, because its electrical problems are vastly different. Rather 
than suffering a shortage of electricity throughout the grid like California, 
Chicago has the more microcosmic ills of an aging system--an obsolete 
transformer going down, for example, leaving several city blocks in the dark 
until workers can fix it. 
* 
Times staff writer Eric Slater contributed to this story.

PHOTO: Protester Barbara King shakes a light bulb outside Sacramento office 
of a lobbyist for energy producer Enron near the Capitol.; ; PHOTOGRAPHER: 
ROBERT DURELL / Los Angeles Times 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


Business/Financial Desk; Section C
BUSINESS DIGEST

05/22/2001
The New York Times
Page 1, Column 1
c. 2001 New York Times Company

Enron Moves to End India Contract 
Fed up with its main customer's refusal to pay its bills, Enron's Indian 
power-generating venture said that it would terminate its power supply 
contract. [World Business, Section W.] 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


International
World Watch
Compiled by David I. Oyama

05/22/2001
The Wall Street Journal
A18
(Copyright (c) 2001, Dow Jones & Company, Inc.)

EUROPE/MIDEAST 
Insurer Storebrand
Favors Sampo's Bid 
Over Den Norske 
Norway's largest insurer, Storebrand, became the center of a bidding war 
between Finnish financial-services company Sampo and Norway's Den Norske 
Bank, with Storebrand favoring Sampo. Sampo's offer values Storebrand at 20.8 
billion Norwegian kroner ($2.3 billion), compared with DnB's 17.6 billion 
kroner bid, as the Nordic region's top financial companies battle for 
position in a consolidating sector. Sampo and Storebrand, in a joint Helsinki 
news conference, said they were confident their deal would succeed. 
Sampo's cash-and-stock offer, valued at 75 kroner a share, represents a 31% 
premium to Storebrand's average share price during the past month and was 
backed by Storebrand's management. DnB wouldn't say whether it would alter 
its bid. "One cannot count on that," its chairman said. 
HypoVereinsbank Results Disappoint 
Bayerische Hypo- und Vereinsbank, Germany's second-largest bank, known as 
HypoVereinsbank, said first-quarter pretax profit rose 25% from a year 
earlier to 770 million euros ($678 million), below analysts' consensus 
forecast of 795 million euros. Profit rose 63% to 468 million euros; earnings 
and pretax profit were both helped by one-time gains of 454 million euros. 
Operating profit fell 59% in the retail-banking division to 98 million euros, 
and was down 43% in the international-markets division to 184 million euros. 
HypoVereinsbank said tough market conditions world-wide reduced regular 
commission and interest income. 
Enron Pulls Out of Emirates Gas Project 
U.S. energy company Enron has decided to pull out of the multibillion-dollar 
Dolphin natural-gas project, selling its 24.5% stake to the United Arab 
Emirates Offsets Group, or UOG, according to Dolphin Energy's managing 
director, Ahmed Al-Sayigh. He didn't specify the reason for Enron's 
withdrawal or the value of Enron's stake. The Dolphin project agreement, 
reached two years ago by UOG and Qatar Petroleum, aims to bring two billion 
cubic feet a day of natural gas from Qatar's offshore North Field in the 
Persian Gulf to Abu Dhabi and onward to Dubai. Enron and France's 
TotalFinaElf each held a 24.5% stake, with UOG owning the remaining 51%. Mr. 
Sayigh said UOG will hold discussions with other companies on a possible sale 
of Enron's original stake. Richard Bergester, manager for Enron Middle East, 
said that having contributed to the project's initial stages, Enron now feels 
it can't "add" any more. He didn't elaborate. A TotalFinaElf official said it 
is interested in a greater stake in Dolphin. 
Marc Rich Gains Control of Swiss Firm 
Marc Rich, the former U.S. fugitive given a controversial pardon by President 
Clinton, effectively pulled off a management coup at Swiss real-estate 
company Feldschloesschen-Huerlimann Holding by thwarting its merger plans 
with Swiss Prime Site and forcing the board to quit. Feldschloesschen's 
ousted chairman, Robert Jeker, said Marc Rich Group now had control of the 
company. Mr. Rich himself is not on the board, but he controls more than 10% 
of the votes in Feldschloesschen. 

ASIA/PACIFIC 
BRIEFLY: 
-- Bass Hotels & Resorts, a unit of Britain's Bass, said it will buy the 
Regent Hotel Hong Kong for $346 million from Hong Kong's New World 
Development. 
-- Indian lenders said they want the Indian government to intervene after 
U.S. energy company Enron's threat to walk out of its Dabhol Power unit's 
huge project in Maharashtra state put their loans in jeopardy. Domestic 
lenders have lent $1.4 billion out of the project's total $2.9 billion cost. 
-- Australian Prime Minister John Howard caved in to intense pressure over 
the collapse of HIH Insurance, announcing a royal commission into the 
company's failure and setting aside over 500 million Australian dollars ($265 
million) to assist victims of the Australian insurer's collapse. 
-- Japan's trade surplus shrank at a faster-than-expected pace in April, 
narrowing 42% from a year earlier to 665.9 billion yen ($5.39 billion), as 
reduced foreign demand weighed on the country's economy. 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 



Business; Financial Desk
IN BRIEF / ENERGY Enron Withdraws from Qatar Project
Bloomberg News

05/22/2001
Los Angeles Times
Home Edition
C-2
Copyright 2001 / The Times Mirror Company

Enron Corp. pulled out of a $2-billion pipeline project to export gas from 
Qatar as it became increasingly likely that an Indian power-sales agreement 
will collapse. The company said the move is not related to a filing by its 
65%-owned Dabhol Power Co. to India's Maharashtra state's electricity board 
to stop supplying power because it's owed about $63.9 million by the board.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 




INDIA: UPDATE 1-Indian state spurred by Enron reopens power deals.
By Narayanan Madhavan

05/22/2001
Reuters English News Service
(C) Reuters Limited 2001.

BANGALORE, India, May 22 (Reuters) - India's technology state of Karnataka, 
spurred by a payments row involving U.S. power developer Enron Corp in a 
neighbouring province, has reopened sealed power purchase deals with 11 
private firms. 
The southern state's government has told independent power producers (IPPs), 
which are yet to start generation, that they need to make their tariffs more 
competitive, officials said.
"Now it (electricity) cannot be at any cost," V.P. Baligar, chairman and 
managing director of the Karnataka State Power Transmission Corp Ltd (KPTCL), 
the state's monopoly power distributor, told Reuters in an interview late on 
Monday. 
The move comes on the heels of the bitter wrangle in Maharashtra state 
involving Dabhol Power Co, 65-percent owned by Houston-based Enron. 
Dabhol issued a preliminary notice on Saturday to end a contract to sell 
power to the Maharashtra State Electricity Board. The step came after 
Maharashtra ceased payments saying Dabhol's tariffs were too high. 
The $2.9-billion project, which is 90-percent complete, was first billed as a 
showcase of India's decade-old reform programme but now is regarded by 
critics as a symbol of policy bungling. "Enron is a lesson for all of us," 
Baligar said. 
Karnataka also said it would not provide financial assurances in the form of 
escrow cover and government loan guarantees which the firms wanted to help 
sweeten lending rates. 
"We're trying to tell them your tariff has to be competitive," Baligar said, 
but added that the state was open to negotiations. "You have to have the 
final capability so you can implement the project without any guarantee or 
escrow." 
SIGNED DEALS 
Five years ago, the state signed power purchase deals with 14 private firms. 
Three of them are already generating power at rates higher than the state 
would now like to pay. They will continue to get these rates but the 11 
unbuilt units face an uncertain future. 
The 11 plants involve 2,000 megawatts (MW) of capacity, half of which would 
be supplied by the Mangalore Power Co (MPC) from which U.S.-based Cogentrix 
exited in 1999, citing litigation and delays in government approval. 
China Light & Power now owns the company, in which India's Tata group is 
expected to take 30 percent. MPC Managing Director V.P. Sharma told Reuters 
that his firm's project would not be hit by the demand for lower tariffs 
because it was based on coal unlike the Enron project, based on naphtha. 
"Our cost is the lowest cost approved (and) coal prices have fallen (since 
the agreement)," Sharma told Reuters from Bombay. Company officials say the 
project is also looking forward to a federal guarantee to help it move 
forward. 
Baligar said the government's intention was to weed out those who are not 
serious. "Those who are serious can sit with us and sort out their problems," 
he said. 
Power tariffs vary, depending upon foreign exchange rates and the type and 
prices of fuels. Three projects which are already generating power get about 
3.0 to 4.0 rupees (6.4 to 8.5 U.S. cents) per unit. The 11 uninstalled plants 
had comparable rates but MPC says falling coal prices helped its 
competitiveness. 
One generating firm, Jindal Tractabel, which uses coal and gas, gets about 
2.60 rupees. Its purchase agreement was not among the 14 and is awaiting 
regulatory approval. The state wants the Jindal rate to be the benchmark for 
reopened agreements. 
If private firms cut capital costs and work out long-term fuel supplies, they 
will be able to cut rates, Baligar said. 
The state says it needs 4,000 MW of new capacity over 10 years and 2,500 MW 
over five years. State-run utilities are in a position to meet five-year 
needs at low rates, Baligar said. 
Asked if Karnataka could face litigation over the reopening of the contracts, 
Baligar had legally strong arguments. ( $1 = 46.9 rupees).

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 



INDIA: India utility may slap 4bln rupee fine on Enron unit.

05/22/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, May 22 (Reuters) - An Indian utility is planning to impose a second 
penalty of four billion rupees ($85 million) on Enron's local unit, barely a 
week after the U.S. energy giant took its first step to pull out of the 
embattled project. 
A senior official at the Maharashtra State Electricity Board (MSEB) said on 
Tuesday the fine on Dabhol Power Company (DPC) was for not meeting capacity 
targets within a stipulated period.
"We will do this as soon as the bill for May is received next month," the 
official told Reuters. 
DPC officials declined to comment on the matter. 
Earlier this year, MSEB had imposed a similar penalty on DPC - which DPC has 
not paid - saying its plant could not be ramped up to full capacity within 
three hours from a cold start. 
Enron and MSEB have been battling for six months over payment defaults and 
last week DPC, owned 65 percent by Enron, issued a preliminary notice to 
terminate a power purchase agreement - widely seen as a move that would lead 
to a pull out. 
According to DPC, it is owed $48 million by MSEB. 
A top government official told Reuters in Delhi on Monday the federal 
government is optimistic Houston-based Enron and the Maharashtra state will 
resolve their wrangle. 
The agreement signed between MSEB and DPC in 1995 stipulates that if Dabhol's 
plant cannot achieve 100 percent capacity within three hours from restart, 
MSEB is entitled to impose a penalty. 
The MSEB official said the plant had failed to fulfil this condition in 
February and March, considered peak periods for power demand by the utility. 
DPC is building a $2.9 billion, 2,184 MW plant, of which the first phase of 
740 MW began operations in May 1999. 
Enron is India's largest foreign investor. ($1=47.0 Indian rupees).

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


IXEurope creates a Storm in colocation

05/22/2001
M2 Presswire
Copyright 2001 M2 Communications, Ltd. All Rights Reserved.

IXEurope, a leading pan-European provider of Internet infrastructure and 
hosting services, today announces that it has signed a deal with Storm 
Telecommunications Limited (Storm), the international optical switched 
service provider, with an intelligent optical backbone network built in the 
UK, France, Germany, the Netherlands, Denmark, Sweden and Norway. Over the 
coming months Storm's network will also be operational in the USA, 
Switzerland, Italy and Austria. 
Under the agreement Storm will locate its optical switching equipment at 
IXEurope's flagship datacentres in London and Frankfurt, with plans to use 
other IXDatacentres across Europe for colocation of its equipment to support 
its European and North American metro access rollout.
Storm is the tenth carrier to enter the London city IXDatacentre meaning that 
IXEurope's customers (including other carriers) will benefit from the 
services that Storm offers. This illustrates the advantages that IXEurope's 
carrier-neutral status brings -connectivity, cost-effective choice and 
flexibility. 
Guy Willner, CEO of IXEurope, commenting on the deal, said: "We are pleased 
to support Storm's IP network rollout. It will naturally interlink with the 
new gigabit ethernet service we are offering across our pan-European network 
of IXDataCentres." Mark Stewart, senior vice president, business development 
of Storm, said "We chose IXEurope as one of our colocation partners because 
of its extensive pan-European presence and the strategic location of its 
datacentres. IXEurope has ensured that its datacentres are located where 
there is an abundance of network, and provides a choice of carriers, which 
allows us great flexibility. IXEurope will also provide us with the ability 
to expand over an agreed time scale." 
IXEurope, which now has eight operational datacentres across Europe, has 
recently signed contracts to provide colocation and managed services to 
Hewlett Packard, Enron Broadband Services (EBS) and The Data Company. 
IXEurope has just been awarded the ISO9002 quality assured certification for 
the second consecutive year , showing its commitment to quality across its 
European operations. 
IXEurope 
IXEurope provides neutral colocation and facilities management services to 
corporate, internet and telecoms organisations, allowing them speedier access 
to market and the freedom to focus on their core business. 
IXDatacentres are present across Europe in all major business centres, 
including London, Paris, Frankfurt, Zurich, Nice, Dusseldorf, Milan and 
Barcelona. IXEurope is an ISO9002 Quality Certified Company and a founding 
member of the Colocation and Hosting Association. IXEurope's funders include 
Bank of America, JPMorgan and European Acquisition Capital. For more 
information please visit the website at www.ixeurope.com 
About Storm Telecommunications 
Storm Telecommunications Limited, wholly owned and group operating company of 
Storm Investments Limited, is the first OSP (optical-switched service 
provider). Storm provides voice, bandwidth and IP services and had revenues 
of GBP52m in 2000. Storm's intelligent mesh network is operational in the UK, 
France, Germany, Norway, Sweden, Denmark and the Netherlands, shortly 
reaching the USA, Italy, Austria and Switzerland. In February 2000, Storm's 
management completed an MBO backed by investment affiliates of Soros Private 
Equity Partners, and further backing by investment affiliates of Merrill 
Lynch & Co came in May 2000. 
Storm's intelligent optical network is in prime position to meet the 
e-business challenges of 2001 and beyond. For more information, please visit 
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CONTACT: Victoria Dickson, Citigate Technology Tel: +44 (0)207 950 2982 
e-mail: victoria.dickson@citigatetechnology.com Chris Moseley/Vidushi Patel, 
Miller Shandwick Technologies Tel: +44 (0)20 7282 2844 e-mail: 
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H.O'Hanlon@stormtel.com 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


Power corrupts...

05/22/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

APROPOS of Enrons notice to the government of Maharashtra, Mumbai should act 
pragmatically instead of indulging in heroics and rhetoric. It should set its 
own house in order, improve MSEBs functioning and quickly privatise.
If it fails to do these its threat to Enron will also be taken as just 
another case of demanding kickbacks. 
IT is sad really that Enron had to issue its pre-termination notice. We 
should now ask whether MSEB would be able to construct such a project in 
record time. 
Corruption is rampant in MSEB. They may say Enron power is not needed, but 
you cannot even get a new connection easily. Interruptions are commonplace in 
rural areas (sometimes up to four times a week). 
Power thefts are commonplace too. Each day, on average, we pay MSEB about Rs 
6 per unit for commercial connections. But most people would be willing to 
pay Rs 7 or so if they got clean, uninterrupted power. 
We have seen, for example, the vast cost overruns of many of the official 
water management projects. These overruns go up to 20 times, with delays 
stretching up to 10 years with no guarantee no results even then. 
All told, the government is sending very wrong signals to the international 
community by raking up the Enron controversy. It should set its own house in 
order. 
THE new state ministries are too big in size West Bengals in particular. It 
has allotted one minister just to deal with fire brigades. The expenditure in 
lakhs it entails could exceed the total number of fire tenders under the 
department. 
Despite that it needed 7 complete days to control a recent fire (with private 
tankers requisitioned to help over and above the ones owned by the 
corporation and municipalities). 
We need more fire tenders, not ministers or those who are associated with the 
big boss. Also we need a new minister, plus a full-fledged department, to 
examine corrupt practices in local government and also in the central 
government offices located in states. 
Meanwhile, was the Sarkaria Commissions recommendation to restrict the size 
of the ministry to within 10 per cent of the size of the Assembly advanced 
only to be flouted? 
We should call a stop to such commissions as not even 10 per cent of their 
purpose is served; they too entail huge establishments which are maintained 
year after year at taxpayer expense. 
SINCE 1993, I have been familiar with the political, social and business 
scenarios in the US and so I feel reasonably qualified to make some 
observations on US immigration policy by Sudhir Shah. 
Shahs statistics are not totally accurate but they depict the `global 
picture. The Indian immigrants (a million plus now) are, in many respects, a 
class apart. 
Their education levels are far higher than those of other immigrants, many of 
whom are just a grade above our rag-pickers (they are the cherry and berry 
pickers on US farms). 
I have not come across a single uneducated Indian in the US since 1983. Even 
in asset-formation, Indians (even Pakistanis) are leagues ahead of the other 
immigrants. 
B T Dasture, Mumbai -

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


The Godbole findings
Our Editorial

05/22/2001
Business Standard
15
Copyright (c) Business Standard

The Godbole committee's first report, submitted on 10 April, is an eye-opener 
to what can only be called a massive scandal. It leaves several players MSEB, 
successive Maharashtra governments, the Kirit Parikh re-negotiation exercise, 
the Central Electricity Authority, and other players in New Delhi with no 
clothes on. MSEB claimed that it had negotiated a tariff that was lower than 
would result from applying the central government's standard formula. But 
this was patently fraudulent, because the comparison was based on wrong 
numbers, incorrect technical parameters and unequal assumptions (one 
rupee-dollar rate for the Dabhol tariff, another for calculating the 
government formula), all of it designed to establish what was not true. Asked 
in court why there had been no competitive bidding, the answer (believe it or 
not) was that MSEB was not competent to handle competitive bidding. But it 
was so wonderfully capable of handling direct tariff negotiations that it 
eventually gave Dabhol a higher tariff than Enron had initially sought, 
before the negotiations began!
That's only for starters. There is much more in the Godbole report. On the 
basis of a passing comment in an FIPB meeting, that the project's costs were 
broadly in line with other similar projects, the power secretary in New Delhi 
tells the Central Electricity Authority that the CEA's techno-economic 
clearance is not required though this is statutorily mandated. The CEA agrees 
to this untenable proposition, but later issues a vaguely worded clearance on 
the basis of a meeting whose minutes were not made available to the Godbole 
committee. The re-gasification project that was made part of the power 
project had a capacity to handle 5 million tonnes, though Dabhol itself 
needed only 2.1 million tonnes. A port facility had similar excess capacity. 
Yet the entire cost of these facilities was loaded on to Dabhol, along with 
the full cost of the 20-year gas supply contract. Thus, as the Godbole 
committee observes, what should have been a variable cost was converted to 
part of the fixed cost, which MSEB would have to service through a capacity 
charge, whether any power or gas was bought or not. Even the power 
requirements of Maharashtra were mis-calculated in order to over-ride a 
warning from the World Bank that the Dabhol power would not be needed. This 
was done by assuming that industrial demand for power would grow overnight at 
twice the earlier rate, and that MSEB itself would overnight see a dramatic 
worsening of its operating parameters. There is still more in the report, but 
the point should be obvious. What the report shows is that the Dabhol 
contract can be subjected to legal test (as in fact two members of the 
Godbole committee recommend), on the grounds that it was improperly handled 
and violative of law and common sense. If a favourable judicial decision 
becomes possible, that should help mitigate the costs of winding up a truly 
scandalous project. For reasons that are not clear, MSEB and the Maharashtra 
government have chosen not to go down this route. Perhaps they have greater 
and continuing faith in the re-negotiation process.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


SMARTMONEY.COM: Power Grab
By Elizabeth Harris

05/21/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK -(Dow Jones)- Feeling squeezed by rising electricity bills and 
shrinking investment returns? Consider investing in utilities, which posted 
solid gains amid the recent bear-market carnage. 
But plugging into this volatile sector is risky business, as anyone who piled 
in this year based on energy's surge in 2000 can testify. After returning 
7.28% last year as demand for power outstripped supply, the average utilities 
fund is so far down 1% through May 18, according to the fund research firm 
Morningstar.
Though the sector's prospects remain attractive, such volatility is par for 
the course, says Mark Beckwith, portfolio manager of the Vanguard Utilities 
Income fund (VGSUX). Utilities and funds that focus on the sector no longer 
perform like bonds, delivering most of the gains via relatively predictable 
dividend yields. Instead, the industry has greater growth prospects (and the 
correspondingly higher potential for losses) tied to the fluctuating demand 
for power. 
Already, high prices for natural gas and electricity have created incentives 
for producers to boost supplies. And the stodgy local monopolies that once 
dominated the industry must now reckon with a bevy of independent producers, 
distributors and traders. Even telecom companies are now considered fair 
game, offering managers of sector funds fresh choices alongside greater risk. 
"The classification of a utility has changed," Beckwith says. 
At the same time, the crisis gripping electricity-starved California is 
showing other states the pitfalls to avoid as they deregulate their grids. 
"The outlook for wiser deregulation is very much with us," says Bill Reaves, 
a manager of the Strong American Utilities fund (SAMUX). The crisis out west 
has also spurred construction of new power plants from New York to Florida, 
he adds. Managers also count on continued political support from the former 
oilmen in the White House who are determined to boost domestic output. 
With such inducements in mind, we screened Morningstar's database looking for 
no-load utilities portfolios with one-year returns of at least 1% and 
three-year annualized returns of 5% or more. We also sought funds with 
initial investment minimums no higher than $3,000 and expense ratios below 
the category's average. 
Strong American Utilities 
Bill Reaves, co-manager of the Strong American Utilities fund, characterizes 
the $290 million portfolio's positions as "real utilities." 
"We try to concentrate in the electric and natural-gas area," Reaves says. 
"We try to concentrate in holdings and companies where we see good growth." 
Last year, that meant scaling back significantly from telecom stocks, in part 
because of a deteriorating outlook. 
Right now, electric utilities represent 44.5% of the fund - and Dominion 
Resources (D) is the largest position. Energy ranging from gas utilities to 
integrated oil and gas companies has also been a significant holding, at 
24.2%. 
Reaves and the rest of the portfolio management team are also very sensitive 
to valuations. The portfolio consists of 40 stocks, but the managers can 
devote up to 75% of the fund's assets to the 16 to 18 companies seen as the 
best bargains. 
This cautious approach has stood the fund well at a time when some of its 
competitors got hit by telecoms' travails. The Strong portfolio rose 27.33% 
in 2000 and is up 2.42% so far this year, contributing to a 15.18% three-year 
record. 
Reaves expects the good times to last, with industry earnings growth on the 
order of 8% to 10% coupled with dividends of about 5% over the next three to 
five years. "Demand is likely to keep on being strong...and the value of the 
service is going to be appreciated a great deal more," Reaves says. For 
example, the electric utilities' average price-to-earnings ratio for 2002 is 
about 12 - roughly a 50% discount to the Standard & Poor's 500 index. 
The minimum investment is $2,500, and the portfolio bears a 1% expense ratio. 
Vanguard Utilities Income 
"We won't be moving with the Nasdaq," says portfolio manager Beckwith of the 
Vanguard Utilities Income fund he runs. Beckwith invests a relatively small 
17% slice of the $900 million fund in telecom stocks. As with the other funds 
in this screen, such caution paid off last year, when the fund gained 18.7%. 
That turned the tables on 1999, when the technology boom consigned Vanguard 
Utilities to the rear echelon of its peer group. Annualized over three years, 
the portfolio has returned 9.33%, trailing the average utilities' fund's 
10.53%. 
Here, too, the emphasis is on attractive valuations. Beckwith also has a 
mandate to invest at least 95% of the portfolio in dividend-paying utilities 
(last year, all assets had to be invested in such stocks.) "I'm going to get 
as much growth as I can without taking on too much risk," Beckwith says. 
Right now, Beckwith has 61% of his assets in defensive electric utilities 
such as Dominion Resources or the FPL Group (FPL). 
The portfolio is down 2.65% so far this year, but Beckwith, too, is counting 
on continued strong demand for electricity. "Earnings momentum will be very 
good for the group at least over the next year," he says. His main concern is 
that high energy prices could encourage conservation, eventually depressing 
demand. 
The investment threshold is $3,000, and the expense ratio is a slim 0.38%. 
American Gas Index fund 
This concentrated portfolio rises and falls with the gas industry's 
prospects. Strong natural-gas prices boosted the American Gas Index fund's 
(GASFX) return last year to a 55.86%, far above the sector's average. That 
more than offset the 3.71% drop in 1999. Annualized over three years, the 
roughly $300 million fund has gained 15.82%. 
Like other index portfolios, the fund doesn't make stock picks; instead it 
owns 73 members of the American Gas Association, representing much of the gas 
distribution and transmission industry in most U.S. regions. Stocks are 
weighted by market-cap and by the portion of a company's assets involved in 
natural gas. Top holdings include Williams Companies (WMB), Enron (ENE) and 
Duke Energy (DUK). 
The initial investment is $2,500, and expenses are 0.85%. 
For more information and analysis of companies and mutual funds, visit 
SmartMoney.com at http://www.smartmoney.com/
Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


Malaysian LNG Sales to India Threatened by Enron Power Dispute
2001-05-22 06:32 (New York)

Malaysian LNG Sales to India Threatened by Enron Power Dispute

     Kuala Lumpur, May 22 (Bloomberg) -- Malaysia LNG Tiga Sdn.
may have to find new buyers for as much as 2.6 million metric tons
a year of liquefied natural gas if Dabhol Power Co. carries
through termination of electricity supplies to India's Maharashtra
State Electricity Board.
     MLNG Tiga has an agreement to deliver a maximum 2.6 million
tons a year of LNG each year to an import terminal Enron is
building to feed the Dabhol power plant.
     Saturday, Dabhol Power, 65 percent owned by Enron Corp. of
the U.S., started a procedure to end its power supply contract to
the electricity board, its sole customer, which owes over 3
billion Indian rupees ($64 million) in unpaid power bills.
     ``It is our hope that matters in India would be resolved,''
said Azman Ibrahim, spokesman for state-owned Petroliam Nasional
Bhd., which owns 60 percent of MLNG Tiga. ``If they do not work
out, we would have to find or make alternative arrangements.''
     MLNG Tiga is constructing Malaysia's third gas export
facility, which will raise the country's LNG capacity to 23
million tons from about 16 million tons in 2000. If Dabhol goes
through with cancellation of its power supply contract, MLNG Tiga
would have to find buyers for more than a third of the 6.8 million
tons it is adding to Malaysia's output capacity.
     Other partners in MLNG Tiga are the Sarawak state government
with a 10 percent share, Royal Dutch/Shell Group's unit Shell Gas
BV with 15 percent, Nippon Oil LNG (Netherlands) BV with 10
percent and Diamond Gas Netherlands BV with 5 percent.
     The plant is due to be completed at the end of 2002 with
commercial production due to begin in 2003.
     India's federal and state governments may have to pay Dabhol
Power Co. more than 170 billion rupees ($3.6 billion) if the Enron
Corp. unit cancels its 2,184 megawatt power venture.



		

		
		
		
		LEADER: India unplugged 
Financial Times; May 22, 2001

		The latest threat from Enron, the US energy group, to pull out of its Dabhol 
power plant venture near Bombay illustrates both the shambolic nature of 
India's electricity system and the wider risks of investing in the country. 
The project had serious drawbacks. But unless energy companies can expect a 
commercial return, they will not invest in badly needed new infrastructure. 
Unless contracts are honoured, few foreign companies will consider India as a 
place to do business. 
		The Maharashtra state electricity board, the Dabhol plant's only customer, is 
refusing to pay its bills, arguing that the tariffs are unjustifiably 
inflated. Prices are certainly high. The plant, fuelled by expensive naphtha, 
is running way below capacity due to unexpectedly low demand, further 
increasing unit costs. More difficult to judge is whether this is within the 
terms of the contract, since Enron is keeping the details confidential. 
		The argument over unit costs, though, is in any case less relevant than it 
might seem as most of India's state electricity boards, including 
Maharashtra's, operate at a large loss. Many consumers pay highly subsidised 
rates. Many pay nothing. Bills go uncollected. Half of Delhi's electricity 
output is stolen, mostly to power middle-class air conditioners rather than 
light bulbs for the poor. Bankrupt state utilities are then periodically 
bailed out to the detriment of spending on health and education. 
		India's state authorities urgently need to introduce a common minimum tariff 
and a more targeted form of subsidy. This may be unpopular, but the central 
government's offer of Dollars 5.6bn, raised via a bond issue, to pay off the 
electricity boards' debts should sweeten the pill. 
		A new pricing regime is only the first step. Electricity generation, 
transmission and distribution should be unbundled and privatised. Contracts 
should be awarded through competition, not by arrangement with the relevant 
political party. This would require much more transparency than many of 
India's politicians have been ready to concede. 
		Enron's difficulties over the Dabhol plant, the largest foreign investment in 
India, have persuaded other western companies to withdraw from similar 
projects. This will hardly help the country to overcome the power shortages 
that hinder economic development. But the effect will reverberate well beyond 
the energy sector. 
		India receives a pitifully small slice of the world's foreign direct 
investment. Infrastructure weaknesses are certainly one factor. But as 
important is the readiness of Indian politicians to manipulate foreign 
business for their own ends. 
		Copyright: The Financial Times Limited
		
		




May 22, 2001
Houston Chronicle
Enron pulls out of venture drilling in Qatar's waters 
By LAURA GOLDBERG 
Copyright 2001 Houston Chronicle 
Enron Corp. is pulling out of a large natural gas project off Qatar, the 
company said Monday. 
Plans for the Dolphin project called for Houston-based Enron to work with 
Elf, a subsidiary of France's TotalFinaElf, and the United Arab Emirates 
Offsets Group to develop and pipe natural gas from a block of the Qatar North 
Field. 
More than a year ago those involved with the project said it could end up 
requiring investments of up to $10 billion over six or seven years. 
Enron said Monday it was transferring its 24.5 percent stake in the project 
to the United Arab Emirates Offsets Group, which said in a news release it 
had started negotiating with other international players to become 
stakeholders. 
With the transfer, United Arab Emirates Offsets Group will own 75.5 percent 
of Dolphin. Terms of the deal weren't released. 
Enron pulled out for a couple reasons, including that it believes there are 
better places to invest its money, said Alex Parsons, a company spokesman in 
London. 
The project doesn't necessarily fit with Enron's current focus. 
It is emphasizing businesses such as marketing and trading in wholesale 
markets such as those for natural gas, electricity and broadband. 
Enron said it would consider future ventures with the United Arab Emirates 
Offsets Group that were "in line with our core business activities." 
M. Carol Coale, an energy analyst with Prudential Securities in Houston, said 
Enron's move is consistent with its exit strategy from international assets 
that generate low returns. 







May 22, 2001
Houston Chronicle
Enron exploring commodity trading 
Copyright 2001 Houston Chronicle News Services 
NEW YORK -- Houston-based Enron Corp., the nation's largest natural gas and 
electricity trading house, is looking to continue its expansion into 
industries beyond energy with a move into the cocoa, coffee and sugar 
businesses, industry sources said Monday. 
Enron has had conversations and interviews with members of the commodity 
trade in recent weeks, using a London-based recruitment firm to help them, 
the sources said. 
"They are definitely interested in getting into the business. Enron has been 
looking for physical traders. They have some internal people and are looking 
for lieutenants with experience," a cocoa trader said. 
A representative of Enron's public relations department would only say that 
the firm is constantly investigating different markets and opportunities. 
"There is always a lot of speculation about what we are doing," Habiba Bayi 
of Enron said Monday. 







May 22, 2001
Houston Chronicle
Local and state 
Plains Resources gets new officers
Former executives of Enron and Kinder Morgan are among those chosen for a new 
slate of officers at Plains Resources, an oil and gas exploration and 
production company that had been sharing management with Plains All American 
Pipeline. They are filling vacancies created by people who went over to the 
pipeline side, said spokeswoman Carolyn Tice. 
John T. Raymond, who was vice president of corporate development at Kinder 
Morgan and Kinder Morgan Energy Partners, was appointed executive vice 
president and chief operating officer of Plains Resources. 
Jere Overdyke Jr., formerly managing director of Enron Global Markets, was 
named executive vice president and chief financial officer. 
Timothy Stephens, formerly chairman, president and chief executive of Abacan 
Resource Corp., was named general counsel and executive vice 
president-administration.