Power Trader Tied to Bush Finds Washington All Ears
The New York Times, 05/25/01

Enron Unit's Cline on Dispute With Indian Province: Comment
Bloomberg, 05/25/01

U.S. Energy Regulator May Be Replaced, New York Times Reports
Bloomberg, 05/25/01

Energy Antics: Oh, Behave!
Los Angeles Times, 05/25/01

Lockyer comes out swinging at oilman / Davis has plenty of company in depths 
of poll
The San Francisco Chronicle, 05/25/01

Latest move in dispute threatens Enron project
Houston Chronicle, 05/25/01

Indian State Moves To End Power Pact With Enron's Dabhol
The Wall Street Journal, 05/25/01

Markets / Your Money Dow, Nasdaq Make Modest Gains Wall St.: Politics and 
economic concerns weigh down some stocks prior to slated talk by Fed Chairman 
Alan Greenspan.
Los Angeles Times, 05/25/01

Dot-coms may be down and out, but the internet is still transforming 
corporations
The Globe and Mail, 05/25/01

India Enron Panel Lacks Authority to Solve Dispute, Expert Says
Bloomberg, 05/25/01

India's Negotiator Gokak on Dispute With Enron Unit: Comment
Bloomberg, 05/25/01

India Govt: State Bd To Likely Pay Dabhol Apr Elec Bill
Dow Jones Energy Service, 05/25/01

PGE sees gains despite power costs
Associated Press Newswires, 05/25/01

India: Pachauri rejects Godbole's remarks
Business Line (The Hindu), 05/25/01

India: India, Australia sign pact on energy, mining
Business Line (The Hindu), 05/25/01

India: MSEB slaps notice on DPC
Business Line (The Hindu), 05/25/01

AUSTRALIAN FIRMS EYE INDIAN POWER AND MINING SECTOR
Asia Pulse, 05/25/01

Bechtels out if dues not paid by May 31
The Economic Times, 05/25/01

Govt in a fix over asking NTPC to take over Dabhol
Business Standard, 05/25/01

MSEB rescinds Dabhol PPA
Business Standard, 05/25/01

USA: Business school grads rediscover energy business.
Reuters English News Service, 05/24/01

State utility cancels agreement Enron power purchase pact
Associated Press Newswires, 05/24/01

El Paso's Chairman to Testify in Gas-Price Hearing (Update1)
Bloomberg, 05/24/01



National Desk; Section A
Power Trader Tied to Bush Finds Washington All Ears
By LOWELL BERGMAN and JEFF GERTH

05/25/2001
The New York Times
Page 1, Column 1
c. 2001 New York Times Company

Curtis Hebert Jr., Washington's top electricity regulator, said he had barely 
settled into his new job this year when he had an unsettling telephone 
conversation with Kenneth L. Lay, the head of the nation's largest 
electricity trader, the Enron Corporation. 
Mr. Hebert, chairman of the Federal Energy Regulatory Commission, said that 
Mr. Lay, a close friend of President Bush's, offered him a deal: If he 
changed his views on electricity deregulation, Enron would continue to 
support him in his new job.
Mr. Hebert (pronounced A-bear) recalled that Mr. Lay prodded him to back a 
national push for retail competition in the energy business and a faster pace 
in opening up access to the electricity transmission grid to companies like 
Enron. 
Mr. Hebert said he refused the offer. ''I was offended,'' he recalled, though 
he said he knew of Mr. Lay's influence in Washington and thought the refusal 
could put his job in jeopardy. 
Asked about the conversation, Mr. Lay praised Mr. Hebert, but recalled it 
differently. ''I remember him requesting'' Enron's support at the White 
House, he said of Mr. Hebert. Mr. Lay said he had ''very possibly'' discussed 
issues relating to the commission's authority over access to the grid. 
As to Mr. Hebert's job, Mr. Lay said he told the chairman that ''the final 
decision on this was going to be the president's, certainly not ours.'' 
Though the accounts of the discussion differ, that it took place at all 
illustrates Enron's considerable influence in Washington, especially at the 
commission, the agency authorized to ensure fair prices in the nation's 
wholesale electricity and natural gas markets, Enron's main business. 
Mr. Lay has been one of Mr. Bush's largest campaign contributors, and no 
other energy company gave more money to Republican causes last year than 
Enron. 
And it appears that Mr. Hebert may soon be replaced as the commission's 
chairman, according to Vice President Dick Cheney, the Bush administration's 
point man on energy policy. 
Mr. Lay has weighed in on candidates for other commission posts, supplying 
President Bush's chief personnel adviser with a list of preferred candidates. 
One Florida utility regulator who hoped for but did not receive an 
appointment as a commissioner said he had been ''interviewed'' by Mr. Lay. 
Mr. Lay also had access to the team writing the White House's energy report, 
which embraces several initiatives and issues dear to Enron. 
The report's recommendations include finding ways to give the federal 
government more power over electricity transmission networks, a longtime goal 
of the company that was spelled out in a memorandum Mr. Lay discussed during 
a 30-minute meeting earlier this spring with Mr. Cheney. 
Mr. Cheney's report includes much of what Mr. Lay advocated during their 
meeting, documents show. Both men deny discussing commission personnel issues 
during their talk. But Mr. Lay had an unusual opportunity to make his case 
about candidates in writing and in person to Mr. Bush's personnel adviser, 
Clay Johnson. And when Mr. Bush picked nominees to fill two vacant Republican 
slots on the five-member commission, they both had the backing of Enron, as 
well as other companies. 
Mr. Lay is not shy about voicing his opinion or flexing his political muscle. 
He has transformed the Houston-based Enron from a sleepy natural-gas company 
into a $100 billion energy giant with global reach, trading electricity in 
all corners of the world and owning a multibillion-dollar power project in 
India. He has also led the push to deregulate the nation's electricity 
markets. 
Senior Bush administration officials said they welcomed Mr. Lay's input but 
did not always embrace it: President Bush backed away from curbing 
carbon-dioxide emissions, an effort supported by Enron, which had looked to 
trade emission rights as part of its energy business. 
''We'll make decisions based on what we think makes sound public policy,'' 
Mr. Cheney said in an interview, not what ''Enron thinks.'' 
The Bush-Lay bond traces back to Mr. Bush's father and involves a personal 
and philosophical affinity. Moreover, Enron and its executives gave $2.4 
million to federal candidates in the last election, more than any other 
energy company. While some of that went to Democrats, 72 percent went to 
Republicans, according to an analysis of election records by the Center for 
Responsive Politics, a nonprofit group. 
''He's for a lot of things we're for,'' said Mr. Johnson. 
But when it came to deciding on nominees for the commission, Mr. Johnson said 
that Mr. Lay's views were not that crucial. The two most important advisers, 
he said, were Andrew Lundquist, the director of Mr. Cheney's energy task 
force, and Pat Wood 3rd, the head of the Texas public utility commission. 
As governor, Mr. Bush named Mr. Wood to the utility commission. This year, 
when the White House filled the two Republican slots on the federal agency, 
Mr. Wood was the first choice, Mr. Johnson said. 
Consumer advocates and business executives praise Mr. Wood. But Mr. Lay also 
had a role in promoting him. Shortly after Mr. Bush was elected governor in 
1994, Mr. Lay sent him a letter endorsing Mr. Wood as the ''best qualified'' 
person for the Texas commission. 
In all, there are five seats on the commission, two held by Republicans, two 
by Democrats and one held by a chairman who serves at the pleasure of the 
president. Mr. Hebert, who became a commissioner in 1997, was named chairman 
by Mr. Bush in January. 
The Federal Energy Regulatory Commission's mandate to ensure fair prices in 
wholesale electricity and natural gas markets makes it crucial to sellers 
like Enron as well as consumers. 
The movement toward deregulation sometimes leaves the commission caught in a 
tug of war: power marketers like Enron are trying to break into markets and 
grids controlled by old-line utilities, which operate under state regulation. 
The commission's chairman has considerable latitude in setting its agenda. 
As part of its oversight of the wholesale electricity markets, the commission 
ordered several companies to refund what it considered excessively high 
prices this year in California. One lesser offender named in the commission's 
public filings -- $3.2 million, of a total of $125 million -- was an Enron 
subsidiary in Oregon. 
Enron owns few generating assets, but buys and sells electricity in the 
market. Many of those transactions resemble the complicated risk-shifting 
techniques used by Wall Street for financial instruments. 
Mr. Hebert, after he became chairman, initiated an examination into the 
effects those techniques have on the electricity markets. ''One of our 
problems is that we do not have the expertise to truly unravel the complex 
arbitrage activities of a company like Enron,'' he said, adding, ''we're 
trying to do it now, and we may have some results soon.'' 
William L. Massey, one of the agency's two Democratic commissioners, said he 
supported the inquiry but had not been aware of it -- an indication of the 
chairman's ability to set the commission's agenda. 
Finally, the commission is trying to speed the pace of electricity 
deregulation by opening up the nation's transmission grid, much of which is 
owned by privately owned utilities that enjoy retail monopolies. Some Enron 
officials say the commission has been moving too slowly to open the grid. 
They attribute some of the problem to utilities. But they also fault Mr. 
Hebert. 
''Hebert still has undeserved confidence in some of the vertically integrated 
companies coming to the table and dealing openly'' with transmission access 
issues, said Richard S. Shapiro, an Enron senior vice president. 
The utilities, however, maintain that they provide cheap and reliable service 
for their customers. Washington lobbyists for one Southern utility said that 
Enron was really interested in focusing on the utility's big-business 
clients, which under state regulation pay higher rates than residential 
customers. 
Since 1996, about half the states have moved to open their retail markets to 
competition, and the commission has begun to make it easier for outsiders to 
use the nation's transmission grid. But the promise of cheaper rates has been 
largely unfulfilled. So the push for more deregulation, in which Enron has 
been a leader, has slowed, especially when California's flawed program led to 
skyrocketing rates and chaotic markets. 
Mr. Hebert is a free-market conservative who favors deregulation but also 
recognizes the importance of state's rights. A former Mississippi regulator, 
he is a protege of Trent Lott, the Senate Republican leader from Mississippi. 
Mr. Hebert said Mr. Lott was instrumental in his nomination to the commission 
in 1997 by President Clinton. 
President Bush elevated Mr. Hebert to chairman on Inauguration Day, a move 
Mr. Lay said he told the White House he supported. 
Mr. Johnson, the White House personnel chief, said that Mr. Lott and Mr. 
Hebert had both been told that Mr. Hebert could remain chairman at least 
until the administration's nominees -- Mr. Wood and Nora Brownell, a 
Pennsylvania utility regulator -- are confirmed by the full Senate. The 
Senate energy committee voted earlier this week to approve the two nominees, 
after a hearing last week indicated strong support. 
It is widely expected that President Bush will name Mr. Wood to replace Mr. 
Hebert as chairman after the Senate acts. 
In an interview for a forthcoming episode of ''Frontline,'' the PBS series, 
Mr. Cheney suggested as much. ''Pat Wood's got to be the new chairman of the 
F.E.R.C., and he'll have to address'' various problems in the electricity 
markets, he said. 
Mr. Hebert said that no one had told him he was being replaced. If someone 
else is named chairman, Mr. Hebert can remain a commissioner until the end of 
his term, which expires in 2004. 
It was a few weeks after President Bush made him chairman that Mr. Hebert 
said he spoke by telephone with Mr. Lay. 
Mr. Lay told him that ''he and Enron would like to support me as chairman, 
but we would have to agree on principles'' involving the commission's role in 
expanding electricity competition, Mr. Hebert said of the conversation. 
A senior commission official who was in Mr. Hebert's office during the 
conversation said Mr. Hebert rebuffed Mr. Lay's offer of a quid pro quo. The 
official said that he heard Mr. Hebert's side of the conversation and then, 
after the call ended, learned the rest from him. 
Mr. Hebert said that he, too, backed competition but did not think the 
commission had the legal authority to tell states what to do in this area. 
Concerning the issue of opening transmission access through the creation of 
regional networks, Mr. Hebert supports a voluntary process while Enron seeks 
a faster and more compulsory system. 
Mr. Lay said that while he might have discussed issues relating to the 
commission's authority concerning access to the grid, ''there was never any 
intent'' to link that or any other issue to Mr. Hebert's job status. 
The commission is a quasijudicial agency, so decision-makers like Mr. Hebert 
must avoid private discussions about specific matters pending before the 
commission. Mr. Hebert and Mr. Lay both said that line was not crossed, but 
Mr. Hebert said he had never had such a blunt talk with an energy-industry 
executive. 
Mr. Lay added that his few recent conversations with Mr. Hebert were nothing 
special. ''We had a lot of access during the Clinton administration,'' he 
said. 
And he said that while making political contributions ''probably helps'' to 
gain access to an official, he made them ''because I'm supporting candidates 
I strongly believe in.'' 
Last June, Enron executives were asked to make voluntary donations to the 
company's political action committee. The solicitation letter noted that the 
company faced a range of governmental issues, including electricity 
deregulation. 
This year, some people who sought but did not get nominations to the 
commission said that Mr. Lay and Enron had had a role in the process. 
One was Joe Garcia, a former Florida utilities regulator and prominent 
Cuban-American activist. He said he had been ''interviewed'' by a few Enron 
officials, including Mr. Lay, who he said had not been as ''forceful or 
insistent'' as the other Enron officials. 
But in their conversation, Mr. Garcia said, Mr. Lay made clear that he would 
be visiting the White House, adding that ''everyone knew of his relationship 
and his importance.'' 
Mr. Johnson, the White House personnel chief, could not cite another company 
besides Enron that sent him a list of preferred candidates for the 
commission, but he remembered hearing the views of Tom Kuhn, who heads the 
utility industry trade group, the Edison Electric Institute. Mr. Kuhn was a 
classmate of Mr. Johnson and Mr. Bush at Yale. 
As for his conversation with Mr. Garcia, Mr. Lay said he was comfortable with 
his candidacy but ''I'm not sure what I told him about my friends at the 
White House.'' 
This article is part of a joint reporting project with the PBS series 
''Frontline,'' which will broadcast a documentary about California's energy 
crisis on June 5.

Photos: Kenneth L. Lay, left, chairman of the country's largest energy 
trader, and Curtis Hebert Jr., chairman of the Federal Energy Regulatory 
Commission, differ in their accounts of a conversation about energy 
deregulation. (Photographs courtesy WGBH/''Frontline'')(pg. A18) 

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


Enron Unit's Cline on Dispute With Indian Province: Comment
2001-05-25 03:53 (New York)


     New Delhi, May 25 (Bloomberg) -- Wade Cline, managing
director of Enron Corp.'s Dabhol Power Co., on the dispute with
the western Indian province of Maharashtra over dues. He was
speaking to reporters in New Delhi after meeting A.K. Basu,
secretary to the ministry of power.

     ``We won't renegotiate on the basis of the Godbole committee
report. We are going back to Maharashtra tomorrow to work on the
problem.''

     Dabhol Power said yesterday the Maharashtra State Electricity
Board, its sole customer, served notice that it's canceling their
seven-year-old power purchase contract.
     The notice came six days after Dabhol gave the board a
``preliminary termination notice'' because of an unresolved six-
month dispute over bills owed by the board.
     Madhav Godbole, also the Indian government's chief negotiator
in the current dispute, headed a committee set up by the
Maharashtra provincial government to suggest ways to lower the
cost of power supplied by Dabhol.




U.S. Energy Regulator May Be Replaced, New York Times Reports
2001-05-25 06:04 (New York)


     Washington, May 25 (Bloomberg) -- Enron Corp. gave more money
to Republican causes last year than any other energy company and
the head of the Federal Energy Regulatory Commission, whose
policies the company object to, may soon be replaced, the New York
Times reported.
     Enron Chairman Kenneth Lay objected to Curtis Hebert Jr's
views on electricity deregulation, telling him he would continue
to support the regulator if he changed perspective, the Times
reported. Hebert may soon be ousted, the Times reported Vice
President Dick Cheney as saying.
     Lay drew up a shortlist of candidates he would like to see
named as Hebert's replacement, the Times said. One Florida utility
regulator who hoped to win the job was interviewed by Lay, it
added.
     ``We'll make decisions based on what we think makes sound
public policy,'' Cheney told the Times. The decision won't be
based on what ``Enron thinks.''



California; Editorial Writers Desk
Energy Antics: Oh, Behave!

05/25/2001
Los Angeles Times
Home Edition
B-14
Copyright 2001 / The Times Mirror Company

Admit it: The only comic relief in this energy crisis has been watching our 
leaders go at suppliers and each other like pro wrestlers or Jerry Springer 
guests. 
In his State of the State address last January, Gov. Gray Davis accused the 
big private electric power generators of legalized highway robbery and 
threatened to seize their plants if necessary. Then he really got angry, 
calling them "the biggest snakes in the world." This past week, Atty. Gen. 
Bill Lockyer boosted the rhetoric a notch by declaring he would like to 
personally escort the chairman of Enron Corp. "to an 8-by-10 cell that he 
could share with a tattooed dude who says, 'Hi, my name is Spike, honey."' 
Meanwhile, President Bush and Vice President Dick Cheney have blamed 
California for causing its own problems with a "harebrained" deregulation 
scheme and mocked the state's power purchases and conservation programs. It's 
been fun. Now it's time for our leaders to act like adults.
Davis and Bush always will have their political differences, but the 
economies of both the state and the nation are endangered by California's 
energy situation. These leaders need to work together as cooperatively as 
possible, starting next week when Bush makes his first visit to California as 
president. 
Davis wrote Bush Wednesday offering to meet with him during his California 
visit. Bush spokesman Ari Fleischer said the president looks forward to 
discussing energy and other issues. Good start. Let's hope the conversation 
is civil and that the civility spreads. 
No matter how much California has been abused by the power companies, and it 
absolutely has, the state still needs them to help solve the crisis caused by 
shortages of electric power generation this year and next. Usually, the 
biggest targets of official and public wrath are the investor-owned utilities 
such as Southern California Edison and Pacific Gas & Electric Co. But not 
this time because, in the view of the state, the utilities have been bled dry 
by the power generators' stratospheric prices. The state had to take over the 
purchase of power when the generators refused to extend any more credit to 
Edison and PG&E. Legal recourse should be pursued, but the threatening 
rhetoric needs to subside. 
State lawmakers are right to be upset with the White House for refusing to 
use its authority to set reasonable temporary wholesale price controls. And 
Davis is justifiably upset with Bush and with Cheney, who said the only 
solution was to build more power plants--ignoring the fact that the state is 
building 10 plants now, with five more on the way, and that the only way to 
control wholesale power rates is for Washington to cap them. 
If the state hadn't bought the power, the generators would have let the 
lights go out. Davis needs to deliver that message, quietly and persuasively, 
while Bush is in California. And Bush needs to listen respectfully, like an 
adult.



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



NEWS
MATIER & ROSS
Lockyer comes out swinging at oilman / Davis has plenty of company in depths 
of poll
Phillip Matier, Andrew Ross

05/25/2001
The San Francisco Chronicle
FINAL
A.21
(Copyright 2001)

The reaction from Gov. Gray Davis' camp to yesterday's poll showing him in 
the dumper was quick and blunt. 
"Tell me something I don't already know," adviser Paul Maslin said after 
being hit with the news that the latest Field Poll showed Davis' job rating 
down 18 points since January.
"None of this is news to us," Maslin said. 
Heck, these days even nuclear power is more popular than Davis. 
But to Maslin, who has been watching his client's popularity drop with every 
rolling blackout, the question isn't how Davis is doing today. It's how he 
looks in a year and a half when he faces re- election that counts. 
And on that score, Davis & Co. seem to be oddly relieved at all the bad poll 
numbers that have come out this week. 
Because while their guy is definitely in trouble, everyone else is even 
deeper in trouble -- especially George W. Bush. 
The only announced Republicans running for governor -- Secretary of State 
Bill Jones and businessman William Simon Jr. -- aren't even the first picks 
of GOP voters. 
That honor goes to outgoing Los Angeles Mayor Richard Riordan -- who actually 
does very well when matched up against Davis. In fact, if he ran, the polls 
show it would be a dead heat. 
At this point, however, the only person who seems to think the 72- year-old 
Riordan is going to run is his good San Francisco buddy and adviser Clint 
Reilly, who has been spending a lot of time in Los Angeles of late. 
As for a challenge to Davis from within Democratic ranks? 
Well, the most frequently mentioned possibles -- Attorney General Bill 
Lockyer and Treasurer Phil Angelides -- both trail Davis in job performance 
ratings. 
There was one interesting twist that wasn't in the Field Poll. 
From what we hear, an energy company recently did a survey of its own that 
included a matchup between Davis and Sen. Dianne Feinstein, of all people. 
The result: DiFi cleans Gray's clock. 
RAIDER REVENGE: The Oakland Raiders may be eating more than crow after losing 
their big lawsuit against the National Football League. 
They may also have to eat upwards of $10 million in lawyers fees - - and not 
just for their own lawyers. 
It turns out that under NFL rules, they may also get socked with the bills 
for hundreds of hours of depositions, expert witnesses and the NFL's team of 
eight to 10 lawyers who charged an average of $350 to $400 an hour. 
Not to mention all those weeks the legal team was holed up at Los Angeles' 
tony Omni Hotel on Bunker Hill fighting the Raiders' claim to the Los Angeles 
market. 
And just to add further insult, Commissioner Paul Tagliabue says league 
owners haven't ruled out fining and suspending Raiders' boss Al Davis for 
bringing his lawsuit against the NFL in the first place. 
The Raiders are still considering whether to appeal this week's jury verdict 
-- a roll of the dice that would further drive up the legal tab if the team 
comes up craps. 
As for the odds that Tagliabue might give Davis a pass on paying the league's 
trial costs? 
"Not a prayer," says one lawyer on the case. 
On the other hand, Big Al could always sue them back. 
FUNNY NUMBERS: The question of whether there are 3,600 "unaccounted for" 
votes from November's election isn't the only funny thing going on down at 
the San Francisco Department of Elections. 
There's the department's spend-happy ways as well. 
"Unbelievable," was how Budget Analyst Harvey Rose summed up the department's 
recent request: $1.4 million so it can move from its digs in the basement of 
City Hall to a $678,000-a-year office space on Market Street. 
All in the name of "efficiency," of course. 
THE WILD ZONE: The World Wildlife Fund held its first-ever West Coast 
fund-raiser last weekend at the new Presidio park. 
The $1,000-a-head fund-raiser, which featured the band B-52's, drew upwards 
of 1,200 partygoers to a pair of lavishly decorated hangars -- and included 
honorary chairwoman Lauren Hutton, comic Drew Carey and a bevy of local and 
New York socialites. 
Presiding over it all was World Wildlife Fund chairman Bill Reilly, who also 
happens to be a member of the Presidio Trust board that oversees the park. 
We're happy to report that unlike University High's Decorator Showcase -- 
which has its own board connections and is getting free rent at the Presidio 
-- the World Wildlife Fund ponied up $10,600 in rent. 
Not a bad investment, considering that the party brought in close to 
$700,000, according to event organizers. 
QUOTE OF THE WEEK: State Attorney General Bill Lockyer has never been known 
as a loose cannon, so when he told the Wall Street Journal this week that he 
would love to personally escort Enron Corp. Chairman Kenneth Lay into "an 
8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name 
is Spike, honey,' " more than a few eyes popped wide. 
So what's up? 
"I want these generators in Texas and elsewhere to know that we are coming 
after them," Lockyer tells us. "And we're not talking about a 10-year fight 
to get our money back -- if we have the facts right, we're going to put them 
in prison." 
Besides, Lockyer says, his "missile" wasn't really meant for "home 
consumption" -- rather, it was aimed at the Big Money crowd back East.


PHOTO (2); Caption: (1) Al Davis, (2) Gray Davis 

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






May 25, 2001
Houston Chronicle
Latest move in dispute threatens Enron project 
By MICHAEL DAVIS 
Copyright 2001 Houston Chronicle 
Indian officials have upped the ante in the standoff with Enron Corp. over 
unpaid power bills at the Houston company's Dabhol Power project. The latest 
wrinkle in the longstanding dispute raises questions about the future of the 
beleaguered $3 billion project. 
Enron received notice Thursday from its sole customer, the Maharashtra State 
Electricity Board, that it was canceling a 7-year-old power purchase 
agreement. 
The board has refused to pay for power from the plant, saying the bills 
should be lower because Enron is not living up to its contract. Indian 
officials say Enron is not supplying power at full capacity within three 
hours of being restarted after a shutdown, as required by the deal. 
Enron responded with a statement describing the move as a "deliberate attempt 
to further delay the resolution of difficult issues" confronting the board. 
Termination of the project at this late stage could trigger an estimated $2 
billion in future obligations by India's state and federal governments. 
This latest round in the battle capped off a week of turmoil between the 
Houston company and Indian political officials over the project. 
Last weekend, Enron started proceedings to end the contract by serving the 
board a "preliminary termination notice" because of large unpaid power bills. 
Enron is owed about $64 million for power sold in December and January. 
Then Wednesday, a negotiator trying to resolve the payment dispute between 
the company and the electricity board resigned and then retracted his 
resignation the same day. 
The standoff between Enron and the electricity board and Indian politicians 
is expected to continue into next week, when formal negotiations are 
scheduled to begin. 
Enron is maintaining that the board does not have the right to cancel the 
agreement on the grounds it has stated. 
There has been speculation that Enron is looking to sell its 65 percent share 
of the project, and this latest round of fighting has revived that talk. The 
company has answered such questions in the past by saying it is committed to 
the project. 
"Even if this is resolved, Enron still wants to free itself altogether from 
this investment," said Carol Coale, energy analyst with Prudential Securities 
in Houston. "What investors are afraid of is a write-off. Enron has $850 
million in equity in the project; the rest is debt." 
Currently, the first phase of the project is running at about 37 percent 
capacity and providing Enron with a 5 percent return on its investment, Coale 
said. That ranks it among the company's poorest-performing investments. 
Finding a buyer that would pay fair value for the plant with all of its 
political baggage could be difficult. Potential buyers are believed to be 
Reliance, one of India's largest industrial concerns, or China Light & Power. 
India's federal and state governments have guaranteed the payment for power 
from the plant as well as loans for the project, the largest single foreign 
investment in India. 
An Enron spokesman in India described the board's latest move as a "long 
shot." 
"We have said for some time that there was going to be a lot of noise 
associated with this and legal maneuvering," Enron spokesman John Ambler 
said. "The odds of this being successful are very small." 
Enron is committed to working out a resolution to the dispute, Ambler said, 
and is helping to find credit-worthy electric customers that might be able to 
step in and buy power that the state of Maharashtra does not need. 
Enron has faced ongoing problems in India, almost from the time of its 
initial investment in the project in the early 1990s. 
In 1995 the state government, then headed by the Hindu ultranationalist party 
Shiv Sena, scrapped the project, saying the price of its power was too high. 
The project was idled in the midst of the construction of the first phase, 
costing Enron an estimated $100,000 a day while work was halted. The project 
was eventually restarted after voters chose another slate of politicians in 
the region. 
The project's first phase of 740 megawatts is on line. The second phase of 
1,444 megawatts is scheduled to go into operation later this year, but Ambler 
would not confirm when it will actually start operating, if at all. 






International
Indian State Moves To End Power Pact With Enron's Dabhol

05/25/2001
The Wall Street Journal
A12
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -- The sole customer of Enron Corp.'s troubled power project in 
India said it is rescinding its contract to buy electricity from the company, 
escalating the bitter fight between the two sides over unpaid bills. 
The project, Dabhol Power Corp., said it received a letter from the 
Maharashtra State Electricity Board announcing the move. But Dabhol said in a 
statement that the board "does not have the right to rescind the 
[power-purchase agreement] as attempted in their letter." The chairman of the 
state electricity board wasn't available to comment.
The $3 billion Dabhol project, India's largest foreign investment, is under 
attack by critics who say its rates are too high. Dabhol disputes that claim. 
The electricity board's action puts Dabhol in the position of defending a 
contract that it, too, has recently indicated a willingness to abandon. About 
a week ago, Dabhol gave notice it was formally initiating a procedure to 
cancel the contract in six months if the dispute isn't resolved. Dabhol says 
it is owed $48 million in unpaid bills by the electricity board. The 
electricity board, in turn, claims the bills are offset by millions of 
dollars in fines that Dabhol owes due to service lapses. 
Dabhol holds guarantees from India's central government to cover bill 
defaults, and the government has said it wants to help find a resolution to 
the standoff. A meeting with government officials is set for Tuesday, and 
Dabhol has said it is interested in hearing about prospects for selling power 
to other customers.

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


Business; Financial Desk
Markets / Your Money Dow, Nasdaq Make Modest Gains Wall St.: Politics and 
economic concerns weigh down some stocks prior to slated talk by Fed Chairman 
Alan Greenspan.
From Associated Press

05/25/2001
Los Angeles Times
Home Edition
C-4
Copyright 2001 / The Times Mirror Company

Stocks ended an uneven session with moderate gains Thursday as investors 
vacillated between optimism and fear about the economy. The market also was 
trying to determine the effect of the change in leadership in the Senate. 
The Dow Jones industrial average closed up 16.91 points, or 0.2%, at 
11,122.42 after falling 60 points earlier in the session.
Wall Street's broader indicators followed the Dow's path, advancing late in 
the session. The Nasdaq composite index rose 38.54 points, or 1.7%, to 
2,282.02, while the Standard & Poor's 500 index moved up 4.12 points, or 
0.3%, to 1,293.17. 
Thursday's trading was choppy from the start when Vermont Sen. James M. 
Jeffords announced, as expected, that he is leaving the Republican Party to 
become an independent, ending GOP control of the Senate. 
"Everyone is sort of going through their own analysis of what effect the 
change in the legislature is going to have for various sectors in the 
market," said Charles White, portfolio manager for Avatar Associates. 
But analysts said the market's fluctuation mostly came amid unease over the 
health of the economy. Investors were trading cautiously ahead of a speech 
Federal Reserve Chairman Alan Greenspan was scheduled to deliver Thursday 
night before the Economic Club of New York. 
"The next quarter or two are going to be weak," White said. "We already know 
that. What we want to hear from the Fed chairman tonight is that the fourth 
quarter is going to bring recovery. "The reason we have been rallying 
[recently] is on the hopes and dreams of the fourth quarter." 
Adding to investors' nervousness about the economy were weak housing and 
employment news. The Commerce Department reported that new-home sales posted 
their largest decline in four years in April as rising layoffs made Americans 
feel less secure about making big-ticket purchases. 
And the Labor Department said new claims for state unemployment insurance 
rose more sharply last week than analysts expected. 
It was more difficult to gauge precisely how Jeffords' move was affecting 
Wall Street, where some profit taking had been expected following the 
market's big run-up since early last month. Stocks have advanced primarily 
because of the five interest rate cuts by the Fed this year. 
The Dow has jumped 1,732.94 points, an 18.5% increase, from its March low of 
9,389.48. Nasdaq has gained 643.22, or 39%, from its April 4 low of 1,638.80. 
The market can't be expected to sustain such upward momentum as long as 
investors have reason to worry about the economy, said Alan Ackerman, 
executive vice president of Fahnestock & Co. 
"The averages moved too far too fast without any real strong earnings 
development," Ackerman said. "The market has overreacted to the cumulative 
Fed rate cuts." 
The economy and politics aside, stocks still managed to post widespread 
gains. Microsoft rose $2.02 to $71.72, and General Motors advanced $1.41 to 
$56.59. Home Depot moved up 83 cents to $53.45, and Intel rose 41 cents to 
$29.21. 
However, analysts said politics pulled down pharmaceutical and energy shares, 
sectors that typically benefit from a Republican Congress. Merck dropped 
$1.50 to $72.50 and Enron fell $1.19 to $54.16. 
The slowing economy hurt makers of semiconductor equipment, which reported 
late Tuesday that customer orders for April dropped 41% from March. Triquint 
Semiconductor plunged $4.22 to $20.59. 
Advancing issues traded about evenly with decliners on the New York Stock 
Exchange, where consolidated volume was slightly below Wednesday's trading 
pace. 
* 
Market Roundup, C6, C7


GRAPHIC-CHART: Daily Diary: Thursday, May 24, 2001; 

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



Report on Business Magazine
DIGITAL ECONOMY
Dot-coms may be down and out, but the internet is still transforming 
corporations
DON TAPSCOTT

05/25/2001
The Globe and Mail
Metro
27
"All material Copyright (c) Bell Globemedia Publishing Inc. and its 
licensors. All rights reserved."

The pendulum of irrational exuberance of 18 to 36 months ago is swinging back 
to irrational orthodoxy. Typical is Harvard competitiveness guru Michael 
Porter's article in the March issue of Harvard Business Review, "Strategy and 
the Internet," in which he joins the chorus exhorting business leaders to 
"return to fundamentals" and abandon misguided thoughts of new business 
models or e-business strategies. 
Porter's line of reasoning is this: The internet arrived. Many companies 
attempted to build businesses based on the net. They were called dot-coms. 
Most crashed and burned. Therefore, building a company based on the net is 
foolhardy.
Porter asserts that "the experiences companies have had with the internet 
thus far must be largely discounted and that many of the lessons learned must 
be forgotten." Success in today's economy "does not require a radically new 
approach." Companies should stick to their time-tested processes, using the 
net as a "complement to traditional ways of competing." 
Porter divides the world into two camps: the dot-com zealots and the 
traditionalists like him. The former raved about web site stickiness and 
first-mover advantage, while the latter support concepts such as value 
creation, differentiation and profitability. And we can all see who won. 
Framed this way, much of Porter's reasoning seems rock solid. After all, who 
can defend the dot-com recklessness of 1999 and early 2000? Our grandchildren 
will marvel at the era of insta-billionaires and IPO frenzy. But even after a 
3,000-point Nasdaq plunge, must we inescapably conclude, as Porter argues, 
that the internet is more or less inconsequential? 
The answer is, no. Porter's analysis falls short for two key reasons. First, 
he grossly underestimates what the internet is and where it is headed. 
Second, he doesn't understand its impact on the nature of the firm. 
On the first point, Porter maintains the net is just "the latest stage in the 
ongoing evolution of information technology." Porter makes the all-too-common 
mistake in assuming that today's internet--a network connecting desktop 
computers--is basically the same as tomorrow's. 
This, of course, is nonsense. The net continues to soar in ubiquity, 
bandwidth and function. More than one billion people will be on-line by 2005. 
It is the means not only by which computers will connect, but the mechanism 
by which individuals and organizations will collaborate, exchange money and 
conduct transactions. Mobile computing devices, broadband access, wireless 
networks, and computing power embedded in everything from refrigerators to 
automobiles are converging into a global network. All other communications 
technologies, such as telephone, radio and television, are being sucked into 
the net's maw. 
The internet of tomorrow will be as dramatic a change from the internet of 
today as today's internet is from the primitive, unconnected, proprietary 
computing networks of yesterday. 
This leads to Porter's second major error. He fails to appreciate that this 
complex and ever-expanding communications medium will precipitate deep and 
profound changes to the structures of successful businesses. 
The 20th-century corporation did everything-it was vertically integrated. 
This model worked best because the costs and difficulties of collaborating 
with partners outside the firm were greater than performing such activities 
inside the corporate walls. 
But the digital economy is bringing forward myriad new models-fluid 
congregations of businesses, sometimes tightly structured, sometimes 
amorphous-that use the net to create value for customers in unprecedented 
ways. These new models are possible because the net smashes the costs of 
partnering. Companies can now focus on their core capabilities and partner to 
do the rest. When done properly, such business webs create better and less 
costly products and services than the old corporation. 
Established businesses such as Enron, Citibank, American Airlines, Nortel, 
Schwab and many product divisions of GE are now transforming themselves by 
partnering in areas that were previously unthinkable. Boeing CEO Phil Condit 
calls his company a systems integrator, not an aircraft manufacturer. IBM is 
a computer company that doesn't make its computers-its partner network does. 
Newer companies based on the internet, such as eBay, Travelocity and E*Trade, 
are competing well despite volatility in their stock prices. Napster is 
causing chaos in the music industry and forcing every company to rethink its 
value. Linux and the open-source movement pose a huge threat to Microsoft. 
And this is just the beginning. 
Yet Porter continues to champion the old, vertically integrated model, and 
his HBR article criticizes corporations for partnering. But we can already 
see that the traditional model is an increasingly less effective vehicle. It 
is akin to entering a Formula One race with a golf cart. No matter how 
well-built and skillfully driven, it will never win. 
Don Tapscott is chair of itemus (www.itemus.com) and co-author of Digital 
Capital. He can be reached at dtapscott@itemus.com

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


India Enron Panel Lacks Authority to Solve Dispute, Expert Says
2001-05-25 07:16 (New York)

India Enron Panel Lacks Authority to Solve Dispute, Expert Says

     Mumbai, May 25 (Bloomberg) -- Indian negotiators lack the
authority to solve a dispute that has shut down Enron Corp.'s $3
billion power plant, India's single biggest foreign investment,
said a former member of the negotiating committee.
     The negotiators will meet Enron officials on Tuesday next
week, though any proposals made will not be binding on either
Dabhol Power Co., 65 percent owned by Enron, and the Maharashtra
State Electricity Board, the official said. Maharashtra, Dabhol's
sole customer, has refused to pay some of its power bills.
     ``Where is the guarantee Enron and the government will accept
what the committee recommends,'' said R.K. Pachauri, director-
general at the Tata Energy Research Institute, a research
organization. Pachauri said he quit the committee because it was
being asked to renegotiate the project, when it was set up to
solve the payment dispute.
     Maharashtra yesterday served Dabhol notice canceling the
power purchase contract, six days after Dabhol gave the board
notice it was set to pull out of the project in six months.
     The board has refused to pay Dabhol 3 billion rupees for
power supplied in December and January, saying the bills should
reflect a 4 billion rupee penalty it imposed on the company Jan.
28 for failing to supply power at full capacity.

                            Meeting

     Other India officials said the two parties can't afford not
to negotiate as there is too much at stake.
     Mahrashtra and Dabhol serving each other notices is ``simply
legal maneuvering,'' said Kirit Parikh, an economist on the prime
minister's economic advisory council.
     ``It won't affect the process of finding a solution because
``the ground reality is neither Enron nor Maharashtra can afford
not to find a compromise'' to the dispute, Parikh said.
     The government needs a solution as it could be left footing
the bill.
     India's federal and state governments, which have guaranteed
the board's payments for power and some of the loans to help fund
the project, may have to pay Dabhol more than 170 billion rupees
($3.6 billion) if it terminates the 2,184 megawatt power project.
     ``We are going back to Maharashtra tomorrow to work on the
problem.'' Dabhol managing director Wade Cline said. Cline was in
New Delhi to meet A. K. Basu, secretary to the ministry of power.




India's Negotiator Gokak on Dispute With Enron Unit: Comment
2001-05-25 05:35 (New York)


     Mumbai, May 25 (Bloomberg) -- A.V. Gokak, the Indian federal
government's nominee in discussions with Enron Corp.'s Dabhol
Power Co. on a dispute over dues with the western province of
Maharashtra, on the next meeting of the negotiating panel.

     ``According to me, the committee is still there. Till the
committee is formally dissolved we exist.''

     Dabhol Power said yesterday the Maharashtra State Electricity
Board, its sole customer, served notice that it's canceling their
seven-year-old power purchase contract.

     ``I have been told even today that the meeting is as
scheduled on May 29 and I will be there to attend it.
     ``There have been any number of instances where such
developments take place and the committee continues its
negotiation.''



India Govt: State Bd To Likely Pay Dabhol Apr Elec Bill

05/25/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- India's Maharashtra State Electricity Board is likely 
to pay its electricity bill for April to U.S. energy major Enron Corp.'s 
(ENE) Indian unit, Dabhol Power Co., a senior Power Ministry official said 
Friday. 
"My understanding is that MSEB will pay up its bill for April to Dabhol Power 
under protest," the official said without elaborating.
Jimmy Mogal, Enron India's spokesman declined to comment on the size of the 
April bill. MSEB Chairman Vinay Bansal wasn't available for comment. 
Media reports have speculated that the bill was around 1.37 billion Indian 
rupees ($1=INR46.95). 
Dabhol has come under fire because of the relatively high cost of its power. 
Critics object to Dabhol charging INR7.1 rupees a kilowatt-hour, compared 
with INR1.5/KWh charged by other suppliers. 
The $3 billion Dabhol project has been mired in financial disputes since its 
main customer, the Maharashtra State Electricity Board, has failed to pay 
several of its bills. 
DPC confirmed Thursday that the MSEB has declared its contract to purchase 
power from the US$3 billion Dabhol plant null and void, but it said the move 
by its client was without merit. 

-By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; 
himendra.kumar@dowjones.com

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


PGE sees gains despite power costs

05/25/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

PORTLAND, Ore. (AP) - Power prices may have hit an all-time high, but 
Portland General Electric showed record revenues in the first part of the 
2001. 
With earnings of $43 million for the quarter ended March 31, a 10 percent 
increase from year-ago levels, PGE clearly has stepped-up sales activity as 
wholesale electricity prices have surged.
Utility officials have told state regulators that if the good times continue, 
they will share some of the benefits with customers through credits or 
refunds. 
But the cost of buying electricity for 728,000 Oregon customers has climbed 
dramatically, and the volatility casts doubt on the possibility of refunds 
for PGE customers this fall. 
PGE's quarterly report showed revenue from wholesale power sales rose to $480 
million, three times the posting for the same period a year earlier. 
"We were able to do fairly well," said James Piro, chief financial officer 
for PGE. 
But costs also climbed dramatically. Because PGE's power plants produce less 
than half the electricity needed to serve the utility's residential and 
business customers, it buys power on the same high-priced markets into which 
it sells. It also buys natural gas to fuel some of its generators - an 
increasingly expensive commodity. 
The costs of electricity and fuel totaled $582 million for the quarter ended 
March 31, almost twice PGE's tab for the same period of 2000. 
PGE's success on the wholesale market involved luck as well as trading savvy. 
The utility anticipated a cold winter, along with the increase in demand, and 
bought an extra cushion of electricity supplies. When the season proved 
unusually mild, PGE found itself with a surplus to sell. Because prices were 
on the rise, PGE benefited from subsequent trades. 
Dry weather, however, is cutting into PGE's hydropower resources, and 
wholesale prices are easing slightly. These conditions could crimp PGE's 
ability to continue to profit from power sales and hold down earnings. 
On the other hand, if a heat wave sweeps through the region and PGE still has 
extra power to sell outside Oregon - to the Southwest, for example - sales 
revenue could surge as prices rise. 
Under a plan approved by regulators to help deal with volatile electricity 
markets, PGE will track all power costs incurred from January through 
September. If costs exceed certain levels, a rate increase will result. If 
profits exceed certain thresholds, refunds will occur. 
Whether increase or refund, regulatory review is required.

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


India: Pachauri rejects Godbole's remarks

05/25/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

NEW DELHI, May 24. DR R.K. Pachauri, a member of the Review Committee set up 
by the Maharashtra Government on the Dabhol controversy, has voiced his 
concern on a fellow member's recent statement in a leading national daily on 
the issue. 
In a press statement released here, Dr Pachauri has contended Mr Godbole's 
statement that, "The committee has also suggested that the judicial enquiry, 
headed by a service or a retired Supreme Court judge should be initiated as 
soon as possible."
According to Dr Pachauri, this statement needs to be seen in the context of 
the fact that three out of the five members in the committee recorded their 
strong dissent with this view. "Can the view of two members of the committee, 
clearly a minority, be read as 'the committee has also suggested...'," Dr 
Pachauri has argued. 
According to him, "Can a judicial enquiry really force Enron back to the 
negotiating table?" 
In the press statement, he has thrown up several other questions -Can the 
Maharashtra Government renegotiate a deal with Enron if a judicial enquiry is 
in progress, and would the public accept any such deal till the enquiry is 
over? And till it is over, the Maharashtra Government would continue to run 
up huge bills even as the State is unable to absorb the power generated by 
Dabhol. 
Our Bureau

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


India: India, Australia sign pact on energy, mining

05/25/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

NEW DELHI, May 24. INDIA and Australia have signed a protocol for 
strengthening bilateral cooperation in the areas of mining, power, 
non-conventional energy sources and coal. The protocol followed two days of 
deliberations by the Indo-Australia Joint Working Group on Energy and 
Minerals set up in 1999. 
After the signing ceremony here on Thursday, the leader of the Australian 
delegation, Mr Tim Mackey, Deputy Chief Executive Officer, Department of 
Industry, Science and Resources, said that a lot of investments from 
Australia may flow into India following the recent policy changes initiated 
by the Indian Government.
There are potential opportunities for enhanced cooperation between the 
private sectors of the two countries, he said and added that there will be at 
least three joint venture projects coming up in the power sector, some in LNG 
and gas pipelines and a few technology transfers. 
In view of the ongoing controversy about Enron Corporation's Dabhol power 
project, Mr Mackey said that Australian companies are not bothered with the 
controversy and it will not have any impact on their entry into the Indian 
power sector. 
He said that there are three proposals for supplying of liquefied natural gas 
(LNG) to potential terminals in the eastern coast of India involving 
investments worth $3 billion. 
Australian firm Woodside, he said, is a partner in Dakshin Bharat Energy 
Consortium Ltd selected by Tamil Nadu Industrial Development Corporation 
(TIDCO) to establish an LNG terminal at Ennore. 
Another Australian firm - Broken Hill Proprietaries (BHP) - to set up an LNG 
terminal in the eastern coast for which the spot is yet to be identified. BHP 
also has plans to enter the power sector in India. 
The head of the Indian team, Dr Aruna Bagchee, Joint Secretary, Ministry of 
Mines, said that this second meeting of the joint working group has yielded 
very positive results in terms of enhancing bilateral ties between the two 
countries and will go a long way in promoting Australian business community 
to come and explore the opportunities thrown open in India's mining sector. 
Australia has agreed to assist in enhancing the capacities of Indian mining 
regulatory and developmental oriental organisations like the Indian Bureau of 
Mines and the Geological Survey of India to strengthen customer and 
user-friendly basic data. 
The next meeting of the joint working committee will be held in Sydney next 
year. 
Our Bureau

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



India: MSEB slaps notice on DPC

05/25/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

MUMBAI, May 24. THE Maharashtra State Electricity Board (MSEB) today issued a 
legal notice to Enron under the Indian Contract Act, claiming the power 
purchase agreement (PPA) with Dabhol Power Company (DPC) as "void". 
In the notice, MSEB has said it had been forced to "rescind" the PPA with DPC 
and is "avoiding" the contract. DPC had "misrepresented material facts" while 
drawing up the PPA and hence it is "no more bound by the contract", it said.
The notice, which has been served under Section 19 of the Indian Contract 
Act, claims misrepresentation in performance of the plant as per clauses 6 
and 7 under schedule 6 of the PPA. 
A senior MSEB official said, "we were expecting a certain level of 
performance from the plant. The contract was entered into as per assurance 
about a certain level of plant performance from DPC, which we found to be a 
misrepresentation. We are now exercising the option under Indian law of 
avoiding the contract." 
"MSEB does not have the right to rescind the PPA as attempted in their 
letter," DPC said in a statement issued here. 
" It would appear that MSEB's notice is a deliberate attempt to further delay 
the resolution of difficult issues confronting MSEB. The board has chosen an 
obscure and improper justification for attempting to rescind a contract that, 
in any event, was signed more than seven years ago. In any case, this basis 
and many of MSEB's related claims are already subject of a pending 
arbitration initiated by DPC." 
According to the MSEB official, although DPC is free to contest the notice, 
they can do so only in Indian courts. 
The relevant clauses of the PPA relate to making power available at full 
capacity within three hours. MSEB has been claiming that DPC has not been 
generating power at full capacity and had slapped three penalties of Rs 400 
crore each. It had also sought that its bills be adjusted against the amount. 
The issue had led to protracted quarrels between DPC and MSEB which ended up 
in conciliation, arbitration and now, finally, the termination notices. 
According to State Government sources, Enron had an inkling of what was 
coming. They also hinted that it could have prompted DPC to serve the 
preliminary termination notice (PTN). Banking sources too said the company 
had "feared" that MSEB may serve a termination notice. 
The board official said MSEB would henceforth not be under any obligation to 
buy power from DPC. "But since the plant cannot be shut down, we have offered 
to purchase power as per the PPA. Of course, they too are not obligated to 
supply power," he said. 
The legal notice is, however, not likely to affect the renegotiation. 
Dr Madhav Godbole, Chairman of the renegotiation panel, told Business Line 
that the legal notice would not affect the normal course of the proceedings. 
"The two processes would continue alongside," Dr Godbole said. 
* * * 
Centre awaits negotiations 
NEW DELHI, May 24. THE Centre is willing to consider any worthwhile idea 
emerging out of the negotiating committee for the settlement of the dispute 
between Dabhol Power and MSEB, according to the Union Power Minister, Mr 
Suresh Prabhu. 
An official release issued today states that any such proposal has to be 
acceptable to both the MSEB as well as the DPC. 
Industry sources, however, point out that the Centre's stated position is not 
likely to provide a breakthrough since the Centre has endorsed a 
consensus-driven approach with its involvement restricted to the 
participation of its member Mr A.V. Gokak in the negotiating committee. 
A meeting between Dabhol Power Company and Ministry of Power is slated to be 
held on Friday following DPC's request to the meet the Power Secretary, Mr 
A.K. Basu. 
Our Bureau

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


AUSTRALIAN FIRMS EYE INDIAN POWER AND MINING SECTOR

05/25/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, May 25 Asia Pulse - The Enron controversy notwithstanding, the 
Australian transnational companies plan to invest US$3 billion in the Indian 
energy sector over the coming years. 
This was announced at the end of two-day meeting of India-Australia Joint 
Working Group on Mines and Energy, here.
"Our companies plan to invest $3 billion in the energy sector over the next 
few years", Tim Mckey, Head of the Australian delegation said here. 
On the mining front Mckey announced that Australian firms were interested in 
investing in development of science and technology for cleaning up mines. 
Indian delegation headed by Aruna Bagchee, the Joint Secretary (Mines), 
briefed the Australian counterparts about the recent changes in the 
investment policies aimed at atrracting foreign direct investment. 
The meeting also discussed possibilities of cooperation in other areas like 
non conventional energy sources. 
The working group has identified specific proposals for follow up action 
including a projects for mineral processing and benefication of minerals. 
(PTI) 25-05 1051

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


Bechtels out if dues not paid by May 31
Anto T Joseph

05/25/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

FRUSTRATED by a series of payment defaults, US-based Bechtel has threatened 
the Enron-promoted Dabhol Power Company that it will withdraw from the 
controversial project by May 31, if its dues are not paid. 
In a letter written to DPC, Bechtel which is the EPC contractor for the 2,184 
mega-watt project and also a minority stake holder (10 per cent) in DPC has 
said it was stopping civil work at the site in coastal Maharashtra.
Sources from financial institutions said that the unit I of the projects 
phase-II, which was slated to be operational commercially by June, will not 
be ready by then, after Bechtel stopped work at the site. Around 10 to 15 per 
cent of the work is yet to be completed, sources added. 
Both Bechtel and DPC refused to comment on these developments. FI sources 
said the issue will be discussed threadbare at the meeting in New Delhi on 
Friday called by the Centre. 
While Bechtel issued the May 31 deadline to DPC to make its outstanding 
payments, lenders have refused to bail out the project with any further debt 
disbursements. 
The preliminary termination notice issued by the cash-starved DPC has 
compounded the matter, according to FI sources. 
The ongoing payment impasse, involving MSEB and the state and central 
governments, has resulted in delays in payments to vendors for the second 
phase of the power project. 
On May 2, Aric Oakf, project director of Bechtel India, had said his company 
was concerned about the payment defaults. He had said that the company was 
exploring various options as per the EPC contract. 
On May 3, the Economic Times had reported that Bechtel was considering 
pulling out of the project. Though there were defaults and delays in payment, 
the company had continued with the construction work at the site. 
Sources said DPC was not in a position to change the situation, unless 
lenders soften their stance and start funds disbursal. The lenders have held 
back around $250 million payment out of the committed debt, after the project 
ran into a series of controversies. 
Bechtel, one of the largest engineering construction firms in the world, has 
set up more than 450 power plants, installed more than 6,800 kilometers of 
high voltage transmission lines, and is the leading builder of independent 
power projects worldwide.


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


Govt in a fix over asking NTPC to take over Dabhol
Santosh Tiwary & P Vaidyanathan Iyer NEW DELHI

05/25/2001
Business Standard
2
Copyright (c) Business Standard

The possibility of National Thermal Power Corporation (NTPC) being roped in 
to keep the 2,184 mw Dabhol power project running has been discussed at the 
highest level in the government. Enron can sell its 65 per cent stake in the 
$1 billion (Rs 4,700 crore) equity of DPC even during the six month period 
before the lapse of the preliminary termination notice, according to its PPA 
with Maharashtra State Electricity Board. The sale however will have to be 
routed through the MSEB.
The government however faces a major dilemma over asking NTPC to take over 
the project given the political ramifications of the move which could be 
construed by other states as direct bailing out of Maharashtra, sources said. 
Given the composition of the Vajpayee-led NDA government, any move towards 
taking over Dabhol through NTPC would immediately invite the ire of other 
strong allies including Andhra Pradesh chief minister N Chandrababu Naidu. 
Several IPPs in Andhra Pradesh and other states are still awaiting financial 
closure. Sources said though NTPC's involvement in DPC at present was not 
advisable, they noted that the Rs 19,220-crore public sector Navratna had all 
the resources and expertise to chip in if Enron exited. With NTPC having 
piled up huge reserves of over Rs 15,000 crore, shelling out $ 650 million 
(Rs 3,055 crore) to acquire Enron's 65 per cent stake will not be a big deal 
if the Centre gives a green signal. Besides, NTPC also has expertise in 
handling dual-fuel projects based on gas and naphtha. They said NTPC had 
seven such gas/naphtha-based projects including Anta, Auriaya, Kawas and 
Gandhar. NTPC officials however declined to comment on this issue. The 
possibility of a private player picking up Enron's equity in the $ 3 billion 
power project has also not been ruled out. Sources said given the fact that 
Madhav Godbole committee recommended keeping the project alive, MSEB would 
not pose any hurdle in Enron transfering its equity to any serious Indian 
private sector company.

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


MSEB rescinds Dabhol PPA
Our Regional Bureau MUMBAI

05/25/2001
Business Standard
1
Copyright (c) Business Standard

The Maharashtra State Electricity Board today rescinded the power purchase 
agreement (PPA) it had entered into with the Dabhol Power Company (DPC) on 
May 23, 1993, in response to the preliminary termination notice (PTN) issued 
to it by the power major on Saturday. The notice issued to Enron India 
managing director C Wade Kline (dated May 23, 2001) by MSEB chairman Vinay 
Bansal said: "We are now convinced that your conduct is not bona fide and as 
such we are constrained to rescind the PPA with immediate effect." The MSEB 
will file a case tomorrow with the state electricity regulatory commission.
DPC, in a release issued here, confirmed having received the termination 
notice and added: "In any case, many of MSEB's related claims are already the 
subject of a pending arbitration initiated by DPC. Our arbitration notice of 
April 12, 2001, should serve as evidence of our confidence in DPC's legal 
position and we expect that the issues in arbitration will be resolved to our 
satisfaction." The MSEB notice for its part noted: "On January 28, 2001, to 
meet our urgent requirement we instructed you to deliver your fully declared 
baseload of 657 mw within three hours. You, however, failed to deliver the 
energy required and committed a breach of the PPA. Similar defaults occurred 
on February 13 and March 29, 2001." It went on to state: "In the letter 
addressed to us after January 28, you (DPC) have admitted that your power 
plant does not conform to the PPA and is not capable of meeting the 
contractual terms in respect of crucial operating characteristics and dynamic 
parameters." MSEB has thus justified the termination of the PPA and pointed 
out to DPC that in the above mentioned circumstance it was advised of the PPA 
being void at its (MSEB's) option. DPC has been blamed by the state 
electricity board of intentionally adopting a non-cooperative attitude and 
instead embarking upon a campaign to create confusion and obfuscate issues.

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


USA: Business school grads rediscover energy business.
By Carolyn Koo

05/24/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, May 24 (Reuters) - Let's face it. Getting a job in the staid energy 
business hasn't exactly been considered the pinnacle of success for ambitious 
business school graduates. 
Maybe it should be, since a national energy crisis makes conditions ripe for 
a resurgence of interest in the industry from both newly minted MBAs and 
experienced executives.
At the very least, power companies won't soon go out of business given record 
profits for many in the last year at a time when dot-coms and tech companies 
are struggling or failing. 
"The industry is seen as a growth industry with a lot of happenings, and it's 
very newsy," said Randy Wheeless, a spokesman for Duke Energy Corp. , a 
traditional North Carolina utility which now trades power all over the 
country. 
After all, with the advent of deregulation, more financially-oriented jobs 
are available. Also, students are more aware of energy issues including 
blackouts in California, which have featured prominently in the headlines. 
And just last week, President George W. Bush, himself a former oilman, 
unveiled a new national energy plan to combat the crisis. 
That plan calls for the use of cleaner-burning coal and possibly nuclear 
power as well as more traditional fuels like natural gas and could open up 
brand-new avenues of employment in the business. 
Duke's Wheeless noted that the utility has seen more interest in its openings 
and, for that reason, has stepped up its recruiting at college campuses. 
That interest stems from factors like "the growth of the industry, which 
moves at a very dynamic and aggressive pace," said James Peters, a spokesman 
for Mirant Corp. , which markets electricity and natural gas and owns power 
plants from North America to Asia. 
"The hours are better than investment banking and you get the same kind of 
money," he added. 
Indeed, the power industry has undergone a sea change. Because of 
deregulation, "there are new management opportunities and new trading 
opportunities in the electricity and natural gas industries," explained 
Stephen Brown, director of energy economics at the Federal Reserve Bank of 
Dallas. 
Deregulation enabled utilities to engage in the profitable business of 
selling wholesale power across borders, opening the way for new opportunities 
that cater specifically to the strengths of people with financial 
backgrounds. 
"The new merchant energy companies have built real dynamic cultures with a 
commercial orientation and a market focus," said Ron Lumbra, an executive 
director who specializes in the merchant energy field at recruitment firm 
Russell Reynolds. 
"It's a business where there's a huge component in marketing, trading and 
structured transactions," he added. 
The MBA curriculum, with its emphasis on finance and risk management, teaches 
skills that are transferable to the new needs of energy companies. 
"With their skill set, they can go into a number of different areas, like 
strategic development, risk management, trading and anything on the 
commercial side of the business," noted Kim Pollard, a recruiter at Richard, 
Wayne and Roberts. 
This new emphasis means that energy companies are beginning to look like 
high-tech companies. "There's a real demand for talent," Lumbra said. "And 
these companies can compete with any company in any industry." 
A prime example of a new energy company is Enron Corp. , which trades 
everything from electricity to broadband to weather derivatives. Other names 
are Dynegy Inc. ; El Paso Corp. ; and Duke Energy. Mirant, for instance, 
recruits students from Duke University, University of Chicago and Rice 
University, among others. 
Exelon Corp. also stepped up its recruiting efforts three years ago, 
according to Caryl Sabine, a consultant at Exelon Power Team, Exelon's 
wholesale trading and marketing organization. 
During the recruiting season in September, Exelon will target business 
schools at Harvard, the Wharton School of the University of Pennsylvania, the 
University of Chicago, Cornell University and Carnegie Mellon University, 
among others. 
New business school graduates aren't the only ones considering a career in 
the energy sector either. 
Lumbra pointed out that at more senior levels there's also "much more 
willingness to discuss a move to the energy business," from a cross-section 
of other industries, including professional services, technology companies, 
industrial companies and financial services firms. 
That's partly because of the attention commanded by the energy crisis, which 
has included rolling blackouts in California where deregulation failed. With 
millions and even billions of dollars at stake in markets like this, 
companies are seeking seasoned executives. 
"Energy is not so much a take-for-granted kind of service anymore, where you 
just flip a switch or pull up to the gas pump," Lumbra said.

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


State utility cancels agreement Enron power purchase pact
By RAMOLA TALWAR BADAM
Associated Press Writer

05/24/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

BOMBAY, India (AP) - A state-run utility notified the Indian subsidiary of 
U.S. power giant Enron Corp. on Thursday that it was canceling an agreement 
to buy power from the company and accused the power generator of 
misrepresenting its capacity to produce electricity. 
The notification comes four days after Dabhol Power Co., Enron's Indian unit, 
issued a preliminary notice to the Maharashtra State Electricity Board that 
it would stop selling electricity if the government company continued to 
default on payments.
Houston-based Enron confirmed it had received MSEB's notice, but said the 
utility had no legal right to cancel the purchase agreement. 
A top MSEB official told The Associated Press that the plant has failed in 
some instances to produce required power within the time frame stipulated in 
the 1995 agreement that details the purchase of power from Dabhol. 
"Over the last two years it has been established that the plant cannot 
achieve this, so the assertions made by Dabhol Power Company earlier were in 
the nature of misrepresentation," the official said. 
Controversy over the six-year-old power purchase agreement has affected the 
$3 billion project, the largest foreign investment ever in India, that is 
being set up in Dabhol, 210 miles south of Bombay. 
Indian politicians argue that Maharashtra state cannot afford the tariff of 
the naphtha-based power plant and have called for renegotiating the purchase 
agreement. 
While Enron charges MSEB with defaulting on overdue December and January 
bills of $48 million, MSEB says this should be offset by an $85.31 million 
fine it levied on Enron for not being able to supply power. 
Representatives of the federal and state government and the power utility are 
currently engaged in talks with Enron officials as part of a six-month 
reconciliation process. 
Enron described MSEB's notification as a "deliberate attempt" to delay 
resolution of the dispute. 
"MSEB has chosen an obscure and improper justification for attempting to 
rescind the contract," said Dabhol spokesman Jimmy Mogal in a statement. 
"It is clear that MSEB does not have the right to rescind the power purchase 
agreement as attempted in their letter."

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


El Paso's Chairman to Testify in Gas-Price Hearing (Update1)
2001-05-24 20:39 (New York)

El Paso's Chairman to Testify in Gas-Price Hearing (Update1)

     (Adds hearing details from 12th paragraph.)

     Washington, May 24 (Bloomberg) -- El Paso Corp. Chairman
William Wise agreed to testify in a federal hearing after the
judge angrily accused another company executive of dodging
questions on whether El Paso officials conspired to manipulate
California natural-gas prices.
     Wise wasn't scheduled to testify in the Federal Energy
Regulatory Commission hearing, and El Paso volunteered Wise's
testimony after the judge threatened to subpoena him.
     Judge Curtis Wagner lashed out at Executive Vice President
Ralph Eads, also president of El Paso's merchant energy group,
accusing Eads of avoiding the question of whether he sought Wise's
permission to enter into a contract that plaintiffs say was meant
to drive up California gas prices.
     ``I'm just appalled that you're trying to pull this over my
head,'' Wagner said. ``If I have to subpoena (Wise) ... I am
perfectly willing to do it.''
     The judge is examining charges that El Paso's pipeline unit,
El Paso Natural Gas, sold more than a billion cubic feet of
pipeline capacity into California to its merchant energy
subsidiary, which then withheld gas shipments to drive up prices.
    Eads previously testified that he and other merchant energy
executives met with Wise to tell him about the imminent contract.
Wise didn't want to hear too many details because of FERC
prohibitions against regulated and unregulated affiliates of the
same company unfairly colluding on contracts, Eads said.
     The California Public Utility Commission, PG&E Corp.'s
Pacific Gas & Electric Co. and Edison International's subsidiary
Southern California Edison Co. brought the charges against El
Paso.
     The FERC is looking into why the average price of gas has
jumped almost fivefold in California this year compared to a year
earlier, and why prices there are much higher than elsewhere in
the country. Gas is used to fuel many power plants, and the
average price of electricity at the California-Oregon border has
soared more than ninefold this year.

                      Valentine's Day Meeting

     Wagner was particularly concerned about an affidavit by Mark
Mitchell, a former senior vice president with the merchant energy
unit now in charge of South American trading for the company.
Mitchell said the Feb. 14, 2000 meeting with Wise was ``prepared
in an effort to solicit endorsement of Merchant's participation in
the auction'' for the pipeline capacity.
     ``It seems to me Mr. Wise put his blessing on this,'' Wagner
told Eads. After further questioning, Wagner stated: ``Mr. Wise
did approve it.''
     ``Yes,'' Eads said.
     Wise is expected to testify tomorrow afternoon, and the trial
is expected to continue into next week.
     Wagner also released to the public a single comment from a
document El Paso officials contend must remain sealed because it
contains sensitive information about the company's business
practices.
     The line, from an April 14, 2000, memo to Wise, reads: ``We
will make money two ways: 1) increase the load factor, 2) widen
the basis spreads.''

                           Basis Spread

     California's regulators and utilities accuse El Paso of
withholding pipeline capacity to drive up the ``basis spread,''
the difference between the price of natural gas sold where it is
produced and the price at the California border. Later, after the
border price rose, the company increased shipping to take
advantage of the high price, they allege.
     According to the FERC, spot prices in California were around
$2.50 per thousand cubic feet during most of last year, similar to
the rest of the country. By December, prices had risen to between
$11.79 and $18.80 per thousand cubic feet, while in other regions
they ranged from $4 to $7.
     Eads testified that the line from the memo exonerates El Paso
because it shows the company's intent from the beginning to
increase gas shipments to California.
     El Paso thought increased gas supplies from Western Canada to
Chicago, imported on a new pipeline, would pull supplies away from
California, raising the basis spread and allowing more gas
shipments, Eads said. Instead, demand in California has taken gas
away from the new pipeline, he said.
     The material ``is meaningful in the sense that they actually
realized what they intended,'' Kevin Lipson, representing Southern
California Edison, said in an interview. ``They accomplished what
they set out to do.''
     Houston-based El Paso's shares fell $1.51 to $63.50. They
have declined 11 percent this year.