Utilities, Environmentalists, States to Discuss Clean-Air Legislation
The Wall Street Journal, 09/04/01
Power buyers in Northwest chase refunds
Houston Chronicle, 09/04/01
India: Hardly electrifying
Business Line (The Hindu), 09/04/01

Northwest U.S. Electricity Buyers Seek $2 Billion in Refunds
Bloomberg, 09/03/01

India: Oil giant seeks offshore expansion
BBC Monitoring, 09/03/01
QATAR: Qatar, Dolphin to sign final gas pact by early Oct.
Reuters English News Service, 09/03/01
INDIA PRESS: Enron's Troubles May Hit FDI - Ernst & Young
Dow Jones International News, 09/03/01
FOXES GUARDING THE HENHOUSE? CHENEY STONEWALLS ON ENERGY PLAN'S ORIGINS
South Florida Sun-Sentinel, 09/03/01
Texas Residents Targets in Ad Battle of Retail Electricity Providers
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas, 09/02/01
ENRON PROJECT REVIEW BEGINS AGENCIES, ACTIVISTS TO GIVE VIEWS ON CALYPSO PIPELINE
South Florida Sun-Sentinel, 09/02/01
State fights 6,000 firms' energy deals / Discount power contracts deemed unfair to consumers
The San Francisco Chronicle, 09/02/01
National Briefing Northwest: Oregon: Higher Electric Rate
The New York Times, 09/01/01
India: Let Enron cut equity value by 75 per cent: Panel
The Hindu, 09/01/01



Utilities, Environmentalists, States to Discuss Clean-Air Legislation
By John J. Fialka
Staff Reporter of The Wall Street Journal

09/04/2001
The Wall Street Journal
A4
(Copyright (c) 2001, Dow Jones & Company, Inc.)

WASHINGTON -- State officials, utility executives and leaders of the nation's environmental groups will hold two days of closed talks this month, negotiations that could pave the way for a significant revision of the Clean Air Act. 
The unusual talks, sponsored by the Senate Environment and Public Works Committee, will mark a step toward new legislation designed to cut deeply into industrial air emissions and, at the same time, give utilities the "regulatory certainty" they say they need to build a new generation of power plants.
The so-called stakeholder talks, starting next week, are designed to explore areas of agreement among the three groups. Staff members from some committees of Congress and federal agencies will observe the talks to get a taste for the complex politics and economics involved. Power plants produce about a third of the nation's air pollution. 
"This is a multitrillion-dollar issue," said Joel Bluestein, spokesman for a group of five utilities pushing for the revision. "How you sort all this out in a politically charged atmosphere will be very difficult. But it should be a lot of fun." The utilities include Enron Corp. and El Paso Energy Corp., of Houston, Calpine Corp., of San Jose, Calif., Trigen Energy Corp., of White Plains, N.Y., and NiSource Inc., of Merrillville, Ind. 
The "fun" will be closely watched by the Bush administration, which is writing a bill that aims to reduce levels of nitrogen oxides, sulfur dioxide and mercury. Democrats hope to add a fourth pollutant -- carbon dioxide, or CO2. Scientists believe man-made CO2, currently unregulated, is the largest cause of global warming. 
Adding CO2, "however, likely would produce a sharp political backlash, because there is no cost-effective way to remove it from the stacks of coal-fired power plants, which produce 52% of the nation's electricity. Requiring steep cuts in mercury, which could be expensive, also could cause utilities to switch from coal. Mercury is released into the air in the process of burning coal. 
"That will be a bright red flag for a lot of legislators, a lot of our states and a lot of our companies," said Quin Shae, the chief environmental expert for the Edison Electric Institute, which represents the nation's closely held utilities. Still, he added, the value of the talks "could be very high," because they could affect all EEI members. 
Under the Clean Air Act, pollutants are covered by 19 different programs, some of which overlap and some that have yet to phase in. A multipollutant approach would create one reduction target for a specified pollutant, leaving it up to companies how to meet that target by a specified date. 
In exchange for accepting deeper cuts for emissions, plant owners want a "period of certainty" during which they would be assured there would be no new regulations that would require substantially altering their power plants. 
This approach also could initiate a nationwide regime of emissions trading. If a company reduced its emissions of a pollutant below targeted levels, it would get emissions credits that could be sold to other companies, which may need the credits to help reach their own targets. It would give plant owners more flexibility than they have under current law, which gives state regulators the authority to choose what state-of-the art pollution-abatement equipment a given plant must use. 
The idea for the talks comes from Sen. Robert C. Smith, a New Hampshire Republican who used a similar session last year to broker a law to restore the Everglades. Sen. James M. Jeffords, the Vermont independent who is chairman of the committee, said in a statement that the approach will produce an "aggressive, four-pollutant bill" that he hopes the committee will pass by late October. 
State regulators are split on the merits of emissions trading, because it tends to reduce some of their powers. They also are split by geography. Because weather patterns move polluted air from west to east, northern East Coast states say they can't meet federal air-quality standards without tougher curbs on Midwest states, where there tend to be more coal-fired power plants.

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

Sept. 4, 2001
Houston Chronicle
Power buyers in Northwest chase refunds 
Enron and others targeted 
By LIZ SKINNER 
Bloomberg Business News 
WASHINGTON -- Electricity buyers in the Pacific Northwest will ask federal regulators this week to order $2 billion in refunds on purchases that they say were inflated by a surge in energy costs in neighboring California. 
An administrative law judge will begin hearings today on requests by Seattle, Tacoma and other Pacific Northwest communities that bought from suppliers such as Houston-based Enron Corp. The state of California already has said it was overcharged for $1.5 billion of electricity that it bought in the Northwest from December to June, government filings show. 
The cost of wholesale electricity soared in Western states this year during a shortage of power in California, where prices rose fourfold. The Federal Energy Regulatory Commission ordered hearings on the refund requests and asked the judge to make a recommendation by Sept. 24. 
"The market was dysfunctional," said Philip Chabot, an attorney representing Tacoma and other Pacific Northwest power buyers. "There may be a question of exactly what is just and reasonable, but it certainly doesn't mean you can charge whatever you can get." 
Enron and other power suppliers have said refunds aren't appropriate for the Pacific Northwest because the sales took place under the rules of the Western Systems Power Pool. 
"I don't think anybody has demonstrated any evidence that there was any market power exercised in the Western interconnect," said Mark Palmer, a spokesman for Enron. "The rules of the marketplace, of supply and demand, were at work, and we don't think any refunds are due." 
Palmer noted that Enron is both a seller and a buyer of power in the Pacific Northwest, and if there are refunds, Enron would most likely be eligible for them. 
This week's hearings on Northwest refunds are separate from a Sept. 14 hearing on a request by California to recover $8.9 billion on electricity purchases it made in its own markets. The judge in that case is slated to issue a recommendation to FERC Nov. 5. 
Commissioners in July ordered hearings after buyers and sellers could not agree on refunds after two weeks of talks. 
FERC Judge Carmen Cintron was in charge of documenting the complex sales that took place outside California's market from Dec. 25 through June 20. 
Government-owned power buyers are concerned that existing government controls on prices in the region may actually lead to supply shortages this winter. 
Wholesale prices have dropped dramatically since FERC set price limits for California on April 25. The commission expanded that price-control plan to include 10 other Western states in June. 
Because prices are limited by what it costs to generate power in California, the buyers fear prices will remain too low to encourage suppliers to sell electricity to the Northwest during the winter, when demand surges. 
The Northwest Power Planning Council, a four-state government agency, asked FERC last week to reduce the plan's dependence on California prices in determining controls for the Northwest. 
Soaring power prices in the West earlier this year have forced Puget Energy, parent of Washington's largest utility, and other power buyers to seek rate increases to offset the cost of buying the power. 
Puget has proposed raising customer bills so it can recover $84 million in costs this year. The plan, which would link customer electric bills to the utility's power costs, must be approved by the Washington Utilities and Transportation Committee. 
High power costs in California, where generators had to pay market-based rates to buy power and couldn't pass on the costs to customers, pushed the state's biggest utility, Pacific Gas & Electric Co., into bankruptcy. 
The California Assembly has proposed a financial rescue plan for the state's second-largest electric utility, Southern California Edison, which has accumulated $3.9 billion in debt. 


India: Hardly electrifying

09/04/2001
Business Line (The Hindu)
Fin. Times Info Ltd-Asia Africa Intel Wire. Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

With the spat between the Maharashtra Government and Enron getting nastier and Enron indicating its desire to quit the project, there appears little scope for reconciliation. Successive governments have tested various strategies on the power sector, hoping that one will click. But the State electricity boards still continue to be run on non-commercial lines and private generation projects face innumerable hurdles or get embroiled in controversies, says N. Ramakrishnan. 
"INDIA'S power sector is a leaking bucket; the holes deliberately crafted and the leaks carefully collected as economic rents by various stakeholders that control the system. The logical thing to do would be to fix the bucket rather than to persistently emphasise shortages of power and forever make exaggerated estimates of future demands for power. Most initiatives in the power sector (IPPs and mega power projects) are nothing but ways of pouring more water into the bucket so that the consistency and quantity of leaks are assured..."
Quite strong words these. But coming from no less a person than Mr Deepak S. Parekh, Chairman, Infrastructure Development Finance Corporation, they carry a lot of weight and best describe the state of the power sector as successive governments at the Centre grope with various strategies hoping that one will click. In the meantime, the State electricity boards (SEBs) continue to be run on non-commercial lines and their losses keep mounting. Private generation projects face innumerable hurdles while the high-profile among them get embroiled in controversies. 
Bottomline: The energy deficit increases. 
In the decade of reforming the power sector, there has been one constant: Enron. It dominated the headlines then and continues to do so now. 
And for all the wrong reasons. It was one of the earlier entrants into the power sector when generation was thrown open to private participation. 
Its naphtha-fired plant at Dabhol in Maharashtra was touted as the harbinger of foreign investment. The Dabhol project was also one of the eight fast- track projects that got the Centre's counter-guarantee. 
How the Centre could at all think it was in a position to stand guarantee for the SEBs is beyond comprehension. That only two of the eight fast-track projects have been completed while the third is under construction with the others nowhere near taking off tells the entire story. 
Now, the Enron-promoted Dabhol project is mired in controversies with no one wanting to own responsibility. The cycle appears to have come a full circle as far as the Enron project is concerned. It was signed when the Congress (I) was in power in Maharashtra, as also at the Centre; then reviewed by the Shiv Sena-BJP Government in Maharashtra and re-negotiated and signed again by it; and now the Congress (I)-NCP Government in Maharashtra is keen on scrapping it, with the BJP-led Government, of which the Shiv Sena is a member, in power in Delhi. 
With the spat between the Maharashtra Government and Enron getting nastier, there appears little scope for reconciliation. Enron, after the much-publicised visit of its chairman, Mr Kenneth Lay, also said it wants out. Mr Lay's meetings in Mumbai with those in the Government and the Shiv Sena leader, Mr Bal Thackeray, were not without their share of humour, if you could call it that. After his meeting with Mr Lay, the Shiv Sena supremo reportedly appealed to all concerned to keep the project beyond politics. This must go down as the biggest joke ever as it was the Shiv Sena-BJP combine that made political capital out of the original project, and by "re-negotiating" and signing a fresh power purchase agreement, landed the Maharashtra State Electricity Board, the Centre and the financial institutions in an even bigger mess. 
Then Mr Lay was reported as having threatened New Delhi with US sanctions if Enron did not get back the $1 billion it had invested in putting up the project. This naturally raised much hue and cry. And the next day Mr Lay, in a letter to the Prime Minister, Mr A. B. Vajpayee, denied any moves to seek sanctions. No other infrastructure project in the country could have attracted as much controversy as the Dabhol project did. It could also go down as one of the most politicised projects ever. The Dabhol project's fate has been raised at various fora, and visiting US Government officials as also consular representatives here have not lost any opportunity to highlight this. Their emphasis has always been that contracts are sacred and must be honoured. 
As the US Consul-General in Chennai, Mr Bernard Alter, pointed out at a recent seminar on infrastructure: "The sanctity of contracts is absolutely critical for attracting investment in infrastructure...The signing of a contract should reflect the end of negotiations not the beginning...No investor will want to commit his or her funds in an environment where deals are never really closed, where re-negotiations can begin almost immediately after signing a legally-binding contract. 
Failure to adhere to contractual obligations reverberates throughout the international financial community. The perception of unacceptable risk goes up among lenders each time a contract is abrogated or re-negotiated - raising the cost of funds and thereby hindering the flow of investment." 
This has quite been the story of reforms in the power sector and India's attempt to attract foreign direct investment in power generation so far. Any number of projects have been signed up, only to be held up by innumerable hurdles along the way. Take the case of the 250-MW lignite ST-CMS power project at Neyveli in Tamil Nadu. This was among the fast track projects to get Central counter-guarantee. It took ST-CMS a good seven years from the time of signing the MoU to achieving financial closure. The project is under construction and is expected to begin generation by November 2002. However, that does not mean that it has overcome all the hurdles. 
It must, however, be mentioned that the blame does not entirely lie with the SEBs, whose financial ill-health is often cited as the reason for the lack of progress in the power sector. That charge is definitely true to a large extent. But part of the blame must also lie with the independent power producers, some of whom have taken advantage of the lack of expertise among the SEBs to sign one-sided contracts. 
The IPPs lose no opportunity to underscore the need for transparency in the SEBs, but are hardly transparent when some of their actions come under public scrutiny. 
How else does one explain the Enron-promoted Dabhol Power Company's threat to sue the hapless Maharashtra State Electricity Board (MSEB) for libel and breach of confidentiality if the latter made public the Power Purchase Agreement. What does Enron have to hide? And, what is it afraid of? True, a confidentiality clause is attached to the PPA, but given the nature of the controversy and the charges made against it, one would have expected Enron to take the lead in making public the PPA. Till this happens, all those things that Enron dismisses as speculative - an exorbitant rate of return, which some in the industry say is in the region of 35 per cent; padding up of costs; spreading the fixed costs over the entire life of the PPA though the debt component would have been cleared much earlier; and lack of transparency in gas pricing - will continue to be cited as reasons for scrapping the project. 
Till recently, the MSEB was touted as the model for other electricity boards, be it in operating efficiency or its finances. However, the Enron project and the populism with regard to tariffs have exploded that myth. It is this propensity of the politicians to tinker with the tariffs of the electricity boards, when it should have essentially remained a commercial decision, that has led to the sorry state of affairs in the power sector. 
The Power Ministry has convened innumerable meetings, to set the power sector back on track. But with the States recalcitrant, nothing happens. 
This is evident from the widening gap between the cost of supply and the average tariff, and the decreasing percentage of recovery. 
The average cost of power, which was 42 paise per unit in 1980-81, increased to 109 paise in 1990-91, to 215 paise in 1996-97 and then to 304 paise in 2000-01. Meanwhile, the average tariff increased from 32 paise per unit in 1980-81 to 82 paise in 1990-91, to 165 paise in 1999-2000 and 212 paise in 2000-01. The percentage of recovery declined from 76.7 in 1996-97 to 69.8 in 2000-01. 
Despite agreeing to levy a minimum of 50 paise per unit on the agriculture sector, the average tariff for farm pumpsets has gone up from 21.2 paise per unit in 1996-97 to 28.48 paise in 2000-01, with a number of States, including the so- called progressive ones such as Tamil Nadu, still providing electricity free to farm connections. 
In this period, the commercial losses of the SEBs with subsidy have gone up by more than four times - from Rs 4,674.31 crore to Rs 20,220.50 crore, while the commercial losses without subsidy have increased from Rs 11,305 crore to Rs 26,013 crore. 
The transmission and distribution losses, which were 20.6 per cent in 1980-81, increased to 21.8 per cent in 1985-86 and to 23.3 per cent in 1989-90, dipping to 21.8 per cent in 1992-93. Since 1995-96, the T&D losses started rising again. The reforming States started reporting higher T&D losses after restructuring the SEBs; they were estimated at 25 per cent in 1998-99. 
The domestic and farm connections continue to be heavily subsidised, with electricity boards levying higher tariffs on industrial consumers. 
However, most States, especially those that have initiated reforms, have realised that industrial tariffs can no longer be raised indiscriminately to subsidise domestic and farm connections. 
The estimated tariff for domestic and farm connections for 2000-01 was 173 paise per unit and 28.5 paise respectively against the average tariff of 212 paise. More worrying for the electricity boards is that the share of domestic and agricultural consumers in the total energy sales has been increasing over the years - from 49 per cent in 1996-97 to 52 per cent in 2000-01 - while the share of industrial consumers, which was more than 50 per cent some time ago, declined from 33 per cent to 31 per cent in the same period. 
Given this situation, it is no surprise that the SEBs collectively owe more than Rs 41,000 crore (principal and interest/surcharge) to the Central power utilities and the Railways. The States know full well that the Central power utilities dare not cut supply and the worst they can do is to threaten the errant States. Would these SEBs themselves continue supplying power to an individual customer who regularly defaults on payment or pays only part of the bill? Thereby hangs another tale?

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



Northwest U.S. Electricity Buyers Seek $2 Billion in Refunds
2001-09-03 10:49 (New York)

Northwest U.S. Electricity Buyers Seek $2 Billion in Refunds

     Washington, Sept. 3 (Bloomberg) -- Electricity buyers in the
Pacific Northwest will ask federal regulators this week to order
$2 billion in refunds on purchases that they say were inflated by
a surge in energy costs in neighboring California.

     An administrative law judge will begin hearings Tuesday on
requests by Seattle; Tacoma, Washington; and other Pacific
Northwest communities that bought from suppliers such as Enron
Corp. The state of California already has said it was overcharged
for $1.5 billion of electricity that it bought in the Northwest
from December to June, government filings show.

     The cost of wholesale electricity soared in Western states
this year during a shortage of power in California, where prices
rose fourfold. The Federal Energy Regulatory Commission ordered
hearings on the refund requests and asked the judge to make a
recommendation by Sept. 24.

     ``The market was dysfunctional,'' said Philip Chabot, an
attorney representing Tacoma and other Pacific Northwest power
buyers. ``There may be a question of exactly what is just and
reasonable, but it certainly doesn't mean you can charge whatever
you can get.''

     Enron and other power suppliers have said refunds aren't
appropriate for the Pacific Northwest because the sales took place
under the rules of the Western Systems Power Pool. Lawyers for the
group of sellers didn't return calls seeking comment.

                         Second Case

     This week's hearings on Northwest refunds are separate from a
Sept. 14 hearing on a request by California to recover $8.9
billion on electricity purchases it made in its own markets. The
judge in that case is slated to issue a recommendation to FERC on
Nov. 5.

     Commissioners in July ordered hearings after buyers and
sellers were unable to agree on refunds after two weeks of
unsuccessful talks.

     FERC Judge Carmen Cintron was charged with documenting the
complex sales that took place outside California's market from
Dec. 25 through June 20. Establishing a record ``will help the
commission to determine the extent to which the dysfunctions in
the California markets may have affected decisions in the Pacific
Northwest,'' FERC said in July.

     Government-owned power buyers are concerned that existing
government controls on prices in the region may actually lead to
supply shortages this winter.

                         Falling Prices

     Wholesale power prices have dropped dramatically since FERC
set price limits for California April 25. FERC expanded that price-
control plan to include 10 other Western states in June.

     Because prices are limited by what it costs to generate power
in California, the buyers are concerned prices will remain too low
to encourage suppliers to sell electricity into the Northwest
during the winter, when demand surges.

     The Northwest Power Planning Council, a four-state government
agency, asked FERC on Aug. 30 to reduce the plan's dependence on
California prices in determining controls for the Northwest.

     ``The price caps as currently constructed might prove to be
so low next winter that they would discourage generators from
selling power in the Northwest if we have an emergency,'' said
Larry Cassidy, chairman of the council.

     Soaring power prices in the West earlier this year have
forced Puget Energy Inc., parent of Washington's largest utility,
and other power buyers to seek rate increases to offset the cost
of buying the power.

     Puget has proposed raising customer bills so it can recover
about $84 million in power costs this year. The plan, which would
link customer electric bills to the utility's power costs, must be
approved by the Washington Utilities and Transportation Committee.

     High power costs in California, where generators had to pay
market-based rates to buy power and couldn't pass on the costs to
customers, pushed the state's biggest utility, Pacific Gas &
Electric Co., into bankruptcy.

     The California Assembly has proposed a financial rescue plan
for the state's second-largest electric utility, Southern
California Edison, which has accumulated $3.9 billion in debt.



India: Oil giant seeks offshore expansion

09/03/2001
BBC Monitoring
Source: PTI news agency, New Delhi, in English 1111 gmt 3 Sep 01/BBC Monitoring/(c) BBC

Text of report by Indian news agency PTI 
New Delhi, 3 September: After putting a 400m dollar takeover bid for US energy major Enron's 30 per cent stake in Panna-Mukta and Tapti oil and gas fields, Oil and Natural Gas Corporation (ONGC) has now sought operatorship of the offshore fields on the west coast.
"We want to step in (as operator) after the exit of Enron from Panna-Mukta and Tapti fields. We have written to government for operatorship," ONGC Chairman and Managing Director Subir Raha told PTI here. 
ONGC's bid for operatorship comes in the wake of reports about Enron favouring third party sale of its stake instead of selling it to joint venture partners ONGC or Reliance. 
ONGC holds 40 per cent stake in the fields, which produce around 300 million cu.m. of gas and 29,000 barrels of oil per day, and logically should be vested with operatorship, Raha said. 
Panna-Mukta and Tapti fields, operated by Enron, were discovered by ONGC but where given on contract to private party on a product sharing basis, he said. 
Raha said ONGC had put in its price bid but was yet to hear from Enron on the issue. "In case Enron stake goes to a third party, we would like to take over the operatorship." 
Reliance Industries, which holds 30 per cent stake in the 900m dollar venture, has also bidded for Enron stake. Besides, US energy Marathon and British Gas are also in race. 
Enron officials are tight-lipped about the whole process saying "it is not the company's policy to comment on divestiture proceedings." 
A British Gas India Pvt Ltd spokesperson confirmed that it was in running for Enron stake, but declined to give details. 
Earlier, state-owned Indian Oil Corporation and Hindustan Petroleum Corporation Ltd also expressed interest in stepping in Enron's shoes, but their bids were rejected by the Houston-based company during the preliminary round itself, sources said. 
ONGC had the required experience and expertise of operating the fields, Raha said, adding, "I am hopeful the government would decide in our favour." 
Enron Oil and Gas India Ltd (EOGIL), the operator of the joint venture, had in October last year sought government permission to withdraw from the Panna-Mukta and Tapti fields as part of its asset rebalancing exercise. 
It had recently mandated Credit Suisse First Boston to derive current value of its stake in the joint venture and evaluate the bids. 
As per JV agreement, EOGIL would need government nod on the prospective buyer though production sharing contract did not provide for first right of refusal to other partners. 
ONGC officials said the corporation had hired merchant banker N M Rothschild India as its consultant for the two-stage bidding process comprising of non-binding expression of interest (EoI) and a detailed financial bid.

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

QATAR: Qatar, Dolphin to sign final gas pact by early Oct.
By Kedar Sharma

09/03/2001
Reuters English News Service
(C) Reuters Limited 2001.

DOHA, Sept 3 (Reuters) - Qatar and Dolphin Energy Ltd (DEL) are set to leap ahead on their landmark gas deal, with final signing of a production pact set for early October and upstream development work targeted for year end. 
Qatari and Dolphin sources said by early next month they will ink a development and production sharing agreement (DPSA) for the $3.5 billion project to route two billion cubic feet (56.63 million cu metres) per day of Qatari gas to the United Arab Emirates.
A comprehensive term-sheet, specifying the commercial terms of the deal, was signed by Qatar Petroleum (QP) and DEL in mid March. It was agreed then to convert the term-sheet into a 25-year DPSA by June. 
But Qatari officials said the DPSA's formal signing was delayed after US-based Enron Corp in May pulled out of DEL - majority owned by the UAE's Offsets Group (UOG). 
A DEL source said there was no real delay, adding that drafting such a huge document was time consuming. 
In any case, both sides are keen to wrap up the search for Enron's replacement. 
"We hope DEL will be able to choose a partner to replace Enron soon," a Qatari official told Reuters. 
For its part, Abu Dhabi last month shortlisted five international oil companies - ExxonMobil , BP , Royal Dutch/Shell , Conoco and Occidental - in the race for Enron's 24.5 percent stake. 
UOG is due to start talks with the firms at the end of September with a view to choosing a single replacement for Enron by the end of the year, the DEL source said. 
QP has meanwhile identified a block in the North Field - the largest single reservoir of gas in the world - for DEL, Qatari officials said. 
Under the deal, DEL will drill 16 wells, build a production plaftform and transport wet gas to Ras Laffan where it will set up a treatment plant to strip condensate, sulphur, natural gas liquids (NGLs) and liquefied petroleum gas (LPG) from the wet gas. 
The stripped products will belong to QP and the dry gas will be taken by DEL via a 350 km (217.5 miles) pipeline to Taweelah in Abu Dhabi. 
DEL will bear all costs and pay $1.30 per million British thermal unit (BTU) to QP for the dry gas it takes. 
First deliveries to Taweelah are expected in late 2004 or early 2005. DEL has already invited engineering and construction management firms to prequalify for five contracts.

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

INDIA PRESS: Enron's Troubles May Hit FDI - Ernst & Young

09/03/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- The Indian government's failure to honor its counterguarantee for the U.S. energy company Enron Corp.'s (ENE) Dabhol power project could restrict future foreign investment in India, reports the Hindu Business Line, quoting consultancy firm Ernst & Young India Chairman K.N. Memani. 
"The Enron imbroglio, where the sovereign guarantee wasn't honored, will have a damaging effect. It will definitely affect the flow of foreign direct investment, which is already very thin," the newspaper quotes Memani as saying.
At $2.9 billion, Dabhol is the single largest foreign investment in India. Enron holds a controlling 65% stake in Dabhol Power Co., which owns a 740-megawatt power plant in the western state of Maharashtra. 
The Dabhol plant has been inoperative since May 29 after its sole buyer, the Maharashtra State Electricity Board, stopped drawing electricity, saying the DPC tariffs were "exorbitant and unaffordable." 
MSEB also refused to pay several of its electricity bills. To date, MSEB owes more than $48 million to DPC. 
The Dabhol-MSEB dispute is being fought in the courts. The Indian government asked the two companies to sort out their dispute before it would consider any payment from federal coffers. 
Newspaper Web site: http://www.thehindubusinessline.com 

-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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


EDITORIAL
FOXES GUARDING THE HENHOUSE? CHENEY STONEWALLS ON ENERGY PLAN'S ORIGINS
Joe Garcia

09/03/2001
South Florida Sun-Sentinel
Broward Metro
25A
(Copyright 2001 by the Sun-Sentinel)

Big Oil and other energy interests pumped almost $65 million into the campaigns of candidates for federal office during the 2000 election cycle. Republicans received 75 percent of these contributions, according to the Center for Responsive Politics. George W. Bush was the largest single recipient of Big Oil cash. He received almost $2.9 million, while his energy secretary, Spencer Abraham, a former senator from Michigan, received almost a half million dollars. 
During last year's presidential campaign, then-candidate Bush said that he would work with his brother, Jeb, to support an offshore oil drilling ban in Florida. However, in his first hundred days as president, Bush decided to move forward with plans to permit Chevron to drill for oil off Florida's pristine coastline. Since the Johnson administration, the federal government has approved 38 offshore leases: One by the Johnson administration, one by the Carter administration, and 36 by the Reagan-Bush administration.
However, almost as quickly as the U.S. Supreme Court appointed Bush our president, he embarked on a course to pay back Big Oil's generosity. A group of White House aides calling themselves the "National Energy Policy Development Group," headed by Vice President Dick Cheney, formulated what the administration has dubbed a National Energy Policy, which was announced by President Bush on May 17. The group recommended oil drilling off the Florida and California coasts, as well as in the Arctic National Wildlife Refuge. 
As part of its oversight function, the General Accounting Office is requesting that the Office of the Vice President provide certain documents relating to the process by which this National Energy Policy was developed. Thus far, Vice President Cheney has stonewalled the GAO request. 
The General Accounting Office is empowered to assist the Congress in exercising its responsibilities to oversee, investigate and legislate. The records request will assist the GAO in determining how the White House's energy-working group spent public funds, how it carried out its activities, who was consulted, and whether the law was followed. 
This is the first White House in history to refuse to provide such information to the GAO. This refusal is particularly troubling, considering that this administration has such strong ties to the energy industries, particularly Big Oil. Cheney was the chairman and chief executive officer of Halliburton, the world's largest oil field services and construction company. The company is also the nation's fifth largest military contractor. 
When Cheney resigned from Halliburton after only five years of service to run for vice president, he took with him a retirement package worth over $13 million. 
The Enron Corp., a Houston-based oil and natural gas company, was one of the largest contributors to Bush's presidential campaign. Enron's chair and CEO, Kenneth Lay, was a "Bush Pioneer," personally raising more than $550,000 to aid Bush's presidential aspirations; the company also contributed $100,000 to Bush's inaugural committee. During the 2000 election cycle, Enron contributed more than $2.3 million to federal office seekers -- 72 percent of it to the GOP. In addition, Exxon-Mobil, BP Amoco, El Pasco Corp, Chevron Corp, and Halliburton contributed $5.2 million, again approximately 80 percent of this total flowed into Republican coffers. 
In addition to the controversy surrounding whether Chevron should be permitted to drill for oil off Florida's coast, Bush's national security adviser, Condolezza Rice, was a member of the Chevron board of directors, . which named an oil tanker after her. 
Therefore, the GAO has a most compelling reason to exercise authority over the Bush administration's National Energy Policy Development Group. If Cheney continues to stonewall, the GAO can and should take him to court. 
We have a right to know who really formulated this administration's energy policy. 
Joe Garcia is a Miami-based public affairs consultant and conservationist.

DRAWING; Caption: Drawing: Editorial cartoon 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Texas Residents Targets in Ad Battle of Retail Electricity Providers
Laura Goldberg

09/02/2001
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM)

In recent weeks, a Green Mountain Energy billboard, a New Power television commercial or a Shell Energy newspaper ad may have caught your eye. 
For a moment, you may have wondered about the product being hawked. Likely you didn't give it a second, or even first, thought.
Soon it will be much more difficult to ignore the advertising and marketing from companies looking to sell you the electricity that powers your lights and air conditioner. 
As Texas moves closer to the Jan. 1 start of electricity deregulation, power providers are busy readying significant marketing campaigns. 
The state is also continuing its branded effort, Texas Electric Choice, which is aimed at teaching residents about deregulation. The Legislature set aside $36 million over four years for consumer education. 
Expect to be blitzed on every front: phone, mail, TV, radio and Internet. Energy sellers are likely to show up at malls, festivals or your workplace. 
A television or radio ad aimed at getting a company's name out there may be followed up with detailed offers in the mail or newspaper. 
In states where deregulation is already under way, consumers have seen a lot of targeted, direct mail and local tie-ins with community groups such as PTAs and Girl Scout troops, said Jerry Alderson, president of Wattage Monitor. His company runs a Web site, wattagemonitor.com, that helps consumers compare competing electricity offers. 
"About the only local marketing we haven't seen elsewhere yet are bake sales," Alderson said, only half-joking. 
Getting consumers to move to new providers isn't necessarily an easy process. 
First, customers must be aware that they have a choice and be comfortable enough to exercise it. 
Then, a company must set itself apart from competitors, each of which is selling a commodity that has few, if any, features that are obviously distinguishing. 
Consumers will have to pay close attention, evaluating whether savings claims add up and apply to their individual circumstances. They'll also have to be vigilant about scouring the fine-print details of any offers. 
Electricity sellers will use marketing and advertising to give themselves identities. Some will brand themselves as the cheapest, while others will claim the best customer service and most innovative products. 
"We've gotten indications there are significant segments of the market that want superior service and are not just solely focusing on price," said Jim Niewald, director of marketing for First Choice Power, a unit of utility Texas-New Mexico Co. 
First Choice -- with its "energy with a smile" slogan -- is trying to position itself as easy to do business with. 
Companies will try to play on emotions, invoking words such as trust and reliability. Specialty players will offer power produced by wind, rather than fossil fuels. 
Several sellers have drawn executives from marketing powerhouses such as Procter & Gamble Co. to help them craft images. 
A couple of providers already have begun full-throttle brand-building efforts, while others are waiting until the fall or later to start in earnest. 
"Consumers will see a tremendous variety in marketing and media messages," predicted Jim DeLong, said vice president of retail markets for Entergy Solutions, an arm of New Orleans-based utility Entergy Corp. , a New Orleans-based utility. "Some companies will invest heavily in advertising with television, radio and newspaper ads. Others will focus more on direct marketing where they will touch customers through mail and telephone." 
Reliant Energy will work to fend off the competition in Houston and plans it own local advertising effort, including TV ads. 
"We're trying to retain everybody in Houston," said Jim Burke, vice president of Reliant Energy Residential Services. "We want to make sure we're not crowded out when our competitors come in." 
At the start of next year, Houstonians, along with most other Texans, will be able to select their power providers. Reliant Energy will no longer hold a monopoly here. 
A pilot program designed to let various players test out systems is already under way. Up to 5 percent of Reliant's residential customers can participate. Six providers have signed up enough residential consumers to fill about 90 percent of those slots. 
Several, such as New Power Co. and Green Mountain Energy Co., aggressively worked to lure as many participants as possible, advertising through a variety of channels, including television and telemarketing. 
Reliant has made a strong effort in the Dallas area, airing three different TV spots, giving away trinkets at various events such as Mavericks' basketball games, and speaking to employees at their workplaces. 
They are already working to imprint their brands in consumers minds, even though most potential customers won't even consider making a switch until days, or even months, after the market opens next year. 
"We want to and need to establish ourselves in the Texas market right away. We wanted to learn about this marketplace real-time in 2001," said Dermott Ryan, the vice president of brand management and online marketing for Purchase, N.Y.-based New Power. 
Others, such as TXU Energy Services, a unit of TXU Corp., the Dallas-based utility serving the upper third of Texas, set small targets for pilot enrollment. 
TXU, which will later expand on its direct mail and telemarketing with TV and other efforts, viewed the pilot as a chance to make sure everything is set to go for January. 
Each strategy has pluses and minuses. Those out early may get a jump on brand-building, but they also run the risk of being identified with delays and glitches the pilot has brought. 
The pilot was to start June 1, but computer problems at the state's power grid operator delayed it until July 31. Even still, continuing glitches mean some in the pilot might not start getting power from their new providers until as late as the end of October. 
Reliant slowed its efforts to sign up customers outside of Houston because of uncertainties related to the pilot. 
"The delays have made most of the market participants a little more cautious with respect to the amount of marketing activity," Burke said. 
Though some providers won't reveal details of their going-forward strategies for fear of tipping competitors, it's clear the players have varied approaches. 
New Power, a national company without ties to any of the state's utilities, is touting savings. 
Its newspaper and billboard advertising feature ballots asking consumers to choose between "burning" money by staying with Reliant or calling New Power. Its direct mail pieces cite specific dollar amounts average Reliant customers could save by switching. 
That saving-money message -- also stressed in New Power's TV ads --is "the first entry point for people to pay attention," Ryan said. 
New Power is also creating new products, including one that lets consumers adjust their thermostats via the Internet when they're not home, and is testing a range of incentives, including Continental Airlines frequent-flier miles, to entice people. 
New Power, which is 45 percent owned by Houston-based Enron Corp., isn't doing much leveraging off that connection other than marketing to Enron employees. 
"We are independent," Ryan said. 
While Shell Energy has also run newspaper ads citing specific savings for Reliant customers, its brand is already established. 
That means Shell can promote itself as a trustworthy company that's been around for 100 years, along with offering savings, said Jeanne Verkinnes, marketing manager for Shell Energy. 
Other providers, including Reliant, TXU and First Choice are pushing customer service, new products and reliability, though they aren't ignoring price. 
TXU is investing $100 million in building back-office operations such as call centers and data-tracking systems, all aimed at providing superior customer service and new products, said Rob McCoy, president of TXU Energy Services. 
TXU, exhorting potential customers to "expect more," is already known for reliability and high customer satisfaction levels, McCoy said. 
It will design offers and new services -- such as giving customers a choice of billing dates -- around those themes. 
McCoy knows a little bit about working in a newly deregulated industry. He spent 30 years in telecommunications and his marketing team includes a few ex-Procter & Gamble employees. 
Elsewhere, Wattage Monitor's Alderson has found price is the biggest driver of customer switching. His research, though, also reveals incumbents come into deregulation with an advantage. 
Consumers may say they are angry with their utility, but once they actually have a choice many customers won't automatically jump ship. 
They concluded, he said: "OK, now I can punish them if they ever do it to me again. I can switch." 
Reliant, the local incumbent, faces a different environment here and in the rest of Texas. Outside Houston, it sets prices as it wants. 
But in Houston, the state's deregulation law requires Reliant to cut its rates once the market opens in January. The prices are expected to be set in October. 
To help spur competition, Reliant won't be allowed to cut its base rates again for three years or until it loses 40 percent of its customers, though adjustments for fuel costs will be allowed. 
Much of Reliant's branding will be similar statewide. 
TV ads shot recently to air in Houston feature "Tom" from Reliant Energy mingling with real residents, not actors. Tom also starred in Reliant's three spots that have run in the Dallas-Fort Worth area. 
The Metroplex ads introduced both Reliant and electric choice and pushed lower rates and better service. 
It was with deregulation in mind that Reliant decided to pay about $285 million over 30 years, around $9.5 million a year, to put its name on all the facilities at the Astrodome complex, including the new football stadium. Even though Reliant stressed ratepayer money wasn't being used, some consumers were angry. 
But in a deregulated world, Reliant needs to make sure it has its share of the "media message," Burke said. And sports fans in Houston and elsewhere in Texas will hear about football at Reliant Stadium and the rodeo at Reliant Astrodome. 
Several of Reliant's competitors were also interested in the naming rights, Burke said, adding that well-funded market entrants will certainly spend significantly more than $9.5 million a year each marketing here. 
Statewide, Reliant will focus on customer service, as Burke stressed "branding is much bigger than advertising." It includes a successful series of customer interactions, ranging from initial telephone contact to finding information on the Internet to billing, he said. 
"The electron is not something the customer cares about at all," he said. "What we can distinguish is the service around the electron." 
Green Mountain disagrees. Unlike others, it occupies a unique niche: selling wind-produced power. 
Its rates aren't the cheapest, and they aren't even always less than the incumbent, but it's seeking consumers concerned about the environment. 
The company does a lot of "on the ground" direct selling, said John Savage, chief marketing officer. 
It sponsors and participates in community-based events, including, but not limited to, those tied to clean air such as a recent solar car race. 
The Austin-based company also relies on traditional marketing methods such as direct mail and television, where a spot features children talking about their desire for clean air. 
"One of the things that we've learned is there are no short cuts to branding," said Savage, a former software company executive. "Branding is really kind of a marathon, not a sprint. Our push is kind of going and continuing."

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

LOCAL
ENRON PROJECT REVIEW BEGINS AGENCIES, ACTIVISTS TO GIVE VIEWS ON CALYPSO PIPELINE
Antonio Fins Business Writer

09/02/2001
South Florida Sun-Sentinel
Broward Metro
1B
(Copyright 2001 by the Sun-Sentinel)

Broward County public officials and conservationists as well as energy industry peers and rivals are lining up to take a close look at -- and ask questions about -- a planned 90-mile pipeline from the Bahamas to Fort Lauderdale. 
In July, Enron Corp. filed papers with the Federal Energy Regulatory Commission asking permission to construct the $400 million Calypso Pipeline to transport natural gas from Freeport to Port Everglades.
Now a slew of groups, agencies and authorities have filed requests with the federal agency to study and comment on the project. The review process is expected to drag through next year as the government agency meets and exchanges information with entities on its list of interested parties. 
Among those in line are Broward County and Port Everglades officials who want to know more about the project's possible effect on wetlands and beaches as well as potential safety hazards at the port. 
"We have an interest as a business, as the port, and also to protect the interests of the local government," said Melissa Anderson, the county attorney who filed the document with the regulatory commission. "Unless we intervened we would not have status as a party." 
Broward is also waiting to receive an alternative pipeline proposal from another company, El Paso Corp. 
According to its filing in the Enron regulatory commission docket, El Paso would offer a pipeline proposal that rivals Enron's. But Houston-based El Paso has not yet filed a detailed project outline with the federal agency. 
Nevertheless, Anderson said the county expects to receive a proposal from El Paso and she said Broward officials would then weigh each bid in an open process before choosing one. 
She said the bid effort is important because the commission has said it will consider local government preferences and decisions. 
Enron spokesman John Ambler said the company has already told the county it will join that process. 
"We have submitted a letter of interest to the county," Ambler said. "If we can work it out this way, we will." 
He said Enron is eager to discuss all issues, particularly safety questions. For example, Ambler said the pipeline would be safe to operate partly because it will be buried as deep as 30 feet below the floor of the port's waterway. He also said the area in question is already laced with other pipelines. 
Ambler said Enron expected its proposal would draw significant interest from the industry and community. He said the key issue is that, so far, no one has objected to the pipeline. 
"The intervenors are in large part getting additional information and willing to supply information in the process," Ambler said. "The important thing is that people are not opposing the project." 
But some groups are voicing skepticism as they pore through plans for the 24-inch diameter pipeline. 
For example, a Hollywood-based group, Save Our Shores, worries that the path of the pipeline crosses through a piece of John U. Lloyd State Recreation Area. 
"It raises ecological questions at the park. It raises safety questions at the park," said Sara Case, the group's energy impact coordinator. "Do you really want a pipeline running through that park?" 
The Florida Natural Gas Association is concerned that the pipeline will serve mainly the needs of the electric utilities, a result the association says could drive up natural gas prices. 
Other filings take a more welcoming tone. Texaco Gas International Inc., a unit of the industry giant, said the pipeline might provide access to markets for its natural gas-producing operations. 
Anyone interested in reviewing Enron's plans can access the company's filing at www.ferc.gov. Or they can view a display on the project at the Paul DeMaio Branch Library at 485 S. Federal Highway in Dania Beach. 
Antonio Fins can be reached at afins@sun-sentinel.com or 954-356- 4669.

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


NEWS
State fights 6,000 firms' energy deals / Discount power contracts deemed unfair to consumers
Bernadette Tansey
Chronicle Staff Writer

09/02/2001
The San Francisco Chronicle
FINAL
A.21
(Copyright 2001)

Thousands of California businesses may reap cost breaks on electricity while other utility customers live with record rate hikes if the state lets stand a spurt of last-minute contracts with private power suppliers. 
More than 6,000 firms, including big retail chains and industrial plants, signed discounted power contracts in July and August as market prices dropped.
State officials are incensed, saying the private "direct access" contracts with electricity providers could shift the burden for millions of dollars in state power purchases onto households and small businesses. 
State Treasurer Phil Angelides said the same companies that benefited as the state depleted its budget surplus to keep the lights on now want to escape paying their share of the billions spent to ensure power supplies for California. 
"I think it's wrong and it's immoral," Angelides said. 
State officials argue that the summer contracts can still be canceled retroactively because California businesses were on notice that their option to shop around for better deals on electricity was about to be suspended by the state Public Utilities Commission. The PUC is set to consider the retroactive ban Thursday. But energy firms say the summer deals were perfectly legal because the PUC had not yet taken action and made a series of draft decisions that put off the effective date of the direct access ban until as late as yesterday. 
"The drafts were not consistent," said Tracy Fairchild, a spokeswoman for Alliance for Retail Energy Markets, a consortium of generators and energy suppliers. "Which one were we supposed to take seriously?" 
The energy trade group is threatening to sue to protect the summer contracts. Angelides fears that a prolonged court fight could block a $12.5 billion state bond sale to reimburse the treasury for California's emergency power purchases. 
The burgeoning conflict is part of a continuing fight by energy firms and some of their business customers to preserve direct access - - a core provision of the state's 1996 deregulation law. 
Deregulation supporters predicted energy consumers would enjoy lower prices if private generators were allowed to compete with the utilities as power suppliers. But the direct access program was thrown into disarray last year when wholesale electricity prices skyrocketed and the state stepped in to buy power. 
To make sure the state's outlay would be paid back by all ratepayers, the Legislature in January directed the PUC to suspend direct access. By that time, most direct access customers were fleeing back to the utilities to benefit from a rate cap that protected them from the soaring market power prices. 
The PUC postponed action on the direct access ban while some legislators were sponsoring bills that would have allowed the program to continue under certain conditions. 
But by July, market prices had come down, and energy providers like Enron Energy Services, AES New Energy and Strategic Energy were again offering direct access contracts. 
Businesses were looking for relief from the record rate hikes imposed on utility customers in June, said Phoenix energy consultant Gina Coleman. Coleman said she helped five retail chains with "a significant number" of stores in California negotiate contracts with Strategic Energy this summer. 
"Business is business, and if you can get a better price for something, you should," said Coleman, who declined to name her clients. She said the lower costs will help the stores keep doing business in California and hold their prices down. 
Daniel Douglass, an attorney for the Alliance for Retail Energy Markets, said any attempt by the state to cancel contracts retroactively would violate the constitutional law. He said energy firms have purchased power to serve their customers under the contracts and would suffer losses if they were canceled. 
Angelides said the same firms that ran to the state for protection when their market contracts became too expensive now want to take advantage of lower power prices he attributes to the stabilizing effect of the state's long-term power contracts. 
"You can't take advantage of the state's stabilizing the rates, then say, 'Thank you very much,' and stick everyone else with the bill," Angelides said. 
State officials have not tallied the total number of customers who signed up in July and August, nor have they estimated the revenue loss that would have to be covered by remaining utility ratepayers. 
Figures compiled by the PUC show that commercial and industrial firms signed more than 6,000 new direct access contracts in July alone. A rough calculation suggests that, as a result, the firms might contribute as much as $64 million less annually to the repayment of state costs. 
The loss might not be significant enough to risk a court fight that would delay the bond sale, state officials said. 
Bu Angelides said the same power firms that helped create the energy crisis by charging exorbitant rates are now threatening a bond issue desperately needed to restore funds needed for education, health care and children's services. 
"What they're talking about doing," he said, "is holding us hostage until they get what they want."

PHOTO; Caption: Phil Angelides said some companies aren't paying their share of the cost of the energy crisis. 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk; Section A
National Briefing Northwest: Oregon: Higher Electric Rate
By Matthew Preusch (NYT)

09/01/2001
The New York Times
Page 10, Column 5
c. 2001 New York Times Company

The Public Utilities Commission approved a request for a rate increase by Portland General Electric, the state's largest electric utility. The increases, effective Oct. 1, will raise residential rates by 26 percent and industrial rates by about 47 percent, the commission said. A residential customer using 1,000 kilowatt-hours per month will pay an additional $16. Matthew Preusch (NYT)


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


India: Let Enron cut equity value by 75 per cent: Panel
Mahesh Vijapurkar

09/01/2001
The Hindu
Fin. Times Info Ltd-Asia Africa Intel Wire. The Hindu Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

MUMBAI, AUG. 31. Setting the target of Rs. 2.40 per KwHr as the tariff for power from Enron-sponsored Dabhol Power Company, the Madhav Godbole Renegotiation Committee has suggested that the value of the equity which Enron now wants to sell to exit from the project be pared down by 75 per cent. If Enron agrees to this cut, the committee argues in its interim report on the renegotiation today, that the project will become viable in the context of the lower required tariff of power. 
Once the project is re-engineered on this line, the panel contends, then three-fourths of the equity should be picked up by the NTPC or any other buyers and the other quarter assigned to the Maharashtra State Electricity Board (MSEB). At that time, the MSEB's stake in the project would come down from the present 30 per cent to 25 per cent but to buy this, the Government of India would need to provision an interest-free long-term loan of Rs. 2,500 crores. Mr. Godbole's report was handed over today to the Chief Minister, Mr. Vilasrao Deshmukh.
Independent of this suggestion, it is learnt that the MSEB has been willing to have its current 30 per stake, which at face value is around Rs. 850 crores, confiscated by the Indian financial institutions which have exposures to the project to the extent of Rs. 5,500 crores plus guarantees to the lendings of foreign entities but the FIs, more keen on having a completed project to hawk to buyers, has not shown any interest in this offer. The IDBI-led domestic FIs have been asked to find a way out by the Centre. 
The panel told the Maharashtra Government that the bid at re-working the deal with the DPC failed mainly because the Enron/DPC was willing to go down in the tariff only by 56 paise per unit on its current price which was abnormally high and unaffordable. This cut was valid only if the off-take was at 90 per cent of the total capacity of both phases while the MSEB can cope with only 30 per cent. 
The panel's other suggestion is that the Gas Authority of India be asked to buy the $ 800 million LNG regasification unit - Enron is willing to hive it off, sources say - again to cut the impact of the capital costs on the price of the power sold by the DPC. Anxious Indian FIs have shown willingness to what sources describe as "substantial cut in the interest rates" from the current 16.5 per cent per annum charged on the lendings to the DPC. The DPC itself has not been on record willing to accept such a possibility. 
Today's report by the Godbole panel is more or less an extension of part one of the earlier report which had set the road map on renegotiations which it was itself asked to pursue by the Maharashtra Government. The earlier report has been described by Enron as "a non-starter" but the panel has relentlessly pushed its point of view. This report, if nothing else, is a kind of document which would continue to be a basis for any future negotiations between any entities.

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