DPC lenders to vote on PPA termination this week
Business Standard, 05/15/01

Enron seen phasing out RP operations
Philippine Daily Inquirer, 05/15/01

Global LNG Experts Gather in Seoul
Korea Times, 05/15/01

GERMANY: INTERVIEW-Bewag first to trade German weather derivative.
Reuters English News Service, 05/14/01

UK: ANALYSIS-Downgrade protection may spread after BT ratings cut.
Reuters English News Service, 05/14/01

Enron Said to Be Considering Withdrawal from Middle East Natural-Gas Project
Dow Jones Business News, 05/14/01

GUINEA: Guinea says $2.5 bln aluminium project takes shape.
Reuters English News Service, 05/14/01



DPC lenders to vote on PPA termination this week
Our Regional Bureau Mumbai

05/15/2001
Business Standard
3
Copyright (c) Business Standard

The lenders to the controversial $3 billion Dabhol power project are likely 
to vote later this week on the issue of authorising the Enron-promoted Dabhol 
Power Company to serve a termination notice. "There will not be any meeting 
in London. The decision can be taken after discussing the issue among lenders 
across the globe through conference calls," said a source.
Even if one of the 25-odd lenders is in favour of the termination notice, the 
resolution can go through, the source said. "Technically, the resolution can 
be passed if four per cent of lenders are in favour of the termination 
notice," sources said. Meanwhile, the representatives of the Industrial 
Development Bank of India, State Bank of India and ICICI met here today to 
take stock of the situation. "Since the Centre has not responded to the 
lenders' letter and the three-week timeframe sought (from the DPC) expires 
tomorrow, the lenders are left with no choice but to give the go ahead to the 
DPC to serve the termination notice. "Indian lenders alone cannot save the 
project as some of the foreign lenders are in favour of issuing the 
termination notice," the source said. The DPC board has authorised Enron 
India managing director K Wade Cline to serve a termination notice as and 
when he deems fit. At the lenders meeting in London last month, the foreign 
lenders were keen that the termination notice be served in the face of 
defaults by the Maharashtra State Electricity Board (MSEB) and the Union 
government's refusal to honour the Rs 102 crore counter-guarantee for the 
December bill. Only foreign lenders are covered by the counter-guarantee in 
case of termination of the contract. The domestic lenders had bought time by 
saying they would try to persuade the central government in three weeks. 
They, however, have failed to convince the Union government to change its 
mind on honouring the counter-guarantee and other related issues.

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



Business
Enron seen phasing out RP operations
Doris C. Dumlao

05/15/2001
Philippine Daily Inquirer
1
Copyright (C) 2001 Philippine Daily Inquirer; Source: World Reporter (TM)

US power company Enron Corp. is planning to phase out its multibillion-peso 
investments in the local power generation sector in line with its global 
strategy to trim down exposure in emerging markets, including the 
Philippines. 
Enron recently backed out of a P4.3-billion power project in Bulacan, 
supposedly a joint venture with the Yuchengco-owned EEI Corp.
Asked about recent developments on the 40-megawatt biomass power plant in 
Bulacan, EEI president and COO Samson Lazo told reporters that Enron was no 
longer participating in the P4.3-billion project. 
Lazo said Enron was pulling out of the project "because it wanted to 
concentrate on trading." 
He said Enron would look for another group to which it would assign its stake 
in the Bulacan power project. 
"The project (biomass power plant) is still viable. It will push through once 
we find new investors," he added. 
INQUIRER sources said Enron was selling its other existing businesses in the 
Philippines. They said the decision has nothing to do with the country's 
political and economic situation. "It is part of the Houston headquarters' 
decision to concentrate more on developed markets including North America and 
Europe. 
The sources said that Enron, one of the world's largest integrated natural 
gas and electricity companies with approximately $15 billion in assets, was 
pursuing the same divestment path in Latin America and other emerging 
markets. 
In the Philippines, Enron was among the companies tapped by state-controlled 
National Power Corp. to help solve the power crisis in the early 1990s by 
putting up power generation plants in the country. 
Through its local subsidiaries, Enron financed and constructed a number of 
power generation plants in the country including a 116-megawatt plant in the 
Subic Freeport and Economic Zone and a 110-megawatt facility in Batangas. 
Enron's subsidiaries in the Philippines are Enron Development Philippines 
Ltd., Enron Subic Power Corp. and Ilijan Power Corp. 
The Enron group operates one of the biggest natural gas transmission systems 
in the world and is the largest purchaser and marketer of natural gas in 
North America. It also markets natural gas liquids worldwide and manages the 
biggest portfolio of fixed-price natural gas risk management contracts in the 
world. 
Enron earlier acquired nine of Napocor's power barges for P2.1 billion in a 
bidding. 
Three of the barges are in Navotas, Metro Manila; one in Polloc, Maguindanao; 
one in Cebu City; another in Calumpang, General Santos City; one in Tacloban 
City; one in Iloilo City, and one in Cortes, Bohol.

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


Global LNG Experts Gather in Seoul

05/15/2001
Korea Times
Copyright (C) 2001 Korea Times; Source: World Reporter (TM)

The International Conference and Exhibition on Liquefied Natural Gas (LNG 13) 
yesterday opened for its four-day run at the Convention and Exhibition Center 
(COEX) in southern Seoul. 
Owing to the increasing importance of the triennial event, an unprecedented 
number of participants and exhibitors, estimated at more than 2,500, have 
converged in Seoul for what is often called the ``Olympics'' of the global 
LNG industry.
``We have spent more than a year preparing for this international event which 
is the largest in terms of the number of participants and exhibitors,'' said 
Lee Seung-hwan, chairman of the Korean National Organizing Committee. 
LNG 13 is 15 percent larger than the conference and exhibition held in 
Australia back in 1998 which reflects the growth of the industry, Lee 
explained, adding that the demand for LNG has been increasing rapidly here in 
Korea. 
``When you look at the scope of participation in LNG 13, it is easy to see 
the increasing vitality of the LNG industry as sources of clean energy gain 
in importance,'' said the former ambassador to Greece who also served as a 
senior official of MOCIE. 
He said enormous efforts have been made to attract as many companies, 
exhibitors and participants to LNG 13 as possible, and the global industry 
has responded in full force. 
``For instance, I traveled to Japan and the United States on numerous 
occasion to drum up support. Japan has been gracious enough to send a 
delegation of more than 500 participants,'' said Lee with satisfaction. 
``LNG 13 in Korea has special meaning in that it is the first such conference 
to be organized at the beginning of new era for the 21st Century and it will 
certainly be a turning point for Korea's gas industry and, at the same time, 
this event will be an another important momentum to serve as a catalyst in us 
for the further development of the world energy industry,'' he elaborated. 
This series of LNG conference began in 1968 as the brain-child of three 
international bodies as official sponsors-the International Gas Union (IGU), 
the Gas Technology Institute (GTI) and the International Institute of 
Refrigeration(IIR). 
``LNG 13 brings together the world's major LNG producers and customers and it 
will be the largest-ever on record with participants flocking in from over 50 
countries,'' Lee said. 
If the scope of participation is expansive, so is the content. The conference 
program will include a comprehensive and topical agenda presented by industry 
experts at the forefront of their field, with technical and workshop sessions 
and presentation by film and posters which is consist of seven paper 
sessions, four workshops, a poster session and five daily film sessions which 
cover virtually all commercial, technical and operational aspects such as new 
LNG projects, safety, and supply and demand. 
``LNG 13 promises to provide an opportunity during the conference days to 
acquire knowledge of the most recent developments in the LNG industry through 
exciting and topical subjects,'' Lee said. 
``Hosting this meaningful event in Korea will help elevate Korea's image in 
the international market, particularly with the sheer scale and size of LNG 
13,'' He noted. 
As for the exhibition, a total of 125 exhibitors and leading energy companies 
will be displaying their most recent developments is an integral part of this 
conference. 
Key participants in the LNG industry from senior officials (top management) 
of the exhibiting companies to engineers, researchers come together to 
display the latest technology and share their expertise at LNG 13. 
The exhibition will provide the opportunity to gain a better insight into the 
current state of the LNG field and make face-to-face contacts with personnel 
qualified to answer their questions and meet their needs and the Exhibition 
will showcase the latest technology and services and services available to 
this increasingly important energy industry. 
The official sponsors of LNG 13 are the International Gas Union, the Gas 
Technology Institute and the International institute of Refrigeration while 
the major sponsors are the Shell Gas and Power, KOGAS, LG-Caltex, SK-Enron, 
the Qatari Group, TotalFinaElf, British Petroleum and Exxon Mobil. 
In addition to the conference and exhibition, there will be a technical visit 
to the Inchon LNG Receiving Terminal in Inchon, about 50 kilometers east of 
Seoul, on Friday.

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


GERMANY: INTERVIEW-Bewag first to trade German weather derivative.
By Claire-Louise Isted

05/14/2001
Reuters English News Service
(C) Reuters Limited 2001.

FRANKFURT, May 14 (Reuters) - German utility Bewag said on Monday it has 
signed a weather derivative contract to protect itself against the risk of a 
drop in power generation if temperatures rise. 
"We bought a weather derivative last December from Societe Generale's London 
trading desk in order to hedge against the risk of low electricity generation 
due to warm weather," Markus Hartwig, Bewag Trading analyst told Reuters in 
an interview.
"Most of our power generation is based on combined cycle heat driven power 
plants, which are highly dependent on weather conditions," he added. 
The company is the first utility to trade weather derivatives in Germany, he 
said, noting that as the country's largest district heating producer, it is 
the generator most exposed to the weather. 
"We had been looking into the possibility of weather derivatives trading 
since last year - we looked at our weather exposure, developed a model, 
priced our derivatives and then went to the market where we chose Societe 
Generale," he said. 
The contract was signed on December 1 and was settled on March 31, which is 
the date when the district heating period ends in Germany. The district 
heating period runs from October 1 to March 31. 
Hartwig said the contract was confidential but added Berlin-based Bewag wants 
to sell weather derivatives to its own customers. 
"We are planning to offer our clients the chance to incorporate their risk on 
the district heating side of their business and sell them weather derivatives 
products," he said. 
Potential clients include not only energy firms, but also construction and 
agricultural companies, for example, who could benefit not only from 
temperature derivatives, but also from precipitation contracts. 
Bewag's sales revenues and volumes from district heating were 771 million 
marks and 9.2 terawatt hours (TWh) respectively in the 1999/2000 business 
year. Its estimate for district heating revenue last winter is 830 million 
marks. 
The derivative announced today had a duration of four months for Bewag's 
Mitte and Klingenberg power plants, but the average temperature December to 
March was 2.2 degrees Celsius colder than the previous year's level of 3.4 
degrees. 
As a result electricity generation increased by 100 gigawatt hours and 
revenues from electricity and district heating increased and thus no payout 
was needed, Hartwig said. 
Enron was the first company to trade weather derivatives in Europe in a deal 
with UK utility Scottish Power . 
Worldwide, weather derivatives have existed for five years in which time 
around 2000 contracts have been signed with a total value of some $6 billion 
in risk transfer. 
Temperature derivatives are the most common type of weather derivative but 
companies can also find products to hedge against rain, snow and storms.

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


UK: ANALYSIS-Downgrade protection may spread after BT ratings cut.
By Catherine Evans

05/14/2001
Reuters English News Service
(C) Reuters Limited 2001.

LONDON, May 14 (Reuters) - Last week's credit rating cut for British Telecom, 
which triggered compensation clauses on around $20 billion of bonds, could 
lead investors to demand similar protection from other corporates, analysts 
said on Monday. 
Recent weeks have seen the first non-telecoms bonds with coupons linked to 
credit ratings, with German defence and engineering group Rheinmetall the 
latest candidate.
Rheinmetall, which has announced plans for a 300 million euro bond issue this 
week, is rated Baa2 by Moody's Investors Service and BBB by Standard & 
Poor's, just two notches above the junk category. The bond is expected to 
offer compensation in the form of a higher coupon if the company is cut below 
investment grade. 
Analysts said demand for downgrade protection could spread to other sectors 
as the U.S. economic slowdown fuels concern about corporate creditworthiness. 
"Investors should watch their guard and keep standards high at this point in 
the cycle. We're very much in favour of that," said Peter Harvey, head of 
corporate bonds at F&C (formerly Foreign & Colonial) in London. 
He said investors might even be prepared to forego the usual new issue 
premium in return for downgrade protection. 
"I think investors are prepared to pay...If the headline yield of a bond is 
even below outstanding paper I think investors will accept it as long as they 
get a step up," Harvey said. 
STANDARD FOR TELECOMS 
Downgrade protection became a standard feature of telecoms bonds last year, 
as bond investors footing the bill for third generation mobile phone licences 
auctioned across Europe became increasingly concerned about their escalating 
cost. Such protection has become steadily more generous as disenchantment 
with the sector has grown, although the trigger for a coupon step-up in all 
cases is a ratings cut to triple-B from single-A. 
Compensation clauses were initially regarded as having mainly pyschological 
value, but bonds carrying downgrade protection have outperformed as Europe's 
leading telecom operators have edged closer to the drop. 
"The perceived option value inherent in this type of coupon structure is 
likely to increase further, given the impetus caused by the action on BT," 
said analysts at Dresdner Kleinwort Wasserstein in a research report. 
"Rating-protection bonds should continue to grow in popularity, particularly 
for longer term holders." 
BT's rating was cut two notches, to Baa1 from A2, by Moody's Investors 
Service on Friday, a day after it unveiled a radical plan to cut its 30 
billion pounds of debt. Moody's said the plan, which includes a demerger of 
BT Wireless and the sale of its Yellow Pages unit as well as a discounted 5.9 
billion pound rights issue, would reduce creditors' access to cashflows. 
The downgrade triggered a 0.25 percent increase in coupon payments on $10 
billion of bonds sold by BT in December, and a further eight billion euros 
and 1.1 billion sterling of bonds issued by BT in January. BT, whose 
treasurer Andy Longden denounced the rating action as "incomprehensible", 
said the compensation package would add $50 million per year to its debt 
servicing costs. 
The cut to Baa1, three notches above a junk rating, could also reduce the 
company's future access to debt markets. Some European funds cannot hold 
paper rated below single-A, meaning they could be forced to sell their 
holdings at a loss following the downgrade. 
Rival rating agencies Standard & Poor's and Fitch kept BT within the single-A 
bracket, with S&P assigning an A-rating - one notch lower than before - and 
Fitch affirming its "A" grade. 
ILLUSTRATION FOR INVESTORS 
Analysts said the downgrade provided a clear illustration for European 
investors, most of whom have little experience of investing in credit 
compared with their U.S. counterparts, of the benefits of protective 
covenants. 
"The European corporate bond market has powered ahead without covenants 
because investors are less sophisticated than in the U.S.," said Simon 
Ballard, market strategist at Bear Stearns in London. 
"As they become more aware...we will see increased demand for ratings 
protection and event risk language in deals. (BT's downgrade) will help drive 
the point the home that this stuff can work." 
Possible candidates include automakers, which after telecoms have sold the 
largest volume of new international bonds this year. Worries about the car 
industry's exposure to a U.S. slowdown has recently pushed up risk premiums 
on automakers' bonds, although their ratings are traditionally stable. 
Another may be the UK water sector, which has been in turmoil since the 
regulator imposed investment targets and price cuts two years ago. Wessex 
Water, which is owned by Azurix Corp , a unit of U.S. energy giant Enron Corp 
, sold a 100 million pound bond with downgrade protection in March, but 
another water company is rumoured to have dropped recent plans for a sterling 
bond because investors demanded downgrade protection.

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


Enron Said to Be Considering Withdrawal from Middle East Natural-Gas Project

05/14/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

DUBAI, United Arab Emirates -- Enron Corp. is considering pulling out of the 
$3.5 billion Dolphin natural-gas project because the company is worried that 
the project won't make money, an industry source told Dow Jones Newswires on 
Monday. 
The Dolphin project, an agreement signed two years ago by the UAE Offsets 
Group, or UOG, and Qatar Petroleum, plans to bring two billion cubic feet a 
day of natural gas from Qatar's offshore North Field to Abu Dhabi and onward 
to Dubai.
Neither Enron (ENE) nor UOG could be reached for comment Monday. 
The Houston-based energy and communications concern and French oil company 
TotalFinaElf (TOT) each hold a 24.5% stake in the Dolphin project, while UOG 
owns the remaining 51%. 
Qatar Petroleum and Dolphin Energy Ltd., or DEL, a subsidiary of UOG, signed 
an initial agreement in March for the upstream section of the project. 
TotalFinaElf is set to operate the upstream phase of the project, which 
includes developing natural-gas reserves in two blocks of the North Field. 
First wells are scheduled to be drilled in the second half of 2001 and come 
onstream in 2005. 
Enron will focus on the midstream part of the project, or gas transportation, 
which requires building a 350-kilometer pipeline from a processing plant in 
Ras Laffan, Qatar, to the Taweelah terminal in Abu Dhabi and the Jebel Ali 
terminal in Dubai. 
Last week, the Middle East Economic Survey reported that the foreign partners 
haven't yet agreed on the precise details of their working relationship, or 
on the price of the pipeline. MEES also said that TotalFinaElf and DEL 
consider Enron's estimated price for the pipeline is too high. 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved

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


GUINEA: Guinea says $2.5 bln aluminium project takes shape.
By Saliou Samb

05/14/2001
Reuters English News Service
(C) Reuters Limited 2001.

CONAKRY, May 14 (Reuters) - An international consortium is planning a $2.5 
billion aluminium project in Guinea that could have a 240,000-tonne per year 
smelter operational in four to five years, government and industry officials 
said. 
Morcire Sylla, head of the official Centre for Mining Promotion and 
Development (CPDM) in the West African state, said the project at Sangaredi 
involved a dam, a 750-megawatt hydroelectric power station and the extension 
of the existing alumina plant at Fria, as well as the new smelter.
"The development will be carried out by a group of private investors grouped 
in the GAPCO consortium," he told Reuters at the weekend. 
Guinea's government will join U.S. energy company Enron Corp , Japanese 
conglomerate Marubeni Corp , the World Bank's private sector arm - the 
International Finance Corp - and other Japanese operators in Guinea Aluminium 
Products Company (GAPCO), Sylla said. 
Guinea, with 30 percent of known reserves, is the world's second largest 
producer of bauxite after Australia. 
The Guinea Chamber of Mines, has forecast that production of bauxite in 2001 
would reach 18.6 million tonnes. 
Guinea currently exports most of its bauxite unprocessed but has one company 
that produces 700,000 tonnes of alumina from around two million tonnes of 
bauxite. Aluminium is produced from alumina. 
Nene Moussa Maleya Camara of the local Mininfos metals magazine said the 
Japanese and U.S. partners had already carried out feasibility studies for 
the aluminium project. 
He said that some 40,000 people would be displaced by the project and would 
have to be rehoused. 
Some 25,000 people are likely to be employed by the project during its 
development phase and 7,000 permanent jobs will eventually be created. 
In addition to the plant and power components, the project involves the 
construction of about 300 km (185 miles) of roads and a major bridge between 
the towns of Badi and Tondon.

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