As promised.  Jeff
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/02/2000 
02:10 PM ---------------------------


James M Bannantine@ENRON_DEVELOPMENT
09/26/2000 11:17 AM
To: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Kristina Mordaunt@Enron Communications, Scott Sefton@ECT, Frank 
Sayre/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Vicki Sharp@EES, John 
Schwartzenburg/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stephen Wallace@ENRON, 
Mark E Haedicke@ECT, Daniel R Rogers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Michael Moran@ENRON, Randy Young@ECT, Sandeep 
Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Elizabeth Labanowski@ECT, Eric 
Newell@ENRON, Janet Place@ENRON, Mark A Evans/HOU/EES@EES, Al 
Alexanderson@Enron, Stephanie Harris@ENRON, Rob Walls/NA/Enron@Enron, Rex 
Rogers@ENRON, Greg Whalley@ECT, Ken Rice@ENRON COMMUNICATIONS, Andrew S 
Fastow@ECT, Lou L Pai@EES, Larry L Izzo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Sanjay Bhatnagar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rick 
Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David W Delainey@ECT, Stanley 
Horton@ENRON, Bill Donovan@ECT, Diomedes Christodoulou/SA/Enron@Enron, James 
L Noles/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bill Cordes@ENRON, Larry 
DeRoin@ENRON, Peggy Fowler@ENRON, Lance Schuler@ECT, Mark Frevert@Enron, Mike 
McConnell/HOU/ECT@ECT, Jeffrey A Shankman@ECT, Wade 
Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Shawn 
Cumberland/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeffrey McMahon@ECT, Jeffrey 
Sherrick@ENRON, J Mark Metts@Enron, James A 
Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rebecca 
McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 
Subject: Re: FOR IMMEDIATE REVIEW: Agreement Restricting Power Generation 
Competition in Asia Pacific Region  

I have not followed this closely  but question why we would give a noncompete 
for this much of Asia in exchange for what I gather is an increased 
expectation in the valuation of Newco in the future if we want to sell.  This 
was the one question I have asked about Dragon all along.  It is a big piece 
of the world to do everything as a minority with these two other partners 
going forward (or have them have a right of first refusal over whatever we 
do).  It is difficult to predict the future and this seems restricitive.  
Maybe I don't understand it all.



Bruce Lundstrom
09/25/2000 03:54 PM
Sent by: Liz N Martinez
To: Kristina Mordaunt@Enron Communications, Scott Sefton@ECT, Frank 
Sayre/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Vicki Sharp@EES, John 
Schwartzenburg/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stephen Wallace@ENRON, 
Mark E Haedicke@ECT, Daniel R Rogers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Michael Moran@ENRON, Randy Young@ECT, Sandeep 
Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Elizabeth Labanowski@ECT, Eric 
Newell@ENRON, Janet Place@ENRON, Mark A Evans/HOU/EES@EES, Al 
Alexanderson@Enron
cc: Stephanie Harris@ENRON, Rob Walls/NA/Enron@Enron, Rex Rogers@ENRON, Greg 
Whalley@ECT, Ken Rice@ENRON COMMUNICATIONS, Andrew S Fastow@ECT, Lou L 
Pai@EES, Larry L Izzo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sanjay 
Bhatnagar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rick 
Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David W Delainey@ECT, Stanley 
Horton@ENRON, Bill Donovan@ECT, James M 
Bannantine/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Diomedes 
Christodoulou/SA/Enron@Enron, James L 
Noles/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bill Cordes@ENRON, Larry 
DeRoin@ENRON, Peggy Fowler@ENRON, Lance Schuler@ECT, Mark Frevert@Enron, Mark 
A Evans/HOU/EES@EES, Mike McConnell/HOU/ECT@ECT, Jeffrey A Shankman@ECT, Wade 
Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Shawn 
Cumberland/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeffrey McMahon@ECT, Jeffrey 
Sherrick@ENRON, J Mark Metts@Enron, James A 
Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rebecca 
McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: FOR IMMEDIATE REVIEW: Agreement Restricting Power Generation 
Competition in Asia Pacific Region

General Counsels -

At the direction of the Enron APACHI Office of the Chairman, I am sending 
this e-mail to you pursuant to the Enron Corp. Policy on Noncompetition.  I 
would appreciate if you would check with your CEO/COO regarding this e-mail 
and respond to me by Friday, September 29 if you have questions or concerns.  
Enron APACHI may need to commit to the following provisions (that bind Enron 
affiliates) by Monday, October 2.

Given the consolidating power generation market in Asia Pacific, Enron Asia 
Pacific/Africa/China (Enron APACHI) is proposing to enter into a transaction 
with Marubeni and Sithe Asia to combine the respective power generation 
portfolios into a single company (Newco).  Newco would be charged with making 
the shareholders' investments as liquid as possible to allow for sale of the 
shareholders' respective stakes in Newco.  

The shareholders believe that Newco must not be seen by the market as a 
"dumping ground" for existing power projects but rather as the vehicle 
through which the investors will continue to pursue power generation 
opportunities in Asia.  As a result, Enron APACHI proposes to include 
competition restrictions in the Marubeni/Enron Shareholder Agreement that 
would bind their respective affiliates.  

The following is a summary of these competition provisions:

Enron affiliates (with the exceptions stated below) could only develop or own 
power projects in the Asia Pacific Region (as defined below) after first 
offering the opportunity to Newco.  If Newco declines the opportunity, Enron 
would be free to own the project itself or offer the project to third parties 
provided that the terms do not materially improve.  Development or ownership 
does not include the provision of construction, O&M, offtaker or risk 
management services.

There are a number of exceptions to this rule:  (a) small projects involving 
20 MW or less; (b) projects in which Enron owns less than a 1/3 interest; (c) 
projects initiated by our SK joint venture; (d) Korean projects using natural 
gas produced by Enron; (e) projects obtained in a corporate acquisition in 
which Asia generation is less than 20% of the value of the acquisition; and 
(f) situations in which any Enron company would be exposed to fiduciary 
liability to another shareholder in complying with the competition 
restriction.

"Affiliates" will be defined to exclude Enron affiliates which are 
publicly-owned (e.g., Azurix).

"Asia Pacific Region" will be defined to include Brunei, China (including 
Hong Kong and Macau), South Korea, North Korea, Taiwan, Vietnam, Laos, 
Cambodia, Thailand, Myanmar, the Philippines, Malaysia, Indonesia, East 
Timor, Singapore, Papua New Guinea and the Pacific Islands (including Guam, 
Saipan, the Federated States of Micronesia, and Fiji, but excluding Hawaii).  
It does not include Japan and Australia.

The competition clause would survive until the earlier of (a) Enron selling 
its interest in Newco or (b) December 31, 2003.

Thank you,
Bruce Lundstrom, General Counsel, Enron APACHI