Bush Task Force on Energy Worked in Mysterious Ways
The New York Times, 05/16/01

Texaco May Build a Facility to Regassify Liquefied Natural Gas Offshore 
Louisiana
The Wall Street Journal, 05/16/01
Enron to drop suit against NGX
Houston Chronicle, 05/16/01

Plots & Ploys
The Wall Street Journal, 05/16/01

THE AMERICAS: Energy worries throw the spotlight on Chilean policy 
Financial Times; May 16, 2001

Enron urges more electric power reform
The Yomiuri Shimbun / Daily Yomiuri, 05/16/01

Enron lawsuit deal to broaden indexes
The Globe and Mail, 05/16/01

Saudi Gas Proj MOUs Expected To Be Signed Jun 6 - Sources
Dow Jones Energy Service, 05/16/01

INDIA: Lenders to vote Wed on cancelling Enron India deal-paper.
Reuters English News Service, 05/16/01

India: 2 units of Sharavathy Project commissioned
The Hindu, 05/16/01

India: Dabhol power project
Business Line (The Hindu), 05/16/01

Three members of Godbole committee quit
The Economic Times, 05/16/01

Panel to brief Gokak on Godbole plans on Wed
The Economic Times, 05/16/01

Settle Enron issue amiably: Munde
The Times of India, 05/16/01

Sharavathi power units inaugurated
The Times of India, 05/16/01

Dunham, Lay, Raymond Among Few to Meet With Cheney on Energy
Bloomberg, 05/16/01



National Desk; Section A
Bush Task Force on Energy Worked in Mysterious Ways
By KATHARINE Q. SEELYE

05/16/2001
The New York Times
Page 1, Column 4
c. 2001 New York Times Company

WASHINGTON, May 15 -- The tiny staff of the Bush administration's Energy 
Development Task Force is led by two former aides to Senator Frank H. 
Murkowski, the Alaska Republican who is the chairman of the Senate Energy 
Committee. The aides jokingly call themselves the Alaska jihad. 
But Mr. Murkowksi, when asked recently about the role his former aides, 
Andrew Lundquist and Karen Knutson, have played in the task force's 
much-anticipated report, which will be released on Thursday, replied, ''They 
don't tell me anything.''
On the eve of the release of the 170-page report, the broad outlines are 
fairly well known. The plan encourages the production of oil, gas, coal and 
nuclear power and calls for some tax credits for renewable energy resources 
and a push for conservation. But since the task force's work began in 
February, most of Washington has remained in the dark about how it operated, 
which arguments it embraced and how it reached decisions on some of the 
nation's thorniest energy issues. 
Individuals from the task force have met with more than 400 people from more 
than 150 groups over the last three months. Mr. Lundquist said today that he 
could not provide a list of all the groups he had spoken with. ''I can't 
really tell you who, because there are hundreds I've met with,'' he said. 
Administration officials also said that they wanted to keep private the list 
of those they met with to encourage the free flow of ideas. Still, they said 
that they had talked with a broad range of interested parties. 
In a recent interview, Vice President Dick Cheney said: ''The staff of our 
energy task force has spent time with folks from various pieces, parts, of 
the industry. We've also spent time with the environmentalists. I spent a lot 
of time with members of Congress, listening to them, both parties, on energy. 
So the idea that somehow only the energy industry has access just simply 
isn't true.'' 
But last month, two Democrats on Capitol Hill challenged the secrecy of the 
process surrounding the task force, which has met eight times in the last 90 
days. David S. Addington, counsel to the vice president, responded that it 
did not have to provide information about the process because all of the 
staff members are federal employees. In addition, environmental groups have 
requested documentation about task force meetings under the Freedom of 
Information Act, but so far those have been denied. 
Democrats and environmentalists say the process was tilted heavily toward the 
coal, gas and oil industries and point out that the energy industry is one of 
the biggest contributors to political campaigns, giving $64 million last 
year, three-fourths of it to Republicans. 
Among those who said they felt shut out was the Consumer Federation of 
America, the nation's largest consumer-advocacy group. Howard Metzenbaum, a 
Democrat and former senator from Ohio who is now chairman of the group, said, 
''The energy crisis is first and foremost a price crisis affecting consumers. 
''It's an incredible insult to the consumers of this country that, to the 
best of my knowledge, none of the consumer organizations were invited to the 
meetings or otherwise participated,'' he said. 
Juleanna Glover Weiss, Mr. Cheney's spokeswoman, said no invitations were 
issued and groups had to request meetings. ''We didn't invite anybody to meet 
with us,'' she said. 
The leaders of about two dozen environmental groups had asked to see Mr. 
Cheney, whose office turned down their requests. Instead, midlevel staff 
members from the groups met with Mr. Lundquist and Ms. Knutson. 
Alys Campaigne, legislative director of the National Resources Defense 
Council, said that that meeting lasted about 40 minutes but that the size of 
the group inhibited substantive policy discussion. 
''We asked who the deputies were on different issues so we could have more 
in-depth conversations, and they wouldn't tell us,'' she said. ''They said, 
'Just send us paper, we'll take a look at it.' The meeting felt like window 
dressing for us, but they got to check off the box that they consulted with 
stake-holders.'' 
Mr. Lundquist said he viewed his meeting with the environmental groups as ''a 
good conversation.'' 
Some of the industry representatives who did get audiences with the vice 
president said the task force's deliberations seemed a mystery to them, too. 
John Grasser, a spokesman for the National Mining Association, said: ''We've 
probably had as much input as anybody else in town.'' But, he added, ''All we 
know is what we read in the paper. This is a tight-lipped process. I have to 
take my hats off to them -- they've been able to keep a lid on it.'' 
Richard S. Shapiro, senior vice president of the Enron Corporation, a major 
Republican contributor and the nation's largest trader of wholesale 
electricity and natural gas, said top executives from his firm spent half an 
hour with Mr. Cheney, but he could not tell how much this may have influenced 
the final report. 
''Energy issues are a very high priority, and we've had the opportunity to 
provide some input into the process,'' Mr. Shapiro said. ''But it's been 
difficult to get input in the task force. Other consumer groups have been 
weighing in with perspectives. It's not an open-hearing setting.'' 
Tom Kuhn, head of the Edison Electric Institute, the utility lobbying group, 
and a friend of the president's since they were classmates at Yale, saw the 
process as relatively open. 
''The task force put out the word they were open to input,'' he said in an 
interview. He said that his group sent them reports and that some executives 
met briefly with Mr. Cheney. 
Given all of their interaction with so many groups, Mr. Lundquist denied that 
the process had been secretive. ''I don't think that's fair,'' he said. 
''There's been no attempt to make it a secret process. All it's been is an 
effort to work on and put out good policy.''

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


Texaco May Build a Facility to Regassify Liquefied Natural Gas Offshore 
Louisiana
By Alexei Barrionuevo
Staff Reporter of The Wall Street Journal

05/16/2001
The Wall Street Journal
B4
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Texaco Inc., joining a growing list of companies looking at ways to import 
more natural gas, said it is considering building a terminal in the Gulf of 
Mexico that would regassify liquefied natural gas. 
While other companies have looked at building land-based LNG terminals, 
Texaco, based in White Plains, N.Y., is considering going offshore. The 
facility would be constructed in shallow waters off Louisiana and make use of 
Texaco's extensive offshore pipeline system. The system's spare capacity has 
grown in recent years as the Gulf of Mexico's natural-gas production has 
declined.
Cooling natural gas to a point where it liquefies greatly condenses the gas 
and allows it to be shipped by tanker over long distances. 
Currently, the U.S. only has four LNG receiving terminals, two of which have 
been mothballed for more than 15 years. Until this year, LNG was considered 
too expensive for the U.S. market, which relies on LNG for less than 2% of 
total natural gas supply. 
But with natural-gas prices averaging about twice what they were in 1999, the 
owners of the mothballed terminals are bringing them back and a flurry of 
companies have announced plans to build new terminals on both the East and 
West coasts. The companies include El Paso Corp., Enron Corp., Phillips 
Petroleum Co. and Chevron Corp., which has agreed to buy Texaco in a pending 
deal. 
Texaco is initially considering a terminal designed to process about one 
billion cubic feet of gas per day. The facility's capacity could later be 
doubled, depending on natural-gas demand in the U.S. 
"The U.S. demand for natural gas continues to increase at a significant pace, 
demonstrating the need for clean burning fuels for power generation, 
industrial fuels and residential markets," said Robert A. Solberg, president 
of Texaco's commercial development business unit. 
From the proposed Louisiana terminal the natural gas would be fed into 
several interstate pipeline systems, as well as the Henry Hub futures pricing 
point in south Louisiana, which is operated by Sabine Pipeline Co., a Texaco 
subsidiary. 
Texaco said the proposed terminal could be up and running in four to five 
years. While the company said it is still evaluating the terminal's cost, 
other companies have said land-based facilities would each cost about $300 
million to $400 million. Texaco expects its feasibility study to be done 
within six months.

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






May 16, 2001
Houston Chronicle
Briefs: Houston & state 
Enron to drop suit against NGX
Enron Corp. agreed to provide natural-gas pricing information to NGX Canada 
and drop a $64.6 million suit against the Canadian gas exchange. 
Houston-based Enron sued NGX in November after the Internet exchange, a unit 
of the company that owns the Stockholm Stock Exchange, changed providers of 
its gas-pricing data and didn't include trades on EnronOnline, Enron's 
Internet exchange, when calculating gas-price indexes. 
Calgary-based NGX agreed to include EnronOnline trades in its calculation of 
its Alberta Gas Price Indices by August, Enron spokesman Eric Thode said. 





The Property Report
Plots & Ploys
By Peter Grant

05/16/2001
The Wall Street Journal
B12
(Copyright (c) 2001, Dow Jones & Company, Inc.)

[What's Brewing in the Real Estate Market] 
Bright Spot
FUELED BY A STRONG energy sector, the Houston office market is outperforming 
the rest of the country. While many cities saw office vacancy rise in the 
first quarter, the downtown vacancy rate in Houston dropped to 6.26% from 
6.65% at the end of last year, according to CB Richard Ellis. 
Expanding companies include Enron Corp., Reliant Resources Inc., Dynegy Inc. 
and other energy companies that have been profiting from the deregulation of 
the electricity business. Houston also has been benefiting from consolidation 
in the oil and gas industry. Giants like Exxon Mobil Corp. and Anadarko 
Petroleum Corp., which acquired Union Pacific Resources last year, have 
relocated divisions to the city. 
Rents in the hottest submarkets are continuing to increase, according to Will 
Penland, head of CB's Houston office. "We're at levels we haven't seen since 
the late 1970s," he says. 
All this is good news for the three developers that have projects underway 
downtown. Indeed, Crescent Real Estate Equities has leased over 70% of the 
space in 5 Houston Center, a 27-story building that's still more than one 
year away from opening. "It's a very good time to be in Houston," says 
Crescent chief executive John Goff. 
To Sell or Not to Sell 
THE SALES MARKET is continuing to slow as the gap widens between asking 
prices and what buyers are willing to pay. In the first quarter, about $11.6 
billion of property traded hands, down 11% from the same period in 2000, 
according to Granite Partners. 
Many sellers are choosing to refinance, an option made especially attractive 
by declining interest rates. For example, a group led by Emmes & Co. just 
refinanced the 21-building Meadows Business Park outside of Baltimore for $40 
million after failing to get its price of about $55 million. The three-year 
floating rate loan with CDC Mortgage Capital Inc. was brokered by 
Insignia/ESG Capital Advisors. 
S. Lawrence Davis, an Emmes partner, notes that the $40 million is well in 
excess of the $35 million the group invested into the property. "We recognize 
at the moment it's not the appropriate time to sell," he says. 
Hoop Dreams 
IN THE MID-1980s, city officials in Springfield Mass., convinced the Naismith 
Basketball Hall of Fame to move to a forlorn riverfront urban renewal site. 
But the stores, restaurants and hotels that city officials said would follow 
never materialized. "Not a darn thing happened," says Michael Downey, 
president of the O'Connell Group, a consultant to the museum. 
Despite this history, the Hall is giving Springfield a second chance. Now 
rising a short distance from the existing facility is a new, larger Hall of 
Fame that's scheduled to open next year. Once again government officials are 
promising that numerous other projects will follow. 
But this time the museum has reason to be confident. The city and state 
agreed to put up $70 million of the project's $109 million cost, after the 
museum threatened to move to Orlando, Fla. A new tourist center already is 
being built on the site and the Picknelly family, which owns Peter Pan Bus 
Lines, is set to break ground soon on a Hilton Garden Inn and Pizzeria Uno 
Chicago Bar & Grill. 
There's even talk of converting the shuttered 110-year-old county jail on the 
site into an aquarium or some other tourist attraction to complement the 
Hall. One possibility the locals are joking about: using it as a Hall of 
Shame where lousy referees could be incarcerated. "I'm sure there would be a 
number of players who would support that," says Thomas McColgan, the city's 
economic development director. 
Price Reduction 
AFTER MONTHS of negotiations, Philadelphia's Berwind Property Group has 
signed a binding contract to acquire the Barbizon Hotel from Ian Schrager. 
But the price of $96 million is about $4 million less than what was being 
discussed at the end of last year, a reflection of the softening sales 
market, people with knowledge of the deal say. Berwind plans to add the 
306-room property to its Melrose chain of high-end hotels.

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



		

		
		
		
		THE AMERICAS: Energy worries throw the spotlight on Chilean policy 
Financial Times; May 16, 2001
By RAYMOND COLITT and MARK MULLIGAN

		An energy crisis in Brazil and the threat of a capacity shortfall in Chile 
has thrown the spotlight on government policy on tariffs and competition, and 
drawn pressure from the multinational groups that control private-sector 
generation in South America. 
		Both cases also highlight the dangers of over-reliance on hydroelectric 
generation in countries where rainfall can vary widely year to year. 
		Low rainfall in Chile in 1998, for example, deprived the hydraulic plants 
that serve the country's populous southern half of melted snow from the 
Andes, plunging Santiago and other urban centres into darkness during four 
months of rationing. The crisis exacerbated a recession in 1999, when growth 
dropped into negative territory for the first time in 16 years. 
		Industry leaders warn of a repeat in 2003, unless generators are encouraged 
to invest in new thermal plants with tariffs - or node prices - which reflect 
the increased costs of natural gas and other combustibles. 
		"What we need is more thermal capacity," says Andres Gluski, chief executive 
of AES-owned Gener, Chile's second-largest generator and the third-biggest in 
the region. 
		"If we simply build more hydro plants we end up with the same problem that 
Brazil is experiencing at the moment," he said. 
		In Brazil, the government is preparing a rationing programme that could force 
a 15-20 per cent reduction in consumption over the next few months, and shave 
a percentage point from gross domestic product for the year. 
		Although drought in the country - which relies on water for 90 per cent of 
generation - is blamed for the crisis, industry leaders and experts say lack 
of investment by the state, which still controls 80 per cent of capacity, and 
the slow pace of privatisation are the main underlying problems. 
		"Of course the crisis could have been avoided - it has been in the making for 
years," said Mauricio Tolmasquim, energy expert at Federal University in Rio 
de Janeiro. He says that while consumption has grown 50 per cent in the past 
decade, generating capacity has increased only 35 per cent. 
		The government estimates that Brazil needs 25,000MW of new capacity over the 
next five years, but companies are holding back on investment because current 
tariffs makes new projects unprofitable. Enron, the US energy group, has put 
two of its three energy projects on hold. 
		"We're in a capital-intensive business, in which the recovery of investment 
requires a long period of time," said Alfredo Llorente, president of Enersis, 
the Latin American holding company for Endesa of Spain, the region's largest 
electricity investor. "Therefore it is essential to know what rules are going 
to apply over the long term." 
		Despite growth in electricity demand in Chile averaging about 7 per cent 
since 1996, there has been little new capacity installed since then. 
		Part of the problem stems from heavy investment in cheaper, gas-fired plants 
in the mid-1990s by the dominant three generators, encouraged by a new 
pipeline from Argentina. This created a surplus of generating capacity, which 
contributed to a 40 per cent decline in node prices between 1996 and 1999. 
		At the same time, an international credit squeeze began depriving the Chilean 
operators of funds for fresh investment, leading eventually to their sale to 
the large foreign groups. 
		These companies now say that even after a recovery of prices in the last 
year, investment in new capacity remains unprofitable. 
		One solution is the interconnection of the main Chilean and Argentine grids, 
but this will take four to five years. 
		Another is the connection of Chile's over-supplied northern grid, fuelled by 
two gas pipelines from Argentina, to the more populous southern grid. But 
this would not be feasible, said Andres Gluski. 
		Copyright: The Financial Times Limited
		
		



Enron urges more electric power reform

05/16/2001
The Yomiuri Shimbun / Daily Yomiuri
Copyright (C) 2001 The Yomiuri Shimbun; Source: World Reporter (TM) - Asia 
Intelligence Wire

Enron Japan Corp., a Japanese subsidiary of United States energy giant Enron 
Corp., published a reform proposal for the Japanese electricity market 
Tuesday. 
The proposal urged the government to implement the suggested reforms over a 
two-year period beginning at the start of 2002, following deregulation of the 
Japanese retail electric power market, which began in March this year.
Japan has allowed nonutility companies to supply power to industrial and 
commercial users since March. 
Enron is seeking to enter the Japanese energy market on a large-scale basis 
following the deregulation efforts. 
In the reform proposal, Enron Japan argued that the present liberalization of 
the electricity market was insufficient by presenting original data showing 
that Japanese electricity charges were 46 percent higher than average when 
compared with those of other member countries in the Organization of Economic 
Cooperation and Development. 
Enron's reform proposal includes 10 measures to promote competitiveness in 
the Japanese market, such as a separation of conventional power companies' 
supply operations from the generation, transmission and distribution of 
electricity. 
The proposal also contends that conventional power companies are monopolies 
that should be prohibited from constructing new electricity-generating 
facilities within the areas they currently supply. It also urges the 
privatizing of operations for the development of power sources. These measure 
are meant to make it easier for those newly entering the business to gain a 
competitive foothold. 
In March Enron applied for approval from Aomori Prefecture to build a large 
thermal power plant in Rokkashomura. 
Copyright 2001 The Daily Yomiuri

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


Report on Business: Canadian
Enron lawsuit deal to broaden indexes
DAVID PARKINSON

05/16/2001
The Globe and Mail
Metro
B10
"All material Copyright (c) Bell Globemedia Publishing Inc. and its 
licensors. All rights reserved."

CALGARY -- Enron Canada Corp. has dropped its $101-million lawsuit against 
on-line natural gas trader NGX Canada Inc. and energy newsletter publisher 
Canadian Enerdata Ltd., after reaching an agreement to have Enron's on-line 
trading data included in key Alberta gas pricing indexes published by NGX and 
Enerdata. 
The deal, announced yesterday, will significantly broaden NGX's indexes by 
adding trades from North America's biggest on-line trading system, 
EnronOnline, to the calculations. It also opens the door for the development 
of a "superindex," a single price index using combined trading data from key 
on-line trading systems.
"This can be seen as the first step toward that," said Peter Krenkel, 
president of Calgary-based NGX, adding that other on-line trading services 
have already inquired about having their data included in NGX's indexes. 
Enron filed its suit in November, alleging that it suffered "irreparable 
harm" when Enerdata sold the rights to its natural gas price indexes to NGX, 
which operates the on-line Natural Gas Exchange. NGX changed the method of 
calculating the indexes, basing them solely on trades over the Natural Gas 
Exchange rather than Enerdata's old survey of a wide variety of market 
participants. 
Enron, a unit of Enron Corp. of Houston, had argued that the new calculation 
method was less neutral and reliable than the old method. The indexes are 
used by many natural gas market participants as the basis for prices in gas 
hedging contracts. 
Rob Milnthorp, president and chief executive officer of Enron Canada, said 
the agreement to include EnronOnline's data in the NGX indexes "will provide 
industry participants with a more comprehensive source of data and a better 
opportunity to manage risk around these price indexes."

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



Saudi Gas Proj MOUs Expected To Be Signed Jun 6 - Sources

05/16/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

DUBAI -(Dow Jones)- Memoranda of understanding between international oil 
companies and Saudi Arabia on three gas ventures on offer in the kingdom are 
expected to be signed June 6, industry sources told Dow Jones Newswires 
Wednesday. 
Saudi Arabia's Supreme Petroleum Council met Tuesday and endorsed a final 
selection of international oil companies for each of the three projects, 
which have been estimated at a combined investment value of $25 billion, the 
sources said.
The companies concerned are expected to be notified any time on whether they 
have been selected and given about 10 days to respond. 
The 11 companies being considered are Royal Dutch/Shell Group (RD), BP PLC 
(BP), Exxon Mobil Corp. (XOM), Chevron Corp. (CHV), Total Fina Elf S.A. 
(TOT), ENI SpA (E), Enron Corp. (ENE) and Occidental Petroleum Corp. (OXY), 
who are bidding jointly, Marathon Oil Canada Inc. (T.M), Conoco Inc. (COCA) 
and Phillips Petroleum (P). 
Saudi Arabia invited international oil companies in October 1998 to 
participate in proposals for downstream gas projects and upstream gas 
enhancement. 
-By Dyala Sabbagh; Dow Jones Newswires; 9714 3314260; 
dyala.sabbagh@dowjones.com -0- 16/05/01 07-07G

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

INDIA: Lenders to vote Wed on cancelling Enron India deal-paper.

05/16/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, May 16 (Reuters) - Lenders to U.S.-based Enron Corp's troubled Dabhol 
Power Company (DPC) will vote on Wednesday on whether the company should 
issue a notice to cancel its contract to sell electricity to India's 
Maharashtra state, a business daily said. 
The Business Standard said the 25 lenders to DPC will most probably back the 
proposal to terminate the agreement, which has spoiled relations between 
India and its largest foreign investor and cast a shadow over future foreign 
investment in India's power sector.
"It is almost a foregone conclusion that DPC will be asked to issue its 
termination notice," the paper said in an unsourced report. 
It said that foreign institutions which lent 30 percent of the $2 billion in 
debt back such a move. 
But Indian lenders, whose loans are not backed by a federal government 
guarantee, are likely to vote against the proposal, the newspaper said. 
The Industrial Development Bank of India , State Bank of India , Industrial 
Finance Corporation of India , Canara Bank and ICICI are the major Indian 
lenders. 
Enron and India have been sparring for six months over payment defaults by 
the Maharashtra State Electricity Board (MSEB) for power purchased from DPC. 
DPC, owned 65 percent by Houston-based Enron, is building the world's largest 
natural gas-fired power plant on India's western coast. The 740 MW first 
phase of the facility began operating in 1999. The plant's generation 
capacity will more than triple to 2,184 MW when phase two is completed next 
month. 
MSEB had agreed in 1995 to buy all the power produced by the plant but has 
now reneged on that commitment, sparking concern over the fate of the 
project. 
Last month the DPC board authorised its management to terminate the contract 
to sell power and the lenders' decision on Wednesday could add weight to that 
decision. 
($1=46.93 Indian rupees).

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


India: 2 units of Sharavathy Project commissioned
Our Staff Correspondent

05/16/2001
The Hindu
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

GERUSOPPA (Uttara Kannada Dist), MAY 15. The Chief Minister, Mr. S. M. 
Krishna, said here on Tuesday that the Karnataka Power Corporation (KPC), of 
which he is the Chairman, had prepared an ambitious plan to add an additional 
power of 2000 MW with a total investment of Rs. 10,000 crores in the next 
five years to the State Power Grid to meet the increasing demand for power. 
Addressing a gathering after dedicating the first two units of the Sharavathy 
Tail Race Project with an installed capacity of 60 MW each at Gerusoppa to 
the nation, he said the third unit of the project, which formed the final 
phase of the power projects in the Sharavathy Valley, was planned to be 
commissioned in October and the fourth by the end of March next.
He said the seventh unit of the Raichur Thermal Power Project with an 
installed capacity of 210 MW was scheduled to be completed by March 2003. 
Similarly, Alamatti Dam Power Project would be ready for commissioning by the 
end of 2003. 
He said the Vijaynagar Power Project with a capacity of 500 MW, which was 
being implemented in the joint sector, would be dedicated to the nation by 
2005. The Union and the State governments had given clearance to this 
project. 
Mr. Krishna said that the Bidadi Gas-based 700 MW Power Project would be 
ready for commissioning by the end of 2005. In addition, a barge-mounted 
power project in the private sector with an installed capacity of 220 MW, and 
the power projects by the Tatas and the Jindal company with capacities of 80 
MW and 100 MW respectively were in the offing. 
Emphasising the need for working out cost effectiveness of new power projects 
before they were taken up to make power affordable for the common people, the 
Chief Minister explained the reasons why the previous Congress Government in 
which he was the Minister for Power, cancelled the agreement with the 
Cogentrix company on a power project. 
He said there was criticism when the project was dropped after it was debated 
for nearly 14 years. He said the cost effectiveness (of the project) was the 
only reason for dropping the proposal which was planned to be handed over to 
the Cogentrix company. 
Mr. Krishna referred to the predicament of the Maharashtra Government which 
now found itself trapped in an agreement on a power project with the Enron 
company and said that State (Maharashtra) had found itself in such a 
situation that even the Centre could not bail it out. 
"We are lucky that we did not get trapped in a similar project with the 
Cogentrix. It is difficult to imagine what could have been the position of 
the KPC, if we had gone ahead with the agreement with the Cogentrix," he 
said. 
Mr. Krishna said that it was for the reason of cost effectiveness that the 
proposed Alamatti Dam Power Project was handed over to the KPC when the offer 
made by TAPCO for its implementation was found to be "extremely costly." 
He said that after the TAPCO offered to complete the 290 MW project at a cost 
of Rs.1400 crores, the KPC was asked to prepare the plan which it did with an 
estimated cost of Rs.700 crores. Immediately after that, the KPC was given 
the green signal to prepare the pre-survey of the project. 
"If the project (Alamatti Dam Power Project) was handed over to TAPCO, it 
could have been profitable" (which he said needed no elaboration), "but it is 
the protection of the interest of common people which is of paramount 
interest to us. TAPCO may approach the court for the breach of agreement but 
we will fight it out there (court) also," he said.

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


India: Dabhol power project

05/16/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

This refers to the article 'DPC-MSEB slugfest: Needed, a conciliatory 
approach' (Business Line, May 11). The author has tried to defend the Dabhol 
project. Unfortunately his claims hold no water for the following reasons: 
DPC is not the only IPP among the fast-track projects. The 208 MW Jagrapadu 
in Andhra Pradesh (GVK Power) was the first and is doubling capacity. 
Spectrum (208 MW) was the second. Enron is the third. ST-CMS in Tamil Nadu is 
almost complete. The other fast-track projects - Cogentrix, Hinduja Power and 
Bhadravati Power (L. N. Mittal) - are languishing. However, in terms of 
project cost, fixed-charge payments and the total tariff, DPC stands tall.
Several IPPs have come up successfully without counter-guarantees: GMR, PPN, 
Balaji and South India Viscose in Tamil Nadu; and Paguthan and GIPCO in 
Gujarat. Some are under development and their problems are not FDI, equity or 
debt, but the non-availability of the escrow - a result of bad management by 
the States. 
Similarly, a number of LNG projects is in the pipeline. If permitted, they 
could go on-stream in good time. Let us remember that Enron LNG has a 
sovereign guarantee and a very high return on equity and is protected by a 
power purchase agreement (PPA) that will use only half its capacity. However, 
Enron will recover its entire cost in that 50 per cent utilisation. Enron's 
LNG terminal will perhaps make the highest profits in the world. LNG projects 
are feasible all along the coast and the Enron project could even be sold to 
an outsider. 
The cancellation of the Enron PPA will result in a huge liabilities to be 
paid by the people of Maharashtra as a result of the follies of their 
political leaders. 
The project can be sold to international buyers at a reasonable price and the 
loss, if any, absorbed by the people of Maharashtra who might be ready to pay 
an Enron Cess over the next 20 years. 
Now let us come to the number-crunching. At Rs 87.50 a month fixed cost, the 
net present value of the fixed cost of DPC- I over 15 years works out to (at 
15 per cent per annum) Rs 6,252 crore. For 740 MW, this works out to Rs 8.45 
crore per MW. 
At Rs 292 crore, the net present value for the 2,150 MW DPC I and II is (at 
15 per cent pa for 15 years) Rs 20,863 crore - Rs 9.70 crore per MW. When DPC 
I was 740 MW, the NPV per MW was Rs 8.45 crore. To achieve scales of economy 
when the project was expanded to 2,150 MW with an LNG project, the NPV rose 
to Rs 9.70 crore. Is there any power project in the country, or the world, at 
this cost? 
Be it naphtha or LNG, the MSEB is paying for the actual cost of the fuel. 
Here too, Enron is making a huge profit - burning naphtha at 1,700 kcal per 
unit and claiming reimbursement at 2,000 kcal per unit. 
When the fuel cost is reimbursed at actuals the expansion of DPC should have 
reduced the fixed cost. On the other hand, it has increased it to over 13 per 
cent. Perhaps, the DPC project should be referred to the Guinness Book - for 
the highest cost per MW of power. Certainly, nobody would dare beat its 
record. 
S. Padmanabhan

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


Three members of Godbole committee quit
Our Bureau

05/16/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

MUMBAI 
EVEN as efforts to renegotiate the Enron power deal get underway, three 
members of the nine-member Madhav Godbole committee have decided to quit.
Former Union energy secretary and Andhra Pradesh Electricity Board member E A 
S Sarma, Tata Energy Research Institute director Rajendra Pachauri, and 
Indira Gandhi Institute of Developmental Research professor emeritus Kirit 
Parikh have -- in separate communications -- informed the government that 
they do not have the time to attend the committee's meetings. 
The trio was absent from the committee's first meeting with DPC officials 
held last week. 
The Godbole committee was set up by the Maharashtra government to renegotiate 
the deal with Enron. 
Pachauri recently had said the state government had not consulted him before 
he was named on the renegotiations panel. 
The Maharashtra government set up the nine-member committee headed by former 
bureaucrat Madhav Godbole on April 30 to renegotiate the controversial power 
purchase agreement with the Enron-promoted Dabhol Power Company. 
The committee has submitted an interim report and a final one is expected by 
May 31. 
The members now on the committee -- apart from Madhav Godbole -- are HDFC 
chairman Deepak Parekh, state's energy secretary V M Lal, fertiliser 
secretary and a representative of the Centre Anil Gokak, state finance 
secretary S K Shrivastava and Maharashtra State Electricity Board chairman 
Vinay Bansal. 
The government said it had chosen Godbole to head the renegotiation team 
since he had dealt with every detail of the 2,184-mw Dabhol Power Project. 
Godbole was head of the Maharashtra state energy review committee which 
recently submitted a report on the Enron project to the state government in 
which he had strongly criticised the way the deal was conducted and had 
recommended the renegotiation of the power purchase agreement with MSEB. 
The state government employee said: "There is no point in reading too many 
things in the development. These three members really don't have time. The 
committee work will not hamper due to their decision to dissociate."

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


Panel to brief Gokak on Godbole plans on Wed
Our Bureau

05/16/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

NEW DELHI 
THE COMMITTEE of joint secretaries, which is working in close co-ordination 
with the Enron negotiation committee, will be holding a meeting on Wednesday 
to brief the central representative A V Gokak on the Centres views on the 
Godbole Committe recommendations.
The group of joint secretaries from concerned ministries like power, 
petroleum, finance etc was formed to coordinate and form a consensus on the 
Centres view vis-a-vis the recommendations of the Godbole committee and the 
renegotiations that have now been initiated between Dabhol Power Corporation 
and MSEB. 
Gokak was appointed as the Centres representative on the renegotiation 
committee. Since the recommendations of the Godbole committee have been taken 
as some of the basic requirements and changes that could bring down tariffs, 
the Centres stand on this issue will be viewed significantly. 
Among the main things to be discussed would be to explore the possibility of 
delinking the LNG facility from the power plant.

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


Settle Enron issue amiably: Munde
The Times of India News Service

05/16/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

PUNE: Former deputy chief minister Gopinath Munde has said that the US power 
major Enron's exit from the Dabhol power project could have a negative impact 
on investment prospects of the state. 
Speaking to reporters here on Monday, Mr Munde said it was imperative to have 
an amicable solution on the current impasse on the cost of power supplied by 
the Dabhol Power Company.
"A confrontation on the power purchase agreement at such an advanced stage 
may send wrong signals to investors," he added. 
Asked about the growing financial burden on the state exchequer due to hefty 
Enron bills, Mr Munde evaded a concrete reply on the pretext that his party 
was not in power in the state at present. 
The senior BJP leader minced no words in saying that his party would strongly 
oppose any move by the state government to delink the 38 fringe villages from 
the Pune Municipal Corporation limits. All the merged villages should stay 
within the corporation, he emphasised. 
Speaking on the drubbing his party received in the just concluded assembly 
elections, Mr Munde said the party leadership had never expected miracles in 
Tamil Nadu, West Bengal, Kerala and Pondicherry. "The BJP did have high hopes 
in Assam, but unfortunately the popular verdict was not in its favour. The 
party would analyse the reasons behind the debacle," he added.

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


Sharavathi power units inaugurated
The Times of India News Service

05/16/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

KARWAR: Chief Minister S.M. Krishna appealed to the courts of law on Tuesday 
to ``speedily dispose of development-related litigation'' as such delays led 
to huge cost escalation of infrastructure projects. 
Speaking after switching on the 60 MW Units 1 and 2 of the Sharavathi 
Tailrace Hydel Power Project at Jyothinagar, Gerusoppa (near Honnavar), 
Krishna said that this particular project itself had been delayed by five 
years because of the case filed against it in the Supreme Court by 
environmentalists. ``The courts heard arguments in the Cogentrix case also 
about an year ago, but there has been no judgement. Such delays lead to cost 
escalations,'' he contended.
Krishna said plans to add about 200 MW of power every year were on the anvil. 
``Gerusoppa units 3 and 4 will produce 60 MW by March 2002 along with the 210 
MW Raichur Thermal Power Station (RTPS) unit 7. Almatti project 70 MW unit 1 
and 220 MW unit 2 will be commissioned by December 2003. The 500 MW 
Vijayanagara thermal power project will be operational by 2005, while the 
Bidadi project will produce 700 MW by 2006,'' he outlined. 
In the private sector, Krishna said the Tannir Bhavi barge-mounted plant 
would produce 220 MW, while Jindal Tractible would supply 100 MW and Tata 
Electric 80 MW. ``All these projects will involve an investment of over Rs 
10,000 crdore and even after this the state will need more power,'' he 
maintained. 
Stressing on the need for low cost power, Krishna said the Cogentrix 
agreement fell through only because of the ``exhorbitant'' purchase price 
quoted by the American company. ``Maharashtra is in the python grip of Enron. 
We have avoided this even in the case of the Almatti project, for which the 
company, TAPCO had given a cost estimate of Rs 1,400 crore while the 
Karnataka Power Corporation quoted only Rs 700 crore,'' he added. 
Legislative Assembly and Council Opposition leaders Jagadish Shettar and K.H. 
Sreenivas praised the KPC on its pro-active role in providing power to the 
state. Karwar MP Margaret Alva and Industries Minister R.V. Deshpande 
stressed on the need for improving the living conditions of the project 
displaced people. 
Meanwhile, Magsasay Awardee K.V. Subbanna of Heggodu rued that the agitation 
against the project by environmentalists led by Shivaram Karanth and the 
Pejawar Math pontiff had not borne fruit. ``One MW of Gerusoppa power has 
eaten away a minimum of 10 hectares of fertile, evergreen forest of the 
Sharavathi valley which was once full of medicinal plants and rich 
bio-diversity. The KPC should at least take up an afforestation programme to 
ensure that sufficient rains fall to fill up the dam and produce power,'' he 
added.

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


Dunham, Lay, Raymond Among Few to Meet With Cheney on Energy
2001-05-16 00:01 (New York)


     Washington, May 16 (Bloomberg) -- Archie Dunham, chief
executive of Conoco Inc., told Vice President Dick Cheney that it
was time to stop using unilateral sanctions as a diplomatic weapon
against fuel-rich countries like Libya.
     Enron Corp. Chairman Kenneth Lay said he used his time with
the vice president to talk about how to open power markets.
     And Exxon Mobil Corp. CEO Lee Raymond made the case to Cheney
for reducing federal regulations.
     The three chief executives, all big contributors to President
George W. Bush, were able to make their case to a White House
energy task force at the highest level: Cheney is in charge of it.
And when the task force releases its report tomorrow, many of
their recommendations will be in it.
     No such access to Cheney was available for many others.
Leaders of environmental groups, including the Sierra Club and the
Natural Resources Defense Council, didn't make it onto Cheney's
calendar. Neither did California Governor Gray Davis, a Democrat,
who was told to submit a one-page memo.
     ``They bumped us to staff level,'' said Alys Campaigne,
NRDC's legislative director. ``That there was no outreach to the
CEOs of environmental groups is striking.''
     The task force is recommending a broad basket of ideas to
encourage domestic fuel production, including regulatory changes
that will make it easier to build more refineries, pipelines and
transmission lines; plans to promote more oil and gas exploration;
and tax credits to promote renewable energy sources like wind and
solar power.

                         `All Sides' Heard

     Juleanna Glover Weiss, Cheney's press secretary, says the
idea that the energy task force had a two-tiered system for
getting input is ``nonsense.'' She said Cheney had only about a
half dozen private meetings. ``The vice president has listened
carefully to all sides of the debate,'' she said.
     The administration has spurned congressional and
administrative inquires into whom top officials such as Cheney,
Energy Secretary Spencer Abraham and economic adviser Lawrence
Lindsey met with. To some, the meetings are simply further
evidence of the energy industry ties that both Bush and Cheney
brought to the job, and the support they have received from that
industry during the campaign -- roughly $2.9 million in
contributions, according to the Center for Responsive Politics,
which tracks campaign finance.
     ``Bush came in with goals and assumptions about energy that
played right into the business community,'' said Stu Rothenberg,
editor of the non-partisan Rothenberg Political Report.

                       Supply-Side Arguments

     Those who were willing to talk about their meetings with
Cheney described businesslike, formal sessions.
     Lay said that he discussed ``the whole issue of making
wholesale markets work better,'' a mantra for Enron, the country's
top wholesale power marketer. Cheney made no commitments, Lay
said, but he was sympathetic.  ``He fully understood,'' Lay said.
     Lay raised more than $100,000 for Bush during the campaign.
Enron contributed nearly $2.4 million to candidates, with 72
percent going to Republicans. The company was Bush's tenth-largest
contributor, at $113,800.
     Conoco's Dunham, who also raised more than $100,000 for Bush,
declined to discuss his March 21 talk with Cheney except to say he
expects the vice president will remain opposed to unilateral
sanctions. The issue is a big one for Conoco and other oil and gas
companies unable to tap large holdings abroad because of U.S.
sanctions in places like Libya and Iran.
     Exxon, Vice President Jim Rouse said that he and other
officials met for 30 minutes with Cheney Feb. 8 and 45 minutes
with the task force staff a week later.
     ``We don't want to wear out our welcome,'' he said. ``We had
a story to tell, we told it, that was it.''
     Exxon contributed nearly $1.4 million in campaign
contributions, with about 89 percent going to Republicans.

                  Complaints From Those Left Out

     For those denied access to the highest ranking members of the
task force, the process confirmed fears of being shut out.
     ``The energy industry is in the White House,'' said Anna
Aurilio, legislative director at the U.S. Public Interest Research
Group.
     Steve Maviglio, a spokesman for Davis, said California's
Democratic governor hasn't been allowed any more input than the
other 49 governors. Though the administration has contacted
California Republicans, Maviglio said ``There hasn't been a very
strong link engaging us in terms of the problems.''
     A coalition of environmental leaders from 32 organizations
known as the Green Group requested a meeting with Cheney to no
avail, though they did meet April 18 with Environmental Protection
Agency Administrator Christine Whitman.
     Later, the NRDC, a member of the group, filed formal requests
to learn whom task force members saw. It was denied and the group
is now appealing. Democratic representatives Henry Waxman of
California and John Dingell of Michigan, both members of the House
Energy and Commerce Committee, requested similar information. They
received a reply May 4 that Laura Sheehan, the committee's
Democratic spokeswoman, described as ``inadequate.''
     ``We just want to find out who's influencing them,'' said
NRDC lawyer Sharon Buccino, ``because it isn't us, the
environmental community.''