LME Base Metals:Aluminum Ends Officials Dn On Fresh Sales
Dow Jones Commodities Service, 07/06/01

ENTERPRISE INTERVIEW: India's salesman to the investing world
AsiaWeek, 07/06/01

India: Dabhol delay: RCF turns to BG
Business Line (The Hindu), 7/06/01
`Reduce government debt by Rs 2000 crore
The Economic Times, 07/06/01
RCF plans to ink supply pact with British Gas
Business Standard, 07/06/01
Economics fuels power solution in California Price relief gains political 
support
Chicago Tribune, 07/06/01
COMPANY NEWS
ENERGY PROVIDER IS PLANNING TWO ACQUISITIONS
The New York Times, 07/06/01
Business Brief -- NewPower Holdings Inc.: Division to Acquire Assets Of AES's 
Power Direct Unit
The Wall Street Journal, 07/06/01

Regional: Enron in talks with Gulf LNG producers
Middle East Economic Digest, 07/06/2001

News Highlights: Chang Hwa Bk 1H Pretax Pft NT$1.46B
Dow Jones International News, 07/06/01

Dabhol Project Vexes Foreign Firms --- If Enron's Dispute in India Isn't 
Resolved, Other Investments Could Suffer --- Regulators and Courts Throw in a 
New Twist
The Asian Wall Street Journal, 07/06/01

Enron May Spin Off Enron Wind Unit This Year, Reuters Reports
Bloomberg, 07/06/01

Davis Appeals Order to Release Calif. Power Contracts (Update2)
Bloomberg, 07/06/01

NewPower to Acquire Customers From AES and DTE Energy (Update2)
Bloomberg, 07/06/01


LME Base Metals:Aluminum Ends Officials Dn On Fresh Sales

07/06/2001
Dow Jones Commodities Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

LONDON -(Dow Jones)- London Metal Exchange three-month aluminum ended 
officials lower Friday from Thursday's late kerb, on heavy fresh speculator 
selling in Asian trade and an unexpected stock build, dealers said. 
(LME three-month prices in dollars a metric ton at officials, with the 
previous late kerb close in brackets. Comex copper at 1324 GMT in cents a 
pound, with the previous close in brackets.)
Copper 1,562.50 (1,560.00) Tin 4,537.50 (4,535.00) 
Aluminum 1,449.50 (1,451.50) Zinc 886.25 (884.50) 
Nickel 5,975.00 (5,962.50) Lead 459.50 (450.50) 
Comex Sep Copper 70.25 (70.85) 
The Asian selloff forced aluminum down to a one-year low at $1,434/ton, and 
after some early forward buying interest in the pre-market in London, the 
market took a further blow as LME stock movements were released. 
Aluminum stocks rose 1,450 tons Friday, bringing total stocks to 626,550 
tons. 
"It (the stock increase) was fairly unexpected, but it exposes the slackening 
demand that has characterized this market for the last six months," said one 
LME dealer. 
The move kept aluminum prices depressed for much of the morning, before more 
forward and bank buying emerged in the first two rings to pull prices off the 
lows for officials. 
Aluminum's early falls pulled the already nervous copper market to a two-year 
low at $1,552/ton, and although the latter's stock rise was much more 
considerable, it had been expected, dealers said. 
Copper stocks in LME warehouses have risen by over 50,000 tons in the last 
two weeks, and a number of dealers are still insistent that another 
30,000-40,000 tons will be seen in the coming two weeks. 
Unconfirmed reports have said major trade house Enron is behind the stock 
build, in an effort to reduce the market's nearby supply tightness and 
alleviate the large short positions they are thought to have built up on the 
July-for-a-week spread. 
However, the stock builds are only having a limited effect in easing the 
tightness. 
"Everyone knows what they (Enron) are up to, and won't lend until they're 
really hurting," one LME floor dealer said. 
Spreads were also a focus of the tin market, where prices slumped to an 
eight-year low at $4,490/ton, after the cash-to-three-month spread reverted 
to a $25/ton contango Friday morning from a $60/ton backwardation at the 
beginning of the week. 
The move was caused by heavy lending of the nearby spreads and rolling 
forward to September, a tin dealer said. 
"I think we've seen the last of the tightness for a couple of months," he 
added. 
-By David Elliott, Dow Jones Newswires; 44 207 842 9353; 
david.elliott@dowjones.com

ENTERPRISE INTERVIEW: India's salesman to the investing world

07/06/2001
AsiaWeek 
Copyright (C) 2001; Source: World Reporter (TM) - Asia Intelligence Wire 

Convincing foreign investors that his country is a good place to do business 
is a tough sell. But Delhi's finance minister insists that despite a few 
high-profile setbacks his country offers the world's best returns 
Indian finance minister Yashwant Sinha has had a roller-coaster year. In 
February, he delighted foreign investors with a reformist, pro-business 
budget. But days later, confidence was rocked by a stock market crash and 
insider trading scandal.
Then New Delhi's first major privatization, of the BALCO aluminum plant, 
sparked a crippling two-month strike by workers. Worse, India's biggest and 
once most trumpeted foreign investment, Enron Corp's $3-billion Dabhol power 
project, remains at a standstill following claims the Maharashtra state 
government defaulted on payments. A U.S.-led $1.6-billion power project near 
Madras is stalled over financing. 
Recently, during a road show to Hong Kong and Singapore, Sinha spoke with 
Executive Editor Richard Hornik, Managing Editor Zoher F. Abdoolcarim and 
Senior Editor Cesar Bacani. Extracts from their conversation: 
Can India really compete for investment? 
We have completely opened up the Indian market. I know that China and other 
countries have been receiving large foreign direct investments, but let's not 
forget that they started much earlier on the reform path. The problem is one 
of perception. We have the challenging task of explaining the new India to 
the world. 
Don't you also have the task of explaining it to the Indian people? Isn't 
there a resentment of foreign companies left over from the colonial era? 
Every government has pursued the same reform path, including welcoming 
foreign direct investment. There has [also] been a very marked change from 
what you referred to as the colonial past. The increasing realization is that 
it is not Western multinationals that are causing problems. It is competition 
from other developing countries. 
There seems to be disquiet among investors, though, about high-profile cases 
such as Enron and BALC0. 
BALCO had nothing to do with foreign investment. It was a 100% government 
company, and we decided to sell 51% along with management control. There was 
some resistance, but fortunately that has been resolved. In the case of Enron
, I have clearly sent out a message to both the Maharashtra government and 
[Enron] that they had to sit down in the spirit of constructive cooperation 
and find a solution. Let's not [interpret] a commercial dispute involving one 
company as being a major disincentive for foreign investment. 
What are you doing to increase governance in the financial world? 
I have told Parliament three things: That we shall adopt international best 
practices so that the scope of mischief is reduced further; that we must 
strengthen the market regulator; and that we want to corporatize the stock 
exchanges, which are run by the brokers, so there can be no conflict of 
interest. 
In India, can what is manufactured by foreign-owned firms be sold locally? 
Absolutely. And because of its sheer size, India's middle class of 250-300 
million consumers is almost like a middle-sized [developed] country. In terms 
of purchasing power parity, India is considered to be the world's third 
largest economy. Another advantage for investors] is that we have a judicial 
system that does justice to Indians and foreigners alike. 
But it's slow - very slow. 
When you say slow, there are courts of appeal from primary courts to the High 
Court to the Supreme Court. You can't do away with this. You can't compare it 
with autocratic regimes, where justice can be swift but at times misguided. 
How is the privatization program faring? 
In the case of Air India, we decided we'd retain 40%, 10% would go to 
employees, another 10% would go to the market and 40% would be made available 
to strategic buyers. Only 26% would go to foreign partners. Similarly we have 
taken a decision to disinvest [telco] VSNL. We will privatize the domestic 
airline, Indian Airlines, the largest automobile manufacturer, Maruti, and 
hotels owned by the Tourism Development Corp. 
What are your main frustrations? 
Foreign investors have all kinds of perceptions that India is not worth doing 
business with, [but] studies by independent consultants A.T. Kearney and the 
Indian Chamber of Commerce and Industry show foreign direct investors have 
made more profits in India than anywhere else in the world and most are 
bullish about the future. Now this is something that is not known.

India: Dabhol delay: RCF turns to BG

07/06/2001
Business Line (The Hindu) 
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire 

BANGALORE, July 5. FACED with delays in gas availability from Enron's Dabhol 
regassification plant, the public sector Rashtriya Chemicals and Fertilisers 
Ltd (RCF), has turned to British Gas (BG) for supply of liquefied natural gas 
(LNG) to meet its feed stock requirements. Speaking to reporters here today, 
the RCF Chairman and Managing Director, Mr D.K. Verma, said that RCF's 
requirement of LNG was about 1.5 million tonnes per annum. 
As per the agreement with Enron, the LNG supply was expected to have begun 
from Dabhol to its Thal plant in Maharashtra. Enron's requirement for power 
generation was only about 2.5 million tonnes and the remaining was expected 
to be sold to third parties which included RCF.
However, he said, these supplies were faced with uncertainty in view of the 
stand-off between the Maharashtra State Electricity Board and Enron. 
Asked if this would lead to a termination of the agreement with Enron, he 
said: "We still need LNG. When supply from Dabhol is available we will pick 
it up." 
In addition to this supply, BG was also expected to supply another 1.7 
million from Gujarat to the Trombay plant of RCF. This requirement was in 
view of the capacity expansion that has been proposed for the urea plant. The 
capacity of the urea plant is to be raised to 2.3 million tonnes from the 
current level of 1.5 million tonnes. This expansion is expected to cost at 
least Rs 1,400 crore, of which Rs 800 crore would be funded from RCF's cash 
reserves. 
The debt component is expected to be raised from ICICI. "We are a zero-debt 
company now and can afford to have a little debt on our balance sheet," he 
said. The company, he said, was also preparing to expand its DAP (di-ammonium 
phosphate) capacity in Rajasthan at a cost of Rs 300 crore. This four-lakh 
tonne per annum plant was being set up with 25 per cent equity support each 
from Hindustan Zinc Ltd and Rajasthan Mines and Minerals Corporation Ltd. The 
remaining 50 per cent would be entirely held by RCF itself, he added. 
Mr Verma indicated that a final decision on the expansion of the urea plant 
would be taken by the company's board only after the interim fertiliser 
policy was announced by the Centre. This policy is expected to provide for a 
pricing policy and prepare the industry for complete dismantling of the 
retention pricing mechanism. 
He said that the industry was also looking forward to supplies of LNG from 
Iran. Supply of gas through the pipeline route via Pakistan would be more 
cost-effective than the submarine pipeline proposed. 
- Our Bureau

`Reduce government debt by Rs 2000 crore
ET Interview / Shalini Singh

07/06/2001
The Economic Times 
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) 

FOR an organisation that has done its best to boost sentiment by repeatedly 
announcing that it expects the economy to grow by 6.5 to 7 per cent this 
year, the Confederation of Indian Industries, finds the current official 
projections of 5.2 per cent way down at the lower end of their own forecast. 
I believe our projections were realistic considering that on the economic 
front all the macro-fundamentals are in place. The policies are in place.
It is just that the implementation of these policies is not happening. And 
that is the only reason for a lower growth rate than was envisaged by 
industry. 
No. There is no way that can happen. On the other hand, with some hard 
decisions, we could still move closer to a growth of 6.5 per cent. 
The most radical would be a dramatic reduction in government debt by Rs 
20,000 crore right away. We need to examine what we need to do to achieve 
this level of reduction and the whole country needs to cooperate in the 
effort. 
The whole nation needs to rally around the FM if he makes these moves. We 
need to move ahead on disinvestment, on reduction in expenditure. 
What we are additionally prescribing is that issues and policies which have 
been committed should be implemented. Implementation is going to be the key 
to success. 
The CII is preparing to submit, over the next fortnight, a list of 20 
projects in housing, power, roads, railways and civil aviation to the 
government to be monitored on a weekly basis to stimulate growth. 
Growth can also be stimulated by increased government spending on creating 
world class capitals for the three new states Uttaranchal, Jharkhand and 
Chhatisgarh. 
With an expenditure of just Rs 10-15,000 crore, the government can stimulate 
demand in cement, power, roads and infrastructure. The funds are there. It is 
just that there is no thought or planning in this direction yet. 
The third thing that we are prescribing is that interest rates must come 
down. I disagree with the RBIs stand on interest rates. Like in the US, we 
too must respond quickly and proactively to the slowdown. 
Fourthly, we have an overvalued exchange rate and we believe it is time we 
moved to a realistic exchange rate. We are just about to see the first 
effects of an overvalued rupee on the growth rate of exports and we need to 
arrest this declining rate of export growth. 
On the contrary, there is recognition and respect for the government that 
despite a global slowdown, India is still the second fastest growing economy 
after China. 
Any disappointment that is voiced is actually in the spirit of moving to 
better performance rather than a critique of the establishment. 
I truly believe we are today at the threshold of a unique opportunity. 
Different countries the US, EU, Malaysia and so on want to engage in trade 
with India in a manner that nobody has looked at before. 
President Bush and the Bush administration want to engage in a substantial 
trade relationship with India which is based on mutually beneficial long-term 
relationships. It offers India a unique window. 
There is huge respect for Mr Vajpayee, Mr Jaswant Singh and Mr Yashwant 
Sinha. The world is recognising Indias potential. 
Enron is an issue in the minds of the Americans that is stalling investment 
commitment, despite this respect, and this must be addressed quickly if we 
are to maximise on our overseas business dialogue.

RCF plans to ink supply pact with British Gas
Our Bureau Bangalore

07/06/2001
Business Standard 
4
Copyright (c) Business Standard 

Rashtriya Chemicals & Fertilisers Ltd (RCF) is planning to sign an agreement 
with British Gas for supply of gas to meet its fleet stock needs. 
RCF chairman and managing director D K Verma told newspersons that the 
company's requirement of LNG was about 1.5 million tonne per annum. As per 
its existing agreement with Enron, LNG supply should have already began from 
Dabhol to its Thal plant in Maharashtra.
Enron's requirement for power generation was only about 2./5 million tonne 
and the remaining was to be sold to third parties including RCF. The RCF, CMD 
said that these supplies now faced an uncertain future, because of the 
stand-off between MSEB and Enron. 
Asked if it would lead to a termination of the agreement with Enron, he said 
"We still need LNG. If supply is available from Dabhol we will pick it up," 
he said in reaction to a question on whether it would lead to a termination 
of RCF's agreement with Enron. 
In addition to this supply, British Gas is also expected to supply another 
1.7 million tonne to the Trombay plant of RCF. This requirement was in view 
of the capacity expansion that has been proposed for the urea plant of RCF. 
"The capacity of the urea plant is to be raised from 2.3 million tonne from 
the production level of 1.5 million tonne." This expansion is expected to 
cost at least Rs 1,400 crore, of which Rs 800 crore would be funded from 
RCF's cash reserves, he said. 
The debt component is expected to be raised from ICICI. The company he said 
was also preparing to expand DAP in Rajasthan for Rs 300 crore. 
This 4 lakh tonne per annum plant was being set up with 25 per cent equity 
support each from Hindustan Zinc and the Rajasthan Mines and Minerals 
Corporation. The remaining 50 per cent would be held by RCF itself. 
Verma also said that the final decision of the expansion of the urea plant 
would be taken by the board of the company only after the interim fertiliser 
policy announcement to be announced by the Centre. 
The policy is expected to provide an interim measure of fertiliser pricing 
and prepare the industry for complete dismantling of the retention pricing 
mechanism.

Business
Economics fuels power solution in California Price relief gains political 
support
Robert Gibbons, BridgeNews

07/06/2001
Chicago Tribune 
North Sports Final ; N
3
(Copyright 2001 by the Chicago Tribune) 

Political pressure coming from the U.S. Congress and politicians from Western 
states seems to have influenced the approach to the power crisis, despite 
opposition to price caps in the Bush administration. 
The Federal Energy Regulatory Commission in June expanded price mitigation 
measures on wholesale electricity sales in California during periods when 
blackouts are possible.
The measures encourage generators to sell power into the state to prevent 
emergency alerts from being declared, which trigger price caps. The move came 
with support growing in Congress, especially among representatives of Western 
states on both sides of the aisle, for legislation that would have capped 
wholesale prices in the region. 
The macroeconomic force may have been the difference between the $7 billion 
cost of power for California in 1999 and its rise to approximately $27 
billion in 2000. The cost is estimated to reach between $50 billion and $70 
billion in 2001. 
With that kind of money at stake, suddenly the concern becomes less a 
question of who is responsible for the problem, but rather, how it can be 
solved quickly to prevent harsh political consequences. 
California Atty. Gen. Bill Lockyer has conducted an investigation into the 
actions of power generators and offered multimillion dollar rewards to 
whistleblowers to provide evidence of price manipulation by independent power 
generators. The state is seeking refunds of $8.9 billion, the amount it 
estimates independent power generators overcharged California's troubled 
utilities. 
The U.S. General Accounting Office has released a report criticizing the FERC 
for not finding evidence of power generators using plant outages to drive up 
prices in California. 
"FERC's [February] study was not thorough enough to support its overall 
conclusion that audited companies were not physically withholding electricity 
supply to influence prices," the GAO found. 
Of the major independent power generators and marketers, like Reliant Energy, 
Dynegy, Duke Energy and Enron, only Williams and its CEO Keith Bailey came 
out in April in favor of some sort of short- term price relief for 
California. 
"The political dynamic out there is much more Draconian than what we're 
proposing," Bailey told analysts in April, defending Williams' position 
supporting some limited, short-term price mitigation. 
What he was worried about was California Gov. Gray Davis using eminent domain 
powers to take over power plants and the state setting up a public power 
authority to build state-owned plants.

Business/Financial Desk; Section C
COMPANY NEWS
ENERGY PROVIDER IS PLANNING TWO ACQUISITIONS
Reuters

07/06/2001
The New York Times 
Page 4, Column 1
c. 2001 New York Times Company 

The New Power Company, a national energy provider partly owned by Enron, said 
yesterday that it planned to make two acquisitions that would increase its 
customer base by about 20 percent and increase its presence in Pennsylvania 
and Ohio. Terms of the agreements, with AES Direct, the retail marketing 
subsidiary of the AES Corporation, and with CoEnergy, a unit of MDTE Energy, 
were not disclosed. New Power, of Purchase, N.Y., a unit of NewPower 
Holdings, said the deals would add more than 82,000 natural gas and electric 
customers in Ohio, and about 38,000 natural gas customers in Pennsylvania.

Business Brief -- NewPower Holdings Inc.: Division to Acquire Assets Of AES's 
Power Direct Unit

07/06/2001
The Wall Street Journal 
A4
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

NewPower Holdings Inc.'s New Power Co. unit agreed to acquire assets from AES 
Corp.'s AES Power Direct retail-marketing unit. Terms weren't disclosed. 
Under the agreement, New Power, Purchase, N.Y., will acquire natural-gas 
inventory, supply and transportation contracts and infrastructure in Peoria, 
Ill., and Toronto. AES Power is based in McLean, Va. New Power, which 
provides electricity and natural gas to households and small businesses in 
the deregulated energy marketplace, also agreed to acquire, for a sum that 
wasn't disclosed, the natural-gas inventory related to the Columbia Gas of 
Ohio and Dominion East Ohio gas customer choice programs of Coenergy Trading 
Co. Coenergy is a unit of DTE Energy Co., of Detroit. The deals will expand 
NewPower's presence in Ohio and Pennsylvania, adding more than 82,000 
natural-gas and electricity customers in Ohio and 38,000 natural-gas 
customers in Pennsylvania. In 4 p.m. New York Stock Exchange composite 
trading NewPower shares rose eight cents to $8.83, and AES stock fell 93 
cents to $42.07.

Regional: Enron in talks with Gulf LNG producers

07/06/2001
Middle East Economic Digest 
Copyright (C) 2001 Middle East Economic Digest; Source: World Reporter (TM) 

The US' Enron Corporation is in talks with Abu Dhabi Gas Liquefaction Company 
(Adgas), Qatar's Ras Laffan Liquefied Natural Gas Company (RasGas) and Oman 
LNG Company to finalise short-term spot agreements for liquefied natural gas 
(LNG). 
"The target markets are the East Coast of the US and Europe," says an 
industry official. "Deliveries are presently being made to the US under an 
agreement with Oman LNG."
Enron signed a master agreement with Oman LNG in mid-2000 for the export of 
six 87,000-cubic-metre cargoes. The US energy firm has already taken two 
cargoes under the deal (MEED 22:6:01). "Enron is looking to increase the 
off-take from Oman," the official says. The US energy firm has been in talks 
with RasGas since 1997 for a short-term spot sales and purchase agreement. 
Enron will use an 87,000-cubic-metre LNG carrier, Hoegh Galleon, that its 
owns and operates, for shipments of LNG after it finalises the deals with the 
three Gulf LNG producers. 
Two new LNG carriers, each of 138,000 cubic metres in capacity, will enter 
into service by the summer of 2002 and will trade from the Gulf to the US and 
Europe. By the end of 2001, Enron will take delivery of Laxmi, at present 
under construction in South Korea. The vessel is owned jointly by Japan's 
Mitsui OSK Line, Shipping Corporation of India and Enron. In July 2002, the 
second new carrier, Excalibur, will join Enron's LNG fleet. 
Gulf LNG producers are also monitoring a plan by the US' CMS Energy to double 
the capacity of its LNG terminal at Lake Charles in Louisiana. "The demand 
for LNG in the southern American market is projected to increase, as CMS 
plans to build two new LNG terminals on the east and west coasts of Mexico," 
says the industry official. 
CMS has signed agreements for 10 cargoes of Qatari LNG. Three cargoes were 
scheduled for delivery from Qatar Liquefied Gas Company and the remaining 
seven from RasGas. CMS has been a regular purchaser of spot LNG cargoes from 
Qatar over the past three years (MEED 19:5:00).

News Highlights: Chang Hwa Bk 1H Pretax Pft NT$1.46B

07/06/2001
Dow Jones International News 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

Top Of The Hour 
Taiwan's Chang Hwa Bk 1H Pretax Pft NT$1.46B Vs NT$1.99B>Q.CHW 
S Korea Kyongnam Bank 1H Net KRW42.2B; Preliminary Data>Q.KYO 
Indonesia BCA Shr Offer Already Oversubscribed - Sources> P>PCA 
S Korea's Kumho Denies Report On Plan To Sell Tire Unit>Q.KHO 

Top Of The Day 
WorldCom Ups Year Revenue Growth View; Cuts Year Group Cash EPS View
>WCOM 
Alcatel Cuts Bid For Lucent's Optics To $3 Billion - Report >ALA 
Advanced Micro Devices 2Q Sales Fell 17%; Sees 2Q Net 3c-5c/Shr >AMD 
NZ Fletcher Forests: In Talks With Cos On Forestry JV Sale>FFS 
Taiwan's Hua Nan Bk 1H Pretax Pft Dn 22.9% At NT$2.34B>Q.HNC 
Auckland Airport Surprised By Report, To Make Strong Case>A.AIA 
Toyota Motor Consolidates Distribution In Europe - Nikkei>TM 
Coca-Cola Amatil: Reaches Pact With South Korea Unions>A.KOA 
Japan PM Koizumi: Should Abolish State-Run Oil Corp>R/JA 
Indonesia Indofood's Golden Agri Deal Stalled - Report>P.ISM 
Tropical Storm Hits China; HK Mkts Unable To Open On Time>R/HK 

Market Reports 
WSJ.COM: Asian Stocks Down Early, Pft Warnings, Nasdaq>R/ASI 
Nikkei Stock Average At Midday 12355.96, -251.34>R/JA 
Malaysia Shrs Up 3.0% Early On Foreign Buying>R/MY 
World Forex: Dollar Gains Across The Board>M/USD 
NY Stocks Fall Back, As Marconi Warning Reverberates>N/NYS 

Special Reports 
Asian Stock Focus: Weak Exports, Politics Hurt China Air>Q.CAI 
ASIA DEBT: PCCW-HKT Jumps On The Road Ahead Of The Crowd>PCW 
Hitachi Halts Cellphone Chip Plant As IT Demand Withers>J.FUT 
Heard In Hong Kong: Correlation Between Markets In Asia>R/ASI 
APP Worrying Creditors; Significantly Fewer Asset Sales>PAP 
Enron's India Problems Threaten Other Foreign Investment>ENE 

(Category codes may vary, depending on your vendor. Numbers in brackets refer 
to page numbers of stories for Bridge/Telerate subscribers using the pages 
application.)

Asian-Pacific News
Dabhol Project Vexes Foreign Firms --- If Enron's Dispute in India Isn't 
Resolved, Other Investments Could Suffer --- Regulators and Courts Throw in a 
New Twist
By Daniel Pearl
Staff Reporter

07/06/2001
The Asian Wall Street Journal 
3
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

BOMBAY -- Once touted as a beacon for attracting foreign investment to India, 
Enron Corp.'s $3 billion Dabhol Power Co. project has turned into a nuisance 
for some foreign companies doing business in the country. 
Behind the scenes, some of them are now maneuvering to help resolve a dispute 
between Dabhol and the Indian state of Maharashtra that is at the core of the 
project's problems.
The largest-ever foreign investment in India, Dabhol is mired in conflict. 
Maharashtra, Dabhol's only customer, has stopped purchasing power from the 
740-megawatt project, saying its rates are too high. Work has stopped on a 
nearly completed second phase of the project slated to generate 1,444 
megawatts. Enron, which controls 65% of the project, has tried unsuccessfully 
to scale back its stake and may be looking to exit entirely. 
In an effort to get the electricity project back on track, some of the 
project's foreign lenders -- including ABN Amro, Bank of America Corp. and 
Credit Suisse First Boston -- sent representatives to a recent meeting here 
with Maharashtra's electricity board. Dabhol's difficulties are making 
lenders wary about funding other power projects in the country, and could 
make states bolder about seeking new contract terms. 
That has left other power companies increasingly nervous about Dabhol. Some 
have signaled they could be interested in taking over the project if its 
contract problems can be settled. Dabhol participants still aren't sure if 
the interest is sincere or is an attempt by the other companies to prevent 
collateral damage to their own projects. India's Reliance Industries Ltd., 
which, in partnership with Southern Co. of Atlanta, is hoping to build a big 
plant in eastern India, doesn't deny media speculation that it is interested 
in Dabhol. Nor does Arlington, Virginia-based AES Corp., whose generating 
company has had disputes with India's Orissa state. 
Prakash Daryani, managing director for Houston-based El Paso Corp.'s Indian 
power unit, says that if the Dabhol contract isn't resolved in a way that 
makes both the utility and Maharashtra happy, "it will have an adverse 
impact" on other investments, and "El Paso will not be an exception." He 
denies reports that El Paso, which helped build a 340-megawatt plant in 
Southern India, has expressed interest in buying Dabhol, but adds: "We are 
keeping our eyes and ears open." 
Some companies may be doing more than that. Patrick Sonti, a New Delhi-based 
energy consultant, said he had helped draft a plan outlining a way out of the 
Dabhol impasse, with price concessions on both sides and financial separation 
of Enron's liquefied-natural gas terminal from the power plant. Mr. Sonti 
says he studied Dabhol for a client whose name he can't disclose. Mr. Sonti 
also chairs an American Chamber of Commerce committee on energy, and he 
acknowledges discussing his Dabhol plan with some of the panel's members. He 
says the Chamber wouldn't intervene unless asked by Enron. 
Last time the project ran into trouble with the state, Enron executives saved 
it through an intensive lobbying campaign, aided by American officials. Next 
week, the company's chairman, Kenneth Lay, is expected to fly to India, 
though Enron won't comment on whom he intends to visit. 
Even though Enron and Maharashtra officials have met regularly, their dispute 
has fallen into a slow-motion stalemate, with Enron saying it hasn't agreed 
to renegotiate the contract and the state insisting it has already rescinded 
the contract. Despite warnings that construction delays will increase the 
project's cost by up to $400 million, Vinay Bansal, chairman of the 
electricity board, said Monday that getting the project's second phase 
running is "not a priority for us," since the state can't afford the power. 
The Dabhol contract requires the state to pay for most of the plant's 
generating capacity regardless of how much power it consumes. Maharashtra's 
consumption has been far below projections. 
Mr. Bansal wants India's central government to help buy excess power from 
Dabhol, but "they keep saying no." Other states would be willing to buy power 
if the rates could be lowered to 2.50 rupees (5.3 cents) a unit, but that's 
still well below Dabhol officials' most optimistic projection. 
Meanwhile, India's regulators and courts are throwing in new twists. The 
Maharashtra Electricity Regulatory Commission, set up as an independent body 
to regulate electricity rates, is seeking jurisdiction over the Dabhol 
dispute, even though the commission was created after the Dabhol contract was 
signed. Enron wants an arbitration panel to decide instead. A Bombay judge 
issued a ruling last week that is likely to send the jurisdiction battle to 
India's Supreme Court. 
If Enron loses that battle, it is likely to lose more time. "We'll make the 
process totally transparent," the chairman of the Maharashtra Electricity 
Regulatory Commission, P. Subramanyam, promised in an interview earlier this 
year. 
But if Dabhol construction doesn't resume by summer's end, Enron's suppliers 
of liquefied natural gas are likely to get nervous. Dabhol has 20-year 
contracts requiring it to buy liquefied natural gas from Abu Dhabi and Oman 
starting next year. As for the lenders, Indian banks have more to lose than 
foreign banks if Dabhol, starved of revenue, continues to miss payments. That 
is because much of the foreign debt is guaranteed by the Indian banks, led by 
state-controlled Industrial Development Bank of India. For the project's 
second phase, foreign debt totals nearly $1.1 billion, and domestic debt 
about $330 million. Lenders haven't yet agreed to inject more funds to allow 
construction to resume. 
"I don't think there is any division among lenders at the moment as to what 
should be done," says an international lender involved in the talks. "But 
this is not an easy workout, having so many parties involved in so many parts 
of the world."


Enron May Spin Off Enron Wind Unit This Year, Reuters Reports
2001-07-06 07:18 (New York)


     Copenhagen, July 6 (Bloomberg) -- Enron Corp. may spin off
its wind-power unit Enron Wind as early as this year, Reuters
reported, citing comments made by Enron Wind managing director
Andreas Reuter on Wednesday.
     The unit most likely would be taken over by an investor and
then shares sold in an initial public stock offering, Reuters
reported, citing comments Reuter made on the sidelines of a
European Wind Energy Conference and exhibition in Copenhagen.
     Enron Wind is concentrating its expansion plans on France,
Ireland and the Netherlands, Reuter said.
     Enron Wind currently produces power in Germany and Spain and
would consider moving to the U.K. as well if that market ``starts
moving,'' Reuters reported, citing Reuter.

(Reuters 7-6 Interactive)

For the Web site of Reuters, see {RNEW <GO>}.

--Geoffrey Smith in the Princeton newsroom (609) 279-4028, or
gsmith15@bloomberg.net/bk

Story illustration: To chart Enron's share price, see
{ENE US <Equity> GP <GO>}.


Davis Appeals Order to Release Calif. Power Contracts (Update2)
2001-07-05 17:31 (New York)

Davis Appeals Order to Release Calif. Power Contracts (Update2)

     (Adds details on filing of governor's appeal.)

     San Diego, July 5 (Bloomberg) -- California Governor Gray
Davis has appealed a state judge's order to release records of how
much the state spent purchasing power on the spot market.
     San Diego Superior Court Judge Linda Quinn ruled last week
that the governor had to produce spot market invoices, purchase
orders and confirmation sheets for power supply contracts signed
from January 1 through June 27.
     Quinn directed Davis to produce the documents by July 16, but
she temporarily suspended her order today to allow a state appeals
court to consider the governor's appeal, which was filed Tuesday.
     Several media organizations and Republican state legislators
sued in March under California's public records law to obtain the
contracts, arguing that the state used billions in taxpayer money
to buy power.
     ``There's an obvious and manifest public interest in
disclosure of these contracts,'' said Alonzo Wickers, a lawyer
representing the media companies, at a hearing last week.
     Davis countered that disclosure would hurt the state's
bargaining position with generators and force it to pay higher
prices.
     Media companies had also sought disclosure of 38 uncensored
long-term contracts to buy $43 billion in electricity. State
Controller Kathleen Connell released those contracts on Monday.
     Connell, a fellow Democrat, has criticized the governor for
keeping the contracts secret. She also released terms of
consulting contracts the state made with investment advisers and
energy traders.

                          Power Purchases

     The state has spent about $7.4 billion buying electricity for
three investor-owned utilities. The state's Department of Water
Resources now buys about one-third of the power used by the
state's two largest utilities, PG&E Corp.'s Pacific Gas & Electric
and Edison International's Southern California Edison. Pacific Gas
declared bankruptcy in April.
     Legislators and consumer groups have criticized Davis, saying
the state is locking itself into expensive long-term contracts
that would force it to pay higher rates for electricity in future
years.
     Those seeking access to the long-term and spot-market
contract information include Copley Press Inc., Tribune Co.'s Los
Angeles Times and Bloomberg LP's Bloomberg News. State Assemblyman
Tony Strickland, joined by 10 fellow Republican Assembly members,
filed a similar suit in March.

--Joyzelle Davis in Los Angeles (213) 617-0582, or
joydavis@Bloomberg.net, with reporting by David Ward in San
Francisco (415) 912-2995, through the Washington newsroom /ta

Story illustration: To see a graph of the Bloomberg PowerMatch
Trading Index of Northern California power prices:
{PMATNPSP <Index> GP D <GO>}.



NewPower to Acquire Customers From AES and DTE Energy (Update2)
2001-07-05 16:10 (New York)

NewPower to Acquire Customers From AES and DTE Energy (Update2)

     (Adds closing share prices in last paragraph.)

     Purchase, New York, July 5 (Bloomberg) -- NewPower Holdings
Inc., a venture formed last year by Enron Corp., agreed to acquire
customers and assets from subsidiaries of AES Corp. and DTE Energy
Co. to expand in Ohio and Pennsylvania.
     NewPower, which sells electricity and natural gas to homes
and small businesses, will buy customers and assets such as
natural-gas inventory and supply contracts from AES Power Direct
and DTE's CoEnergy unit. Financial terms won't be disclosed,
NewPower spokeswoman Terri Cohen said.
     The acquisitions will add 82,000 customers in Ohio and more
than 38,000 customers in Pennsylvania for NewPower. The company,
which had an initial stock sale in October, competes for energy
sales in Pennsylvania, Texas and other states.
     NewPower, based in Purchase, New York, has more than 630,000
customers in 10 states and expects to have 1.2 million customers
by the end of the year. Houston-based Enron, the largest energy
trader, owns about 23 percent of NewPower.
     Shares of NewPower rose 8 cents to $8.83. They have fallen
58 percent since the initial offering. AES, based in Arlington,
Virginia, fell 93 cents to $42.07. Detroit-based DTE rose 18 cents
to $46.68.

--Mark Johnson in the Princeton newsroom, (609) 279-4017 or
mjohnson7@bloomberg.net/slb/cmm/kak

Story Illustration: For NewPower's stock performance for the past
year with its comparable indexes, see
{NPW US <Equity> COMP D <GO>}. For more energy news, see
{TOP NRG <GO>}.