---------------------- Forwarded by Rob G Gay/NA/Enron on 01/31/2001 07:43 AM 
---------------------------


Rob G Gay
01/31/2001 09:55 AM
To: bboeh@opic.gov, "Kluesener, Frank" <frank.kluesener@kfw.de>, Susan 
.garven@stoneweb.com, Bradley.Barta@Stoneweb.com
cc:  

Subject: Siemens negotiations


Two agreements have been negotiated with Siemens as part of the plant 
turnover for Provisional Completion Phase III on oil: 1) the EOT Claim 
Agreement between Siemens and SCC and 2) modifications to the TAA between 
Siemens and EPE.

The changes which the lenders should review are as follows:

EOT Claim Agreement

14 Day Availability Test with respect to Provisional Completion Phase III on 
oil, on a look-back basis over 6 months, required as a specific performance 
requirement
After PC on oil, Siemens can demobilize
Compensation for commissioning on oil $5,720,000; $30,000 per day for owner 
delay
Bonus of $15,000 per day that PC achieved before 17 Feb
Phase III Substantial Completion on gas
60 days prior written notice on gas availability
If sound level guarantees demonstrated on oil, only need to demonstrate far 
field sound on gas
Owner must operate and maintain per O&M manuals and industry practices on 
oil; if not, owner must correct items materially affecting Contractor's 
commissioning obligations
Performance guarantees remain in tact per EPC
Long stop date on Phase III Substantial Completion on gas of 31 Dec 01
Substantial Completion on gas - punchlist limited to deficiencies from Work 
performed to achieve Substantial Completion on gas
Risk of Loss remains with owner during commisioning on gas
Siemens agrees to enter into negotiations to provide operational assistance
Degradation - agree to use curves with credit to owner for degradation during 
commissioning
Compensation for commissioning on natural gas $1,220,000 lump sum; $20,000 
per day for owner delay
Warranty - 6 months after Provisional Completion on oil
Option to buy extended warranty for up to 6 months at $175,000; must elect 60 
days prior to expiration of Primary Warranty Period
Performance LD's on gas per the EPC contract with first $4,000,000 forgiven 
by owner
Delay LD's on gas do not start until 60 days after performance test on gas
Payments to be paid (including EOTof $5,720,000): 15 Feb  $5,446,141; 28 Feb  
$14,353,401 with offset of $4,000,000 for Phase I LD payment due from Siemens 
to SCC
Late payment interest rate of 14%

TAA Agreement

Effective date Provisional Completion Phase III on oil
No 12 month look back
12 month Initial Guarantee Period, with the clock suspended for gas 
commissioning unless owner delay. 


Additional Insurance

In order to provide the lenders an adequate warranty period on gas (if there 
are additional delays on the P/L) our Insurance group has  indicated that we 
will have no problem obtaining 12 months renewable business interruption 
insurance when we go operational on gas.  This should solve the issue over 
the revised warranty with Siemens because it covers defects, design, and 
workmanship on the turbines and includes lost profits, etc.  Incidentally, 
for insurance purposes the turbines are designated DE3 which is not a new 
technology designation.   The duration of BI coverage is 18 months per event 
with US$150,000 deductible.
Typically we will always have this coverage in place but if their is a 
supplier warranty then the party providing the warranty pays ahead of the 
insurer.  In the case where the supplier does not pay or the warranty has 
ended then the insurer is the primary.


We will need to execute these agreements immediately.  Please advise with 
your thoughts as soon as possible..