Partnership Spurs Enron Equity Cut --- Vehicle Is Connected To Financial Officer
The Wall Street Journal, 10/18/01
Suit alleges conflict of interest at Enron
Houston Chronicle, 10/18/01
Enron Shareholder Sues Over Partnerships Run By CFO (Update2)
Bloomberg, 10/17/01

Analysts vent anger at 'hidden' Enron charge.
Financial Times - FT.com, 10/18/01
Enron Says Its Links to Partnership Led to $1.2 Billion Equity Reduction
Dow Jones Business News, 10/18/01
Markets Ford's Financial Fine-Tuning Leads to $692 Million Loss in 3rd Quarter Earnings: Sales incentives, production cutbacks hit company hard. CEO plans reorganizational moves.
Los Angeles Times, 10/18/01
UK: ANALYSIS-LME members survey hard choices ahead.
Reuters English News Service, 10/18/01
Maharashtra to challenge London court order on DPC
The Economic Times, 10/18/01
India: Enron: Maharashtra to move London court in a week
Business Line (The Hindu), 10/18/01
India: GAIL keen on Dabhol LNG terminal project
Business Line (The Hindu), 10/18/01
FERC To Discuss Possible Changes To West Pwr Price Caps
Dow Jones Energy Service, 10/17/01




Partnership Spurs Enron Equity Cut --- Vehicle Is Connected To Financial Officer
By Rebecca Smith and John R. Emshwiller
Staff Reporters of The Wall Street Journal

10/18/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Enron Corp. shrank its shareholder equity by $1.2 billion as the company decided to repurchase 55 million of its shares that it had issued as part of a series of complex transactions with an investment vehicle connected to its Chief Financial Officer Andrew S. Fastow. 
Enron didn't disclose the big equity reduction in its earnings release issued on Tuesday, when the Houston-based energy giant announced a $1.01 billion charge to third-quarter earnings that produced a $618 million loss. But the company briefly mentioned it in a subsequent call with security analysts and confirmed it in response to questions yesterday. As a result of the reduction, Enron's shareholder equity has dropped to $9.5 billion, the company said.
In an interview Tuesday, Enron Chairman Kenneth Lay said that about $35 million of the $1.01 billion charge to earnings was related to transactions with LJM2 Co-Investment LP, a limited partnership created and run by Mr. Fastow. In a conference call yesterday with investors, Mr. Lay said that the 55 million shares had been repurchased by Enron, as the company "unwound" its participation in the transactions. In the third quarter, the company's average number of shares outstanding was 913 million. 
According to Rick Causey, Enron's chief accounting officer, these shares were contributed to a "structured finance vehicle" set up about two years ago in which Enron and LJM2 were the only investors. In exchange for the stock, the entity provided Enron with a note. The aim of the transaction was to provide hedges against fluctuating values in some of Enron's broadband telecommunications and other technology investments. Mr. Causey didn't elaborate on what form those hedges took. 
Subsequently, both the value of Enron's stock and the value of the broadband investments hedged by the entity dropped sharply. As a result, Enron decided essentially to dissolve the financing vehicle and reacquire the shares. When Enron reacquired the shares, it also canceled the note it had received from the entity. 
In addition, Enron was receiving increasing criticism from analysts and major shareholders concerning the apparent conflict of interest involving the role of its chief financial officer in the partnership, from which he stood to make millions of dollars. In July, Mr. Fastow formally severed his connections to LJM. Mr. Fastow has declined to be interviewed. 
Given all the complexities of the LJM-related financing vehicle and the questions it raised outside the company, "the confusion factor wasn't worth the trouble of trying to continue this," Mr. Causey said. 
Enron downplayed the significance of the share-reduction exercise. Mark Palmer, an Enron spokesman, described it "as just a balance-sheet issue" and therefore wasn't deemed "material" for disclosure purposes. 
Jeff Dietret, an analyst for Simmons & Co. in Houston, said that a large reduction of equity could be "a flag for the rating agencies" because it could adversely affect a company's debt-to-equity ratio. Enron said yesterday that as a result of the equity reduction, its debt-to-equity ratio rose to 50% from 46% previously. 
On Tuesday, after Enron reported its big quarterly loss, Moody's Investors Service Inc. put Enron's long-term debt on review for a possible downgrade. Moody's said the move was related to "significant write-downs and charges reflecting substantially reduced valuations" in several of Enron's businesses. In recent years, Enron had moved aggressively into broadband telecommunications and the water business, both of which failed to produce expected returns. 
Enron, which as of June 30 had $33.6 billion in current liabilities and long-term debt, has lately been attempting to shed assets to pay down debt.

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


Oct. 18, 2001
Houston Chronicle
Briefs: Houston & state 
Suit alleges conflict of interest at Enron
Enron Corp.'s board cost the company at least $35 million by allowing the chief financial officer to manage partnerships that bought Enron assets, a shareholder alleges. 
Fred Greenberg filed the suit Wednesday in Harris County District Court, said his lawyer, Paul Paradis. 
Chief Financial Officer Andrew Fastow's positions with two limited partnerships that bought Enron assets were a clear conflict of interest, Paradis said. The lawsuit doesn't specify which assets the partnerships bought. 
The lawsuit comes a day after Enron reported $1.01 billion in third-quarter losses from failed investments. 



Enron Shareholder Sues Over Partnerships Run By CFO (Update2)
2001-10-17 19:42 (New York)

Enron Shareholder Sues Over Partnerships Run By CFO (Update2)

     (Adds detail on third-quarter loss in final paragraph.)

     Houston, Oct. 17 (Bloomberg) -- Enron Corp.'s board cost the
company at least $35 million by allowing the chief financial
officer to manage partnerships that bought Enron assets, a
shareholder alleges in a lawsuit.

     Shareholder Fred Greenberg filed the suit today in Harris
County District Court in Houston, said Paul Paradis, a partner at
the law firm Abbey Gardy LLP and Greenberg's attorney. Enron is
based in Houston.

     Chief Financial Officer Andrew Fastow's positions with two
limited partnerships that bought Enron assets was a clear conflict
of interest, Paradis said. The lawsuit doesn't specify which
assets the partnerships bought.

    ``Enron directors permitted Fastow to be in the unique
position of knowing what assets were worth,'' Paradis said. ``He
was placed in the position of irreconcilable conflict that
permitted him to capitalize on Enron's proprietary information.''

     The lawsuit comes the day after Enron reported $1.01 billion
in third-quarter losses from failed investments. The Wall Street
Journal reported today that $35 million of the losses were
connected with two limited partnerships run by Fastow.

     The suit seeks damages of at least $35 million, Paradis said.
Damages would be paid to the company, probably by insurance
protecting directors from lawsuits, Paradis said.

     Enron spokesman Mark Palmer declined to comment on the
allegations.

                       Formed to Lower Debt

     The company has formed several limited partnerships that buy
its assets. This allows Enron to reduce debt so it can borrow more
money for other projects.

      The suit, citing details from today's Wall Street Journal
article, says Fastow ran two of the partnerships, LJM Cayman and
LJM2. He could have earned as much as 2 percent annually of the
total amounts the partnerships invested, the suit says. LJM Cayman
raised $16 million in initial partnership capital, while LJM2
raised at least $200 million.

     Allowing a company official to run the partnerships raises
the question of impropriety, said Andre Meade, an analyst at
Commerzbank Securities who rates Enron a ``buy'' and owns no
company shares.

                     Partnerships Not Uncommon


     Many companies create limited partnerships, Meade said, using
them for tax purposes. ``Duke Energy Corp. and Kinder Morgan Inc.
both have limited partnerships where assets are transferred,'' he
said.

      Enron also has owned a controlling interest in Whitewing
Limited Partnership. Whitewing was financed with a $1.4 billion
bond sale last year conducted by Osprey Trust, which set up the
partnership with $807 million for buying Enron assets, according
to the Osprey Trust offering memorandum.

      Whitewing has bought 14 Enron power and gas companies since
it was formed in 1999, according to the memorandum. It had sold
four of them as of September 2000. Enron said in the offering
memorandum that officers and directors of the energy trader may
serve as directors of Whitewing.

     ``Therefore the duties of the directors and officers of Enron
may conflict with the duties of the officers and directors of
Whitewing Management LLC,'' the Osprey Trust offering memorandum
says.

     Enron reported a third-quarter loss of $618 million, or 84
cents a share yesterday, compared with net income of $292 million,
or 34 cents, a year earlier. Shares of Enron fell $1.64 to $32.20
today.



Analysts vent anger at 'hidden' Enron charge.
By JULIE EARLE.

10/18/2001
Financial Times - FT.com
(c) 2001 Financial Times Limited . All Rights Reserved

Enron, the US energy trader which is under intense scrutiny by analysts who have demanded the company release more detailed financial information, on Wednesday gave details of a $1.2bn charge against equity it skipped over in its third quarter results briefing on Tuesday. 
On Wednesday, Enron outlined details of a $1.01bn charge against earnings in its result, due to failed investments in its telecommunications, retail energy sales and water businesses.
Ken Lay, chairman, fleetingly mentioned a separate $1.2bn charge against equity, or a dilution of equity on the company's balance sheet, in a conference call with analysts and the media, and said it would not affect the company's credit rating. 
Many analysts apparently thought this was the $1.01bn charge Mr Lay was willing to break down and to answer questions about. 
Mr Lay met analysts on Wednesday in New York, but there was again no mention of the $1.2bn charge. Mr Lay apparently initially refused to answer questions from frustrated analysts. In August, after the departure of Enron's chief financial officer, Jeff Skilling, Mr Lay promised to provide more earnings transparency. 
"It was unbelievable. Questions were asked and he moved around it and then finally he [Mr Lay] gave a roundabout answer. The [$1.2bn] charge was all related to the writing down of the se failed investments," one analyst said. 
"They were trying to sneak it by. They already have a credibility problem and this did not help it," he said, adding that Enron never disclosed the charge's net effect and Moody's Inv estor's Services, the credit rating agency, placed Enron's $13bn of debt on hold minutes later. "We told them we felt they should have been more honest in the presentation [yesterday]." 
Enron rejected criticism of the failure to fully report and explain the $1.2bn charge. 
(c) Copyright Financial Times Group. 
http://www.ft.com.

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


Enron Says Its Links to Partnership Led to $1.2 Billion Equity Reduction

10/18/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Enron Corp. shrank its shareholder equity by $1.2 billion as the company decided to repurchase 55 million of its shares that it had issued as part of a series of complex transactions with an investment vehicle connected to its Chief Financial Officer Andrew S. Fastow, Thursday's Wall Street Journal reported. 
Enron (ENE) didn't disclose the big equity reduction in its earnings release issued on Tuesday, when the Houston-based energy giant announced a $1.01 billion charge to third-quarter earnings that produced a $618 million loss. But the company briefly mentioned it in a subsequent call with security analysts and confirmed it in response to questions yesterday. As a result of the reduction, Enron's shareholder equity has dropped to $9.5 billion, the company said.
In an interview Tuesday, Enron Chairman Kenneth Lay said that about $35 million of the $1.01 billion charge to earnings was related to transactions with LJM2 Co-Investment LP, a limited partnership created and run by Mr. Fastow. In a conference call yesterday with investors, Mr. Lay said that the 55 million shares had been repurchased by Enron, as the company "unwound" its participation in the transactions. In the third quarter, the company's average number of shares outstanding was 913 million. 
According to Rick Causey, Enron's chief accounting officer, these shares were contributed to a "structured finance vehicle" set up about two years ago in which Enron and LJM2 were the only investors. In exchange for the stock, the entity provided Enron with a note. The aim of the transaction was to provide hedges against fluctuating values in some of Enron's broadband telecommunications and other technology investments. Mr. Causey didn't elaborate on what form those hedges took. 
Subsequently, both the value of Enron's stock and the value of the broadband investments hedged by the entity dropped sharply. As a result, Enron decided essentially to dissolve the financing vehicle and reacquire the shares. When Enron reacquired the shares, it also canceled the note it had received from the entity. 
In addition, Enron was receiving increasing criticism from analysts and major shareholders concerning the apparent conflict of interest involving the role of its chief financial officer in the partnership, from which he stood to make millions of dollars. In July, Mr. Fastow formally severed his connections to LJM. Mr. Fastow has declined to be interviewed. 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved.

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

Business; Financial Desk
Markets Ford's Financial Fine-Tuning Leads to $692 Million Loss in 3rd Quarter Earnings: Sales incentives, production cutbacks hit company hard. CEO plans reorganizational moves.
Times Wire Services

10/18/2001
Los Angeles Times
Home Edition
C-4
Copyright 2001 / The Times Mirror Company

Ford Motor Co. had a third-quarter loss of $692 million because the second-largest auto maker cut production and offered zero-percent financing to draw car buyers into showrooms. 
The loss of 38 cents a share, which compared with year-earlier net income of $888 million, or 53 cents, includes the cost of Ford's plan to sell its company-owned dealerships. Sales declined 9% to $36.55 billion.
Chief Executive Jacques Nasser, who already is eliminating as many as 5,000 salaried jobs by year-end, said he will make more moves to reorganize in December. Ford cut North American production 23% from the year-earlier quarter as a slower economy hurt demand and tighter U.S. border security disrupted supplies. Marketing expenses rose after Ford matched no-interest loans offered by rival General Motors Corp. 
The Dearborn, Mich.-based company's shares, which slipped 55 cents to close at $17.13 on the New York Stock Exchange, have fallen 27% this year. 
Excluding one-time items, Ford had a loss from operations of $502 million, or 28 cents a share, matching the average analyst forecast in a Thomson Financial/First Call survey. 
The company's U.S. vehicle sales fell 11% through September, twice the industrywide decline. Its revenue declined from $40.06 billion in the year-earlier quarter. North American auto making operations had a third-quarter loss of $849 million, compared with year-earlier profit of $782 million. 
Ford's fourth-quarter results will improve from the third quarter but "it will be difficult to earn a profit during the quarter," Chief Financial Officer Martin Inglis said on a conference call. The First Call average forecast that Ford will earn 6 cents a share is too high, he said. 
At a Glance 
Other earnings, excluding one-time gains or charges unless noted: 
* Enron Corp., the largest energy trader, posted a $618-million loss in the third quarter after losing $1.01 billion on failed investments in water, telecommunications and retail energy sales. 
The final loss was 84 cents a share after payment of preferred dividends, the Houston-based company said. 
Net income in the year-earlier period was $292 million, or 34 cents. Revenue rose 59% to $47.6 billion. 
Excluding the charges, Enron said it would have earned $393 million, or 43 cents a share, which matched the average estimate of analysts. Enron said it still expects to earn 45 cents a share in the fourth quarter. 
* Defense contractor General Dynamics Corp. said third-quarter operating profit was $230 million, or $1.13 a share, up 13% from $204 million, or $1.02 a share, a year earlier. 
Sales rose 22% to $3.02 billion. 
But the company warned analysts not to boost their full-year earnings estimates beyond $4.50 a share. 
* Linens 'n Things Inc., the home-accessories and housewares retailer, said third-quarter profit fell 20%, and fourth-quarter earnings will be at the lower end of analysts' estimates. Net income fell to $14.7 million, or 36 cents a share, from $18.4 million, or 45 cents, a year earlier. The company was expected to earn 37 cents. Sales 14% to $468.9 million. 
* Office Depot Inc. said third-quarter profit rose 23% to $62.5 million, or 20 cents a share, from $50.6 million, or 16 cents, a year earlier. Office Depot said fourth-quarter profit may be 3 cents to 5 cents a share below the 20-cent average estimate of analysts. 
* Drug giant Pfizer Inc. achieved double-digit earnings and revenue growth during the quarter, driven by strong sales of cholesterol treatment Lipitor. 
Pfizer's operating profit jumped 28% to $2.19 billion, or 34 cents a share, a penny better than expected. Those figures exclude one-time costs, including those from Pfizer's acquisition of Warner Lambert. 
Sales rose 10% to $7.90 billion. 
* Philip Morris Cos., the biggest tobacco company, said third-quarter profit rose slightly as sales of premium brands such as Marlboro increased in the U.S. while declining currencies hurt results abroad. 
Net income rose to $2.33 billion, or $1.06 a share, from $2.32 billion, or $1.03, a year earlier. Sales climbed 12% to $22.4 billion. The company said it will meet its previous full-year profit growth forecast of 9%. 
Separately, the company said Chief Executive Geoffrey Bible plans to retire in 10 months at age 65. Under Bible, Philip Morris's five-year average annual profit growth is 9.3%, helped by sales of the No. 1 Marlboro brand cigarettes and the company's Miller Brewing and Kraft Foods Inc. businesses. 
* Raytheon Co., maker of the Tomahawk missile used by U.S. forces in the attack on Afghanistan, posted a net loss after charges, as weakness in its commercial aerospace operations offset gains from military businesses. 
Raytheon reported a net loss of $285 million, or 79 cents per share, compared with a profit of $105 million, or 31 cents, a year ago. 
Those results include charges announced Wednesday from the company's Raytheon Aircraft unit, hurt by the Sept. 11 attacks' effect on the commercial air transport industry. Even excluding special items, operating earnings fell 10%, missing Wall Street's targets. Revenue fell 7% to $3.9 billion. 
* TRW Inc., the largest U.S. maker of air bags, said third-quarter operating profit fell to $75 million, or 59 cents a share, compared with $91 million, or 73 cents, a year ago. 
Sales fell 5% to $3.9 billion. 
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC) 
Earnings Reports 
(tabular data not included)

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

UK: ANALYSIS-LME members survey hard choices ahead.
By Martin Hayes

10/18/2001
Reuters English News Service
(C) Reuters Limited 2001.

LONDON, Oct 18 (Reuters) - The London Metal Exchange (LME) faces stormy times a year after demutualisation as members ask where their future lies - with electronic screens, on an open-outcry trading floor or even in some other type of business. 
The debate is happening as the global metals industry gathers in London for the LME's annual dinner week, which this year will be a subdued affair.
"LME week will struggle to surprise against a backcloth of military action in Afghanistan, dismal economic data, forlorn price sentiment and optimists rarer than hen's teeth," analyst Nick Moore of J.P. Morgan Securities said. 
A veteran trader said, "It is going to be a less-populous affair this year. The people that have to do their annual deals will still be there, but we have noticed that people are not travelling unless they have to." 
The downturn in the economic cycle has hit the world's largest non-ferrous metals market hard. Years of volume growth have ended, prices have fallen to lows and shrinking revenues and commissions have pared many brokers' profits. 
MitsuiBussan has scaled back activities and no longer makes markets, ScotiaMocatta has left the floor and blue-blooded N.M. Rothschild has simply quit the non-ferrous metals business. 
THE WAY TO TRADE 
LME trading remains dominated by the price discovery mechanism of the open-outcry official rings, but electronic systems have made deep inroads over the past year. 
"The trade is rapidly being condensed into the three screen mediums. Enron , Spectron and LME Select," a director at one broker said. 
Traders said screens had almostly completely superseded the telephone market during inter-office sessions as narrower buy/sell quotes in larger markets were available on the highly transparent screens. 
"What that has done is to perfect the pricing mechanism - it has flattened out some of the volatility from the market. This has cut the brokers' margins, but at the same time their overheads are constant - they have to pay for screens and to run a floor operation," the director said. 
Screen trading volumes still represent only a small proportion of total daily turnover, but earlier this week the LME reported a record daily turnover of 10,483 lots on the Select system - by far the highest since the screens were switched on in February. 
"We are working hard to ensure that LME Select becomes the electronic trading system of choice for our members," LME Chief Executive Simon Heale said. 
However, senior traders said that once volumes started to increase on screens, electronic turnovers could explode - as had happened on other exchanges. That could force the issue for the LME as it continued to offer three methods of trading - screens, telephones and open-outcry. 
"Despite the LME's resistance, the world is turning to screens. The IPE (International Petroleum Exchange) is going that way, and in the U.S. that pattern is being seen as well," another senior trader said. 
INCENTIVES 
Traders said open-outcry trading would wither away unless the LME acted to make it more attractive to existing participants and potential new entrants. 
"They should be thinking about giving discounts to people on the ring. Maybe they should also approach some of the big off-market players and find out what would entice them to become RDMs (ring dealing members)," the veteran trader said. 
In Europe, other than the LME only the IPE has an open-outcry floor, and that will close next year. 
The RDMs of the LME are trying to fight back - in 2000 they extended the open-outcry sessions by carrying on business through an early-afternoon recess. 
But after ScotiaMocatta Metals decided to call a halt to executing business on the floor this week RDM numbers have dwindled to just 11. 
"It is a structural problem as there is just not enough income on the ring. We are almost getting to a 'last man standing' situation. If we drop under 10 there is a danger the ring may just implode," the senior trader said. 
The ranks of associate broker clearer members (ABCMs) are expanding. These firms have all the benefits of LME membership, but cannot trade during the open-outcry sessions. 
This week, South Africa's Investec Group joined as an ABCM, bringing the total of this membership tier to 26. Another sizeable bank is pondering whether to join, but only as an ABCM. 
"It would be good if someone else came down, but who is going to spend money recruiting a team - clerks, support staff, back office and so on? It is best to go for a small team using screens - the LME needs to either cut our costs or make it less easy to go off-market," a senior floor trader said.

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

Maharashtra to challenge London court order on DPC
Our Bureau

10/18/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

THE MAHARASHTRA government has decided to challenge the injunction order issued by the commercial court in London restraining the state from filing suits against the Dabhol Power Company (DPC) in India. The DPC had obtained the injunction on October11. 
The state government has decided to challenge the order as we feel that the concerned court should have heard the state as well. Within a week we would be presenting our case, the state chief minister Vilasrao Deshmukh said here on Wednesday.
The ex-parte order relates to arbitration proceedings between the state government and DPC with respect to state guarantee, state support and supplemental state support agreements. 
It prevented the state government from taking any legal action in India, challenging the international arbitration proceedings initiated by DPC. Mr Deshmukh today also reiterated his governments resolve not to draw electricity from DPC. 
There is no logic in buying DPC power at higher rate and selling it with much lower rates, Deshmukh said. According to Deshmukh, due to recent rainfall, the demand for electricity has gone down considerably and the state electricity board is supplying power without interruption. 
Meanwhile, the government today expressed its resolve to initiate a judicial probe into the entire Enron deal. The probe would begin in few weeks , Deshmukh said. The state has already requested the Chief Justice of the Mumbai High Court to appoint a judge for the probe.

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

India: Enron: Maharashtra to move London court in a week

10/18/2001
Business Line (The Hindu)
Fin. Times Info Ltd-Asia Africa Intel Wire. Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

MUMBAI, Oct. 17 MAHARASHTRA will move the Commercial Court of London "within a week" against the injunction obtained by Enron's Dabhol Power Company (DPC) restraining the State from challenging international arbitration initiated by DPC in any Indian court, the Chief Minister, Mr Vilasrao Deshmukh, told newspersons. 
He was speaking at a post-cabinet meeting press conference here on Wednesday. The Enron-promoted DPC had obtained the ex-parte order on October 11, 2001. The State Government had 23 days to respond to the order.
The arbitration panel has been constituted for some time now and proceedings were expected to begin any time. However, the proceedings could not take off as a dispute over the jurisdiction of the Maharashtra State Electricity Regulatory Commission had dragged on to the Mumbai High Court and then the Supreme Court. Both the courts had restrained DPC from continuing international arbitration pending resolution of the MERC jurisdiction issue. 
The Chief Minister also said the appointment of a retired Supreme Court judge to head the judicial probe into the power purchase agreement with Enron would also be completed in a week's time. 
Our Bureau

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

India: GAIL keen on Dabhol LNG terminal project

10/18/2001
Business Line (The Hindu)
Fin. Times Info Ltd-Asia Africa Intel Wire. Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

NEW DELHI, Oct. 17 GAS Authority of India Ltd (GAIL) has written to both the Petroleum Ministry and the Power Ministry evincing interest in the 5 million tonnes per annum (mmtpa) LNG regassification terminal of the Dabhol Power Company, according to Government officials. 
In a recent communique to the two Ministries, it has asked the financial institutions to set up a meeting to enable it review the financial details of the LNG project. The financial data on the LNG project solely rests with Bechtel, GE and Enron.
As a first step towards examining the financial data, GAIL will require to enter into a confidentiality clause agreement with the present project sponsors to access the data. 
Meanwhile, the financial institutions are awaiting the results of political parleys between the Centre and the Maharashtra Government towards bringing the latter into a 'solution finding' mode to implement a financial restructuring package and resolve the Dabhol crisis. 
Once this is done, the FIs will freeze the financial package - involving sacrifices undertaken by the present stakeholders - and again elicit market response towards bettering the Tatas' proposition. 
Although the FIs had earlier scouted the market and found only the Tatas evincing interest in the project, it would again offer the Dabhol project to the market to ensure that the concessions on the part of the State are not awarded on a nomination basis. 
The foreign lenders have pointed out that they would not be agreeable to the domestic FIs spearheading the salvage operation finally resulting in transfer of ownership of the power plant. Hence, the Government is mulling a high-level committee to implement the process leading to transfer of ownership. 
Balaji C. Mouli

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

FERC To Discuss Possible Changes To West Pwr Price Caps
By Jason Leopold and Andrew Dowell

10/17/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

OF DOW JONES NEWSWIRES 

LOS ANGELES -(Dow Jones)- Federal energy regulators said this week they will discuss possible changes to price controls the agency imposed on western wholesale power markets in June.
Western utilities complained that the price controls, based on the price of generating power in California, aren't appropriate for the entire region. In particular, demand in the Northwest rises sharply in the winter, while California's power demand and cost are typically highest in the summer. 
The Federal Energy Regulatory Commission said in a notice its Oct. 29 meeting discussions could include an elimination of the 10% premium allowed for sales into California and changes to the way the price caps are adjusted. 
The price cap is set at about $92 a megawatt-hour and is calculated by taking the 85% of the most expensive hourly price during the most-recent Stage 1 power emergency in California, when operating reserves fall below 7%. 
Gov. Gray Davis lobbied hard for FERC to impose price caps throughout the entire western U.S., saying generators would sell their power to other western states if California were the only state with price controls. 
"The governor would be very disappointed if FERC contributed to additional economic uncertainty, particularly in these troubling times" if the agency were to lift the price restrictions, said Steve Maviglio, a spokesman for Davis. 
Last summer, Sierra Pacific Resources (SRP) unit Nevada Power was forced to initiate rolling blackouts to a small number of customers for about 45 minutes because of the new price caps imposed on the market by FERC and blistering heat, said Paul Heagen, Sierra Pacific's chief spokesman. 
In addition, some generators, including a unit of Enron Corp. (ENE), scrapped plans to build small power plants, the so-called peaking units used when demand for electricity is at its highest, in the western U.S. because of the price controls. 

-By Jason Leopold and Andrew Dowell, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com

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