INDIA: Indian states to issue bonds to pay utilities dues.
Reuters English News Service, 07/06/01
Factiva Energy Digest - July 6, 2001.
Factiva Energy Digest, 07/06/01
Commodities Review:Coffee Hits Another Low,$450/Ton Eyed
Dow Jones Commodities Service, 07/06/01

INDIA: Indian states to issue bonds to pay utilities dues.

07/06/2001
Reuters English News Service 
(C) Reuters Limited 2001. 

NEW DELHI, July 6 (Reuters) - Indian states have agreed to issue bonds to 
help bankrupt electricity boards pay $8.8 billion owed to federal utilities 
but they persuaded the government to cut part of the money due, Junior Power 
Minister Jayawanti Mehta said. 
The move is seen as a vital step toward putting the ailing utilities back on 
the road to financial health and reforming the power sector.
"There has been an agreement. The states have agreed to issue bonds," she 
told reporters late on Friday after a meeting of the Empowered Group of chief 
ministers and energy ministers of several states. 
The group was set up in March after Prime Minister Atal Behari Vajpayee met 
chief ministers of all the states and urged them to reform their utilities, 
which are expected to report a combined loss of $5.1 billion this year. 
Officials said the chief ministers in the group and the federal Power 
Minister Suresh Prabhu will discuss the proposal with heads of other states 
before the proposal is finalised. 
The state utilities' debt comprises a principal amount of about $5.3 billion 
and a surcharge of about $3.4 billion levied as interest. 
The federal government had offered to waive 50 percent of the surcharge and 
allow states to issue tax-free bonds bearing an annual interest rate of 8.5 
percent for the rest of the amount. 
Mehta said New Delhi had agreed to the states' demand that 60 percent of the 
surcharge be waived instead of the 50 percent proposed by the federal 
government. 
This and some other concessions granted to the states had imposed an 
additional burden of 20 billion rupees ($425 million) on the federal 
government, she said. 
Mehta said the states had also agreed to set up committees to review tariffs. 
State utilities supply free or heavily subsidised electricity to farmers and 
charge a hefty fee for power given to commercial customers. 
Heavy losses and widespread theft has made the state power boards bankrupt 
and unable to pay power producers for electricity. 
Default by the state utility in the western state of Maharashtra prompted 
U.S. energy firm, Enron Corp, to issue a preliminary termination notice for 
the $2.9-billion Dabhol Power plant which is India's largest foreign 
investment.

Factiva Energy Digest - July 6, 2001.

07/06/2001
Factiva Energy Digest 
Copyright (c) 2001 Dow Jones Reuters Business Interactive Ltd., trading as 
Factiva. 

OIL & GAS HEADLINES 
*OPEC Secretary-General Says Resumption of Iraqi Exports Unlikely to Affect 
Prices
*U.S. Energy Department Bucks American Petroleum Institute, Showing 11th U.S. 
Weekly Gasoline Build 
*Brazil Petrobras Global Offer to Close on July 18 
*Tanker Body Reports 42 Accidents in First Half 
POWER & UTILITY HEADLINES 
*Fiat Says Italenergia Filed for Montedison Shareholders Meeting 
*Italy Watchdog Undecided on Italenergia/Montedison 
*New Power Adds Customers With Two Deals 
REGULATORY & ENVIRONMENT HEADLINES 
*Germany Sets Up Power Grid Competition Watchdog 
*Belgium Government Holding Up Gas Market Opening 
*Energy Regulatory Commission Judge Pushes for California Refund Plan Friday 
*California Asks SEC to Review PG&E Utility Transfers 
*Bankrupt PG&E Seeks Approval to Pay Franchise Fees 
*EU Fears for Climate Deal After Australia Talks 
************************************** 

OIL & GAS 
*OPEC Secretary-General Says Resumption of Iraqi Exports Unlikely to Affect 
Prices 
INTERLAKEN, Switzerland (Reuters) - OPEC Secretary-General Ali Rodriguez said 
on Friday a resumption of Iraqi oil exports following a U.N. extension of the 
oil-for-food deal was unlikely to affect current oil prices. 
"Before Iraq closed production the situation was stabilized and the price was 
falling a bit," he told reporters on the sidelines of a business conference 
in Interlaken. "OPEC took the decision to maintain production levels and now 
the price is oscillating more or less around $25 which is the objective of 
OPEC. Now after the United Nations decision (to extend the oil-for-food deal) 
the situation is the same." 
Iraqi U.N. Ambassador Mohammed Aldouri said on Thursday that Baghdad had 
accepted the U.N. decision to extend the oil-for-food program for another 
five months to November 30. But Aldouri delayed until next week the signing 
of the memorandum of understanding to extend the program, citing a "minor 
technical issue" that needed to be resolved. 
*U.S. Energy Department Bucks American Petroleum Institute, Showing 11th U.S. 
Weekly Gasoline Build 
NEW YORK (Reuters) - U.S. gasoline stocks increased for the 11th straight 
week, new government data showed Thursday, evidence that demand may not be 
recovering as much as an industry report showed earlier in the week, analysts 
said. Gasoline stocks rose 0.9 million barrels to 221.6 million barrels for 
the week ending June 29, according to Energy Information Administration, the 
statistics branch of the Department of Energy. EIA gasoline stocks are now 
12.4 million barrels greater than this time last year. The government data 
were delayed one day by the U.S. Independence Day holiday Wednesday. 
The EIA build countered a draw of more than 2.5 million barrels shown in 
industry data earlier in the week in the American Petroleum Institute's stock 
report. API implied demand was 9.6 million barrels a day, up from 8.56 
million barrels a day the week before. Both reports showed big crude draws. 
EIA had a draw of 4.8 million barrels while API had a 4 million barrel draw. 
But both showed crude stocks were roughly at 310 million barrels, much higher 
than stocks this time last year. EIA showed crude stocks nearly 20 million 
barrels greater than last year, while API showed crude stocks are more than 
18 million above last year. Both reports showed builds in distillates, though 
EIA showed a build of 1.6 million barrels opposed to API's build of nearly 2 
million barrels. 
*Brazil Petrobras Global Offer to Close on July 18 
RIO DE JANEIRO (Reuters) - Brazil's state oil giant Petrobras said on 
Thursday that a global offering of about 2 billion reais ($800 million) of 
its shares will be closed on July 18. Brazil's National Development Bank 
(BNDES) said earlier this week that it had filed a request with U.S. and 
Brazilian authorities to sell the Petrobras shares in its portfolio. The 36 
million preferred shares are equivalent to 8% of voting stock or 3.3% of 
total capital. If demand is strong, the BNDES said on Thursday that the offer 
could be extended to include a further 5.4 million preferred shares. 
Coordinators of the sale and analysts said on Thursday that they expect 
strong demand for the shares due to the high international price of oil and 
the company's increasing transparency. 
*Tanker Body Reports 42 Accidents in First Half 
LONDON (Reuters) - The tanker industry recorded 42 shipping accidents in the 
first half to 2001, over half of which involved collision, fire or explosion 
and a quarter resulted in pollution, the tanker federation Intertanko said 
this week. "Whilst naturally concerned over the 42 incidents, some small 
satisfaction is taken from the knowledge that the figures for the last six 
months continued to follow the downward trend of the last few years", 
Intertanko MD Peter Swift told Reuters. 
Of the 42 incidents this year that Intertanko compiled from Lloyds casualty 
reports, 12 were collisions, 11 were fires or explosions and nine were 
groundings. Fires and explosions have accounted for just 8% of incidents over 
the last 22 years, according to Intertanko figures, so the 11 incidents 
reported in the first half is an unusually high proportion. 
************************************** 

POWER & UTILITY 
*Fiat Says Italenergia Filed for Montedison Shareholders Meeting 
MILAN (Reuters) - Fiat CEO Paulo Cantarella said on Friday the Fiat-led 
Italenergia consortium had formally presented the documents necessary to call 
a Montedison shareholders meeting. "We have presented everything," he said on 
the margins of a press conference to announce a joint venture with IBM. "As 
regards our formal obligations, there is nothing more to do." 
Italenergia, which on Monday declared it controlled 52% of Montedison's 
capital, had called on Montedison to hold an extraordinary shareholders 
meeting to kick out the current management. At a board meeting on Wednesday, 
Montedison's board said it refused to call the meeting as the official 
procedures were not correct. 
*Italy Watchdog Undecided on Italenergia/Montedison 
ROME (Reuters) - Italy's competition watchdog on Friday said it had yet to 
decide if Italenergia's acquisition of a controlling stake of Montedison fell 
under their jurisdiction to evaluate or the European Union's. "We are 
evaluating first, as we always do, if we are the competent institution," said 
Giuseppe Tesauro, the head of Italy's Antitrust on the sidelines of a 
conference, in response to reporters questions on whether they will look into 
the deal or the EU. "We have 30 to 45 days to decide." 
Italenergia, which is lead by car maker Fiat and includes France's energy 
giant EDF, on Monday declared it controlled 52% of agro-energy conglomerate 
Montedison's capital. 
*New Power Adds Customers With Two Deals 
NEW YORK (Reuters) - New Power Co., a national energy provider partly owned 
by powerhouse Enron Corp., said on Thursday it plans to make two separate 
acquisitions that would increase its customer base by about 20% and raise its 
visibility in Pennsylvania and Ohio. Financial terms of the agreements with 
AES Direct, the retail marketing subsidiary of independent power company AES 
Corp., and with CoEnergy, a unit of Michigan-based DTE Energy, were not 
disclosed. 
Purchase, New York-based New Power, a unit of NewPower Holdings Inc., said 
the deals would add a total of 121,000 electric and natural gas customers. At 
the end of the first quarter, it had about 631,000 customers, a company 
spokeswoman said. New Power said it signed an agreement to buy AES Direct's 
customer base and related assets, including natural gas inventory, supply and 
transportation contracts as well as billing and customer service operations. 
It also is buying Ohio-based customers from CoEnergy, gaining entry into 
service areas of four additional utilities. 
************************************** 

REGULATORY & ENVIRONMENT 
*Germany Sets Up Power Grid Competition Watchdog 
BONN (Reuters) - Germany's federal cartel office is about to set up a 
department to stamp out anti-competitive practices in power grid operations, 
a spokesman said on Friday. "The department will deal with barriers to free 
access to the electricity grids," spokesman Stefan Siebert told Reuters. "It 
will take up its work this month and probably have four staff," he added. 
Cartel office president Ulf Boege announced the installation of the 
department in a speech issued along with the office's annual report on 
Thursday. He said three years after market liberalization, established 
utilities were still blocking competition. "These companies have developed a 
whole array of measures to illegally prevent competition from taking place," 
he said. 
There have been numerous complaints about excessive grid access and switching 
fees along with other bureaucratic complications due to low voltage grid 
owners owning the "last mile" to the customers' site or home use to 
discourage alternative suppliers. 
*Belgium Government Holding Up Gas Market Opening 
AMSTERDAM (Reuters) - Belgium's move towards opening up its gas market to 
competition is being slowed because of government delays in implementing key 
legislation, a senior official of the country's energy regulator said on 
Friday. 
"Basically we are waiting for the decrees (from the government)," Jean-Paul 
Pinon, director of technical operations for gas at regulator CREG, told 
Reuters on Friday at the sidelines of a conference. "The Gas Act which is 
expected to come in this summer gives an indication of how the market can be 
organized, but it gives no indication of when this will happen - the decrees 
will do that." Pinon said the government was presented with proposals in 
October but had yet to give any indication of when it intends to publish the 
decrees. "I am amazed the first decree has not been published yet. The market 
is not liberalized because the decrees have not been enacted", he said. "The 
Gas Act will give more freedom to liberalize through the decrees." 
*Energy Regulatory Commission Judge Pushes for California Refund Plan Friday 
WASHINGTON (Reuters) - Negotiations over refunds of billions of dollars for 
Western electricity entered a critical stage Thursday, with the 
administrative law judge overseeing the talks threatening to issue his own 
plan Friday unless progress was made. Curtis Wagner, the chief judge at the 
Federal Energy Regulatory Commission (FERC), also said a public hearing could 
be quickly scheduled for Sunday or Monday if necessary to discuss his 
proposed settlement plan for California and other Western states. 
California has asked FERC to order refunds worth some $9 billion for alleged 
overcharges for wholesale electricity during the past year. In total, the tab 
for the region's demands runs closer to $15 billion, counting the states of 
Washington, Oregon and others. Western states, plus independent generators, 
major utilities and other parties, are involved in the refund talks. 
*California Asks SEC to Review PG&E Utility Transfers 
SACRAMENTO, Calif. (Reuters) - California's attorney general asked federal 
regulators Thursday to scrutinize PG&E Corp. for potential abuses in the 
transfer of billions of dollars from its bankrupt utility Pacific Gas and 
Electric. Attorney General Bill Lockyer filed a petition in Washington D.C. 
urging the Securities and Exchange Commission (SEC) to apply federal 
regulatory oversight to determine whether the transfers helped trigger the 
utility's decision to file for bankruptcy protection in April. 
The SEC currently exempts San Francisco-based PG&E Corp. from almost all 
requirements and review based on the holding company's position that it is an 
interstate entity, Lockyer said. But the petition said because PG&E Corp. 
controls more than $13 billion in assets outside California and is pursuing 
business activities in at least a dozen other states it is open to federal 
review under the Public Utility Holding Company Act. 
*Bankrupt PG&E Seeks Approval to Pay Franchise Fees 
SAN FRANCISCO (Reuters) - Pacific Gas & Electric Co. on Thursday said it 
filed a motion with the U.S. Bankruptcy Court here for authorization to 
assume more than $76 million in 510 franchise fee agreements with California 
cities and counties. The utility, a subsidiary of San Francisco-based PG&E 
Corp., filed for Chapter 11 bankruptcy protection on April 6. The company 
needs the bankruptcy court's approval to make the franchise fee payments to 
the cities and counties, most of which will be due in the first quarter of 
2002, said Ron Low, a spokesman for the utility. A hearing on the motion is 
set for July 31, he said 
*EU Fears for Climate Deal After Australia Talks 
SYDNEY (Reuters) - The European Union raised concerns about global climate 
talks in mid-July on Friday after failing to bridge a gap with Australia over 
how to deal with Washington's rejection of the Kyoto global warming pact. In 
talks with a visiting EU delegation, Canberra stuck by its view the agreement 
between industrialized countries to cut greenhouse gas emissions was dead 
without U.S. support, Environment Minister Robert Hill said. 
With Japan also preferring to bring the world's top polluter back into the 
fold before pressing on with Kyoto, Belgian Energy Minister Olivier Deleuze 
acknowledged it would be tough to win a consensus at the next world climate 
talks in Bonn on July 16. "I think that in Bonn there should be negotiations 
with success at the end with as many countries as possible and we don't have 
this certainty today," Deleuze told reporters in Sydney. 
************************************** 

Full versions of these and other energy stories are available from Dow
Jones Interactive and Reuters Business Briefing 

************************************** 

Factiva Contact: Marc Donatiello, +1 609-627-2659, 
marc.donatiello@factiva.com. 
(Copyright (c) 2001, Dow Jones & Company, Inc.). 
Homepage Address: http://www.factiva.com.

Commodities Review:Coffee Hits Another Low,$450/Ton Eyed
By Ian Stephenson and David Elliott
Of DOW JONES NEWSWIRES

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

LONDON -(Dow Jones)- Robusta coffee futures traded in London fell to another 
fresh 30-year low Friday as the glut of coffee on world markets continued to 
weigh on the market. 
And the market is set to continue even lower short term, barring a frost in 
Brazil, as further supplies come onto the market, traders and analysts said.
"The whole market is consumed with coffee, wherever you look it is there," a 
Liffe coffee broker said. 
"We're in a downward spiral and there's nothing out there to stop us going 
lower still," said another broker. 
Despite hovering above record low prices for some time, producers aren't 
being deterred from producing or selling. And as the coffee continues to 
trickle onto the market the gradual erosion in prices is set to continue, 
with $450 a metric ton a possible target. 
The benchmark September robusta coffee contract on Liffe ended at $540/ton 
Friday, having set a new low of $532/ton. 
"Technically the market is oversold but such considerations appear to have 
little impact in the face of overwhelming supply of robusta (coffee). For 
this reason, the chances of a meaningful recovery are slight and the talk of 
$500/ton or $450/ton on (September) becomes even louder," one brokerage said 
in its daily report. 
Apart from the fall in the level of the Brazilian real, Liffe coffee is under 
pressure from constant origin selling - with India, Uganda, Vietnam and India 
all noted current sellers - and the lack of any frost in Brazilian coffee 
growing regions. 
And Brazil's coffee belt is seen safe from any crop damaging frost at least 
until July 20, according to Sao Paulo weather forecasters Somar Meteorologia. 
Temperatures may cool again from July 16, "but we're not calling for any 
frost risk yet," said one Somar meteorologist Friday. 
Brazil's frost season lasts into August, but as time ticks by, the risk of 
crop damage recedes, traders said. 
The Brazilian real's recent fall has been a major part of the recent falls on 
Liffe coffee, traders said, encouraging producers to sell onto 
dollar-denominated markets. Brazil is reported to have around 10 million-11 
million bags of robusta coffee to sell, they said. 
And the outlook for robusta coffee prices is no better long term, traders and 
analysts said. 
Some analysts had predicted that the low prices would cause producers to cut 
back or to move out of coffee production, but with the vast increase in 
Vietnamese production in the past 10 years, little impact is expected if 
there are any cut backs, said others. 
There are plans to remove less productive trees in Vietnam, but this is 
likely to be offset by younger trees in more productive areas reaching 
maturity, said one analyst. 
In the long term, participants believe the low prices will see producers 
being less able to add inputs, such as fertilizers and pesticides, which may 
help to stabilize production, but this is unlikely to cause the dramatic 
shift in supplies that is needed to lift world prices. 
LME Copper Hits Two-Year Low As Stocks Surge 
Elsewhere, London Metal Exchange copper fell to a fresh two-year low Friday 
as early weakness was compounded by another steep invenventory hike before 
strong trade buying and bargain hunting lifted prices for the close. 
Speculator selling caused a sharp slump in the aluminum market overnight in 
Asia and leant pressure to the already nervous copper market, but it wasn't 
until the release of London Metal Exchange stock data that prices hit the 
one-year low at $1,552/ton. 
Copper stocks rose a further 6,525 tons Friday, bringing total stocks to 
503,650 tons, a rise of 76,550 tons since June 22. 
Although the move has been widely predicted, such substantial stock builds 
will still have a bearish effect on prices short term, an LME floor dealer 
said. 
"You can't expect people to ignore stock jumps like this even if they have 
been expecting them for a while," he said. 
Unconfirmed talk is that major trade house Enron is behind much of 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. 
When questioned, Enron declined to comment. 
However, the builds aren't thought to be over yet, said a London-based 
analyst, predicting that another 30,000 to 40,000 tons of copper are set to 
enter warehouses over the next two weeks. 
LME three-month copper ended the late kerb $2.75/ton higher at $1,562.75/ton. 
-By Ian Stephenson and David Elliott, Dow Jones Newswires; 44-20-7842-9358; 
ian.stephenson@dowjones.com -0- 06/07/01 17-00G