Enron Would Accept Less Money in a Calif. Settlement (Update1)
Bloomberg, 06/06/01

Business World: California's Ship of Fools
The Wall Street Journal, 06/06/01

Commentary 'Hi, My Name Isn't Justice, Honey,' and Shame on Lockyer
Los Angeles Times, 06/06/01

California Squeaks By
The Wall Street Journal, 06/06/01

Top Bush Adviser Moves to Sell Stocks
The Washington Post, 06/06/01

What Really Counts? EPS.
Merrill Lynch Report, 06/06/01

India: MSEB unruffled amid power talk
Business Line (The Hindu), 06/06/01

OMAN LNG STRIKES DEALS WITH INT'L ENERGY COS ON SPOT SALES
Asia Pulse, 06/06/01

AES looks to recover Rs 209 cr Gridco dues
Business Standard, 06/06/01

MSEB refuses DPC power at 90% PLF
Business Standard, 06/06/01

MEXICO: Enron Corp. to sell energy in Mexico in 2002.
Reuters English News Service, 06/05/01

US Democrats Seek Hearing On Cheney Energy Task Force
Dow Jones Energy Service, 06/05/01



Enron Would Accept Less Money in a Calif. Settlement (Update1)
2001-06-06 01:57 (New York)

Enron Would Accept Less Money in a Calif. Settlement (Update1)

     (Adds spokesman's comment in fourth to sixth paragraphs.)

     Houston, June 6 (Bloomberg) -- Enron Corp. Chairman Kenneth
Lay said the world's largest energy trader would accept less than
100 percent of the money it's owed for power sold to California if
it could reach a settlement with the state.
     Lay, who spoke on PBS's ``Frontline'' television program,
which aired nationwide this evening, refused to say how much of a
``haircut'' the company would accept.
     ``I'm not going to negotiate with the governor through you,''
Lay said on the program. Enron is currently owed $400 million to
$500 million by California power purchasers, he said.
     Most of that money is owed by PG&E Corp.'s Pacific Gas &
Electric utility, which declared bankruptcy April 6, so it
wouldn't be covered in a settlement with the state, spokesman Mark
Palmer said after the broadcast, adding that there are currently
no settlement talks going on between Enron and the state.
     Palmer said a settlement to the California power crisis would
have to include issues beyond prices, such as long-term power
contracts and retail electricity choice.
     ``There would have to be a settlement of all the issues in
the market before anyone would agree to take a `haircut,''' he
said. ``For anyone to even talk settlement, we have to talk about
structural issues.''
     The ``Frontline'' broadcast also said Duke Energy Corp. has
been in secret settlement negotiations with the state for six or
seven weeks, which would require that all pending litigation
against the company be dropped. The program, a joint production of
PBS and the New York Times, said that Duke pledged political and
public support for California Governor Gray Davis as part of the
settlement.
     ``I will not do anything that is unseemly or anything that
will bleed California dry,'' Davis said, adding that he won't give
up legal avenues. He said he gave Duke ``high marks,'' though, for
proposing a settlement in the first place.
     Davis has accused California's major generators and Enron - a
state power marketer, but not a generator - of price gouging
California consumers. Duke, which produces about 5 percent of the
power used in California, recently admitted it charged $3,800 a
megawatt-hour for power sold to the state in January and February.
That's 15 times above average levels in January.
     Shares of Houston-based Enron fell 79 cents to $53.75. Shares
of Charlotte-based Duke, the top U.S. utility owner, fell $1.70 to
$42.50.




Business World: California's Ship of Fools
By Holman W. Jenkins Jr.

06/06/2001
The Wall Street Journal
A27
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Lamenting the politician's lot in "Profiles in Courage," John F. Kennedy 
wrote that "In no other occupation is it expected that a man will sacrifice 
honors, prestige and his chosen career on a single issue." Of course, no 
politician would last long if he didn't blow with the wind nine times out of 
10. But on the tenth occasion even California has the right to expect some 
courage. 
We don't know what happens when an advanced economy like California's suffers 
day after day of blackouts. We may be about to find out. Modern office 
architecture becomes uninhabitable without air-conditioning and elevators. 
Old people and asthmatics may die in the heat. So may drivers at unlit 
traffic crossings.
Steps could still be taken to lessen the blackouts, but voters wouldn't know 
the difference, and it's so much easier to cast blame. Gov. Gray Davis prates 
about a "war with Texas." And who knows what secret failures as a human being 
led Bill Lockyer, the attorney general, to threaten Enron's Ken Lay with 
homosexual rape in the California prison system. 
California has found itself singularly lacking in heroes in its hour of 
crisis. Mr. Lockyer and Mr. Davis harp on price, but the true problem is the 
unavailability of power at any price to meet the demand that exists under the 
current structure of retail rates. 
Both must know the solution they noisily advocate, federal price controls 
slapped across Western electricity markets, wouldn't bring power into 
existence to close the gap. Their proposal would simply saddle the feds with 
the dirty job of apportioning blackouts from California's mistakes across 
half a dozen other states. 
In California itself, municipal utilities in Santa Clara, Palo Alto and other 
towns have already announced they won't participate in rolling blackouts. The 
Los Angeles Department of Water and Power certainly isn't volunteering. Why 
should voters in other states? Why not just cut the lines and let California 
monopolize the darkness? A state review board in Washington has already 
vetoed a proposed plant rather than suffer local pollution for power destined 
for California. 
Mr. Davis knows this; he knows price controls would create a new problem 
without solving the shortages. Meanwhile, the specter nobody wants to talk 
about is the state of California itself headed for bankruptcy if it continues 
to be willing to pay any price to satisfy the demand of consumers shielded 
from the true cost of power. 
Mr. Davis's version of the Big Lie is that Texas is to blame. Texas companies 
account for just 12% of California's supply, having bought 7,000 of the 
20,000 megawatts that local utilities were forced to sell under 
"deregulation." Being in the right place at the right time has always been 
profitable, but any windfall has been spread widely among suppliers of gas, 
pipeline capacity, storage and ancillary services. Take Enron: Its revenues 
quadrupled in the past year, but so did its costs, and profits are up only 
31%. 
A leaked California memo names as two of the biggest "gougers" BC Hydro, 
owned by Canadian taxpayers, and the U.S. Bonneville Power Administration. 
Their sin was letting their reservoirs fill up overnight while meeting local 
needs with spot-market power, so they could sell their own production for 
higher prices to California during the day. 
These are precisely efforts that might stop if price controls were imposed 
across the West, making the shortages worse, probably much worse. 
Northwestern smelters might be better off reclaiming the cheap hydro they've 
been passing on to California -- 3,000 megawatts, enough for two million 
homes. Farmers could resume irrigating. Seattle, Tacoma, Boise and other 
neighbors have all done what California has failed yet to do, hiking rates to 
curb demand. 
Rather than emulate them, Gov. Davis's peacock of an energy czar, David 
Freeman, babbles about "public power," the answer to a question nobody asked, 
the solution to a nonexistent problem. 
Prices of electricity and natural gas for future delivery are already falling 
as investors race to build new plants and pipelines to meet the state's 
future needs. Markets foresee the crisis ending without Mr. Freeman's antique 
New Deal schemes. What's been missing while folks like him ride their hobby 
horses, though, is the courage to take steps necessary to minimize the 
suffering this summer. 
One large source of untapped power is California's own small generators, 
known as qualifying facilities. Their fee scale is set by the state, but 
California couldn't even summon the political competence to keep them in 
business, so 3,000 megawatts sit idle. 
People have tried to attach all kinds of ideological baggage to the 
California mess, but we wouldn't be here if water flows in the Columbia River 
system weren't down 54% from normal. Last summer, California's fossil-fuel 
generators increased their output by a whopping 62% to make up the shortfall, 
mostly by running existing plants harder. 
Yes, there have been flaky prices, partly because, mysteriously, California 
continues to use a discredited computer program to book a large chunk of its 
power one hour in advance. But the flaky prices also represent a system 
pulling out all stops to save California from itself. 
We said back in December there's only one solution: Jack up rates to stop 
consumers trying to burn more power than the state can beg, borrow or steal. 
The only question was when Gov. Davis would find the courage. Hard to 
believe, but the price hikes his regulators approved in March are still on 
the drawing board and busily being watered down. 
Someone should point out to Gov. Davis that the author of "Profiles in 
Courage" wasn't endorsing career suicide but suggesting that politicians must 
husband their leadership for times when it really counts. Not a few people in 
public life understand this. Al Gore openly yearned for the day when he could 
justify the compromises and trimming he's done in his life. But Mr. Davis is 
perhaps too lost in the dark to understand he is blowing the whole reason to 
have a political career. 
What borders on the stupefying, though, is the failure of any other 
Californian of prominence to step forward and speak truth about the power 
crisis. By all rights Gov. Davis should be a political leper, yet he actually 
stands a microscopic chance of being re-elected because of the sheer poverty, 
in a state of 34 million people, of the Republican opposition. Arnold 
Schwarzenegger is looking better all the time.

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


California; Opinion Desk
Commentary 'Hi, My Name Isn't Justice, Honey,' and Shame on Lockyer
TOM G. PALMER
Tom G. Palmer is a senior fellow at the Cato Institute in Washington. E-mail: 
palmert@cato.org

06/06/2001
Los Angeles Times
Home Edition
B-11
Copyright 2001 / The Times Mirror Company

Here's what California Atty. Gen. Bill Lockyer said at a press conference 
about Enron Corp. Chairman Kenneth Lay: "I would love to personally escort 
Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 
'Hi, my name is Spike, honey."' 
Here's why Lockyer should be removed from his office of public trust: First, 
because as the chief law enforcement officer of the largest state in the 
nation, he not only has admitted that rape is a regular feature of the 
state's prison system, but also that he considers rape a part of the 
punishment he can inflict on others.
Second, because he has publicly stated that he would like to personally 
arrange the rape of a Texas businessman who has not even been charged with 
any illegal behavior. 
Lockyer's remarks reveal him to be an authoritarian thug, someone wholly 
unsuited to holding an office of public trust. 
But his remarks do have one positive merit: They tell us what criminal 
penalties really entail. 
Contrary to some depictions of prisons as country clubs, they are violent and 
terrible places. More and more politicians propose criminal sanctions for 
more and more alleged misdeeds, and as a result ever more kinds of behavior 
are sanctioned by criminal penalties, perhaps now even selling electricity. 
Those found guilty of such crimes are put into cages, where they are deprived 
of their liberty and dignity and, as Lockyer so clearly acknowledged, raped 
and brutalized. What's worse, Lockyer has indicated that he believes that 
rape is an appropriate part of the system of punishments he administers. 
Should it matter that Lay is a businessman? Imagine the outcry if the head of 
Enron were female. What would Lockyer's fellow Democrats have said to that? 
Should it matter that Lay is chairman of an electricity generator? Does the 
nature of his business justify threats to escort him to his own rape? Lockyer 
told the Los Angeles Times that he had singled out Enron's chairman because 
the Houston-based company is the world's largest energy trader. 
So apparently singling out a man for a heinous threat is OK because he's the 
chairman of the world's largest energy trading company. That's according to 
the man who, as a state senator, sponsored California's 1984 hate-crimes law. 
Evidently the crusader against intimidation on the basis of race, religion 
and sexual orientation feels no hesitation at all about intimidating someone 
and threatening him with the brutal use of physical force simply because he 
heads the world's largest energy trading company. 
Lockyer and Gov. Gray Davis seem to think that the best way to keep the 
lights on is to threaten electricity producers with brute force, rather than 
to offer to pay competitive rates in competitive markets. Are energy 
producers to blame for California's energy problems? No. Bad policies, 
including rigid controls on retail prices of electricity, are the cause of 
the problem, not the people who generate energy. Scapegoating producers and 
threatening them with violence is an old ploy of authoritarians. Californians 
should not stand for it. 
An Enron spokesman said that Lockyer's chilling stated desire to arrange the 
rape of Lay does not merit a response. The spokesman is wrong. Lockyer's 
remarks merit public disgrace and removal from office. After all, rape is not 
a form of legal justice in America--is it?

GRAPHIC-DRAWING: "Is being raped part of my sentence?", Paul Conrad; 

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


REVIEW & OUTLOOK (Editorial)
California Squeaks By

06/06/2001
The Wall Street Journal
A26
(Copyright (c) 2001, Dow Jones & Company, Inc.)

The California energy crisis is now more than a year old and Governor Gray 
Davis has done nothing but squeak at it. At first, he attacked out-of-state 
power generators for being pirates and marauders. But lately he has focused 
on FERC and President Bush, demanding that the federal government place price 
caps on the sale of wholesale power. He's even rustled up 10 economists -- 
including the dad of deregulation, Alfred Kahn -- to support him. 
Well, as most everybody knows -- including the economists who have come out 
in favor of them -- price caps don't work. If caps are set too low, (as 
politics often dictate), existing supply will shrink and demand will grow, 
making the situation worse. Even "correctly" set price caps will discourage 
additional supply and do nothing to moderate demand. The usual result is an 
aggravation of shortages and rationing. Indeed, the history of price caps, 
particularly during the energy crisis in the early 1970s -- when oil prices 
were capped and lines at gasoline stations were long -- bears this out.
The pro-price-caps argument however is a clever one. It rests on the notion 
that there is no "effective competition" in the California energy market. 
According to one of the 10 pro-price-cap economists, Paul Joskow at MIT, the 
energy market in California is characterized by inelastic demand and very, 
very tight supplies, which conspire to produce, at certain times, prices 
above those that would have obtained under competitive conditions. 
Mr. Joskow examined the California energy market during the summer of 2000, 
looking at market fundamentals (the broad forces determining supply and 
demand); he found that 25% to 30% of the wholesale prices of electricity 
during June, July and August cannot be explained by market fundamentals and 
should be attributed to market imperfections. 
As an argument for price caps, this is hardly overwhelming. Especially since 
there are several perfectly respectable and compelling reasons to look no 
further than market fundamentals. Such as the fact that the price of the most 
important input for almost half the electricity generated in California, 
natural gas, has been rising over the past year. Such as the fact that 
natural gas pipelines are filled to capacity, thus bidding up the price to 
transmit. Such as the fact that the worst drought in the Northwest in 60 
years has reduced the amount of hydroelectric power in the market, putting 
even more demands on natural gas generation. Such as the fact that imports 
into the state, which were running 20% and up to 25% during peak usage, have 
declined. And the fact that the price of tradable permits for NOx emissions 
-- which must be held by plants generating electricity -- has skyrocketed. 
Not least the fact that demand in California during the past several years, 
unfettered by rate increases, has zoomed dramatically. 
At any rate, electric power is increasingly expensive all over the country; 
indeed, California's neighbors, the states of Washington, Idaho, Wyoming, 
Arizona, Nevada, Oregon, Utah and Montana, have had to bump up utility rates 
30% to 50%. So where is the tablet of stone saying that California, with its 
especially restrictive environmental regulations, should be any different? 
The bad news for California is that, poor dears, it can't be different. 
Market fundamentals, like supply and demand, rule. But that's also the good 
news. High wholesale prices (and necessary profits) have done their job; they 
have brought forth a number of suppliers, in the form of more than a dozen 
plans for significant new generating plants; in fact, plans have even been 
announced to build more natural gas transmission pipelines. Too, demand has 
started to abate; peak demand on a monthly basis has fallen 4% to 9% from 
last year, doubtless a response to a "temporary" 10% rate hike in January and 
the California Public Utilities Commission's decision in March to finally 
really, really raise rates by as much as 50% on average. (The details of that 
plan were announced in May and rate increases will show up on this month's 
bills.) 
So California's blame-shifting pols can point fingers til the state freezes 
over. The market is working, and imposing price caps would not only interrupt 
that process, but would be unnecessary. Of course, there is a painful lag 
between the market signals of high prices due to shortages and the market 
remedies of increased supply and lower demand. And California will probably 
feel lots of that pain this summer in the form of continued high prices and 
blackouts. 
But, in the long run, the market will be successful in creating new supply 
and lower prices. Unfortunately California's energy glut will probably come 
too late to avoid a siege of political spinning and demagoguery. Ultimately 
we have to hope Californians will understand it is their politics that has 
served them poorly.

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




A Section
Top Bush Adviser Moves to Sell Stocks
Mike Allen
Washington Post Staff Writer

06/06/2001
The Washington Post
FINAL
A10
Copyright 2001, The Washington Post Co. All Rights Reserved

Karl Rove, President Bush's senior adviser, acted yesterday to sell his 
stocks in energy, defense and pharmaceutical companies with stakes in 
administration policies. 
An administration official said Rove has long planned to sell his stocks, and 
made a final decision at an April 24 meeting with White House lawyers, but 
has been unable to complete the process because of the complex paperwork and 
legal issues.
A financial disclosure form released by the White House on Friday showed Rove 
owned holdings worth more than $100,000 each in Boeing Co., one of the 
nation's three largest defense contractors; Enron Corp., a Houston energy 
conglomerate; General Electric Co., a supplier for nuclear and fossil fuel 
power generators; and Pfizer Inc., a pharmaceutical manufacturer. A notation 
dated May 18 said, "All individual stock holdings to be sold." 
Rove yesterday sought a certificate of divestiture from the Office of 
Government Ethics, which allows deferral of capital gains taxes on sales that 
are made to avoid conflicts. The holdings would be rolled into government 
securities or diversified accounts. 
Bloomberg News reported Monday that Rove had not yet sought the certificate. 
An administration official said yesterday that Rove had submitted a draft 
request. 
Democratic Senate aides said they would determine if a hearing might be 
warranted, since Rove had retained his holdings throughout the 
administration's deliberation on its energy policy, which Bush announced May 
17. 
The administration official said Rove has "intended to sell all of his stock 
from the very beginning, and was told not to proceed" by the White House 
counsel's office until his situation was thoroughly examined. At the April 24 
meeting, lawyers outlined several options and Rove chose divestiture. 
"Mr. Rove has followed the instructions of the White House counsel's office 
and has avoided discussions that could specifically or materially affect his 
holdings while consultations regarding his financial situation were ongoing," 
the official said.


http://www.washingtonpost.com 

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


What Really Counts? EPS.
2001-06-06 07:49 (New York)


                      M E R R I L L  L Y N C H        Research Comment
  Natural Gas - Diversified                           Reference Number 
30215707
  United States                                       Jun/06/2001 07:49
  Donato J. Eassey                                    (1) 713 759-2591

Reason for Report:  Take Advantage of CA-Related Market Weakness in Energy
Merchant Conglomerates

Who Let The Bears Out? CA
Every once in a while issues and allegations become larger than life. That
seems to be the case in California.

While many issues beyond CA are negatively impacting the Energy Merchant
Conglomerates (EMCs), in our opinion it is the CA issues themselves which
appear to be at the very root of the problems. These issues include the
uncertainty at the FERC, the threat of CA legislated Windfall Profit Taxes
(WPT), Congressional examination of price caps and, to a lesser extent, the
turnover of Senate control to the Democrats.

As for the allegations of market manipulation and abuse, ultimately such
charges may have to be settled in the courts. Unfortunately, the legal system
is rarely swift, and consequently our EMCs may remain under near term pressure
as media examinations and political rhetoric heat up with summer temperatures.

In short, public discussions have already taken a large toll, with Enron,
Dynegy, El Paso and Williams down a combined $36 billion in market cap value 
or
21% since the beginning of the year.  Yet at worse, we assess the CA exposure
for these players to be only a bit over $1.6 billion!

Bottom line, however, is that with EPS growth rates remaining strongly intact,
it is exactly during these periods of weakness that we would be aggressively
building positions.  We think we are there.  Case in point, Table 1 below
illustrates valuations for our EMCs relative to the S&P500 over the last 10
years; the EMCs are now trading below their 10-year average to the S&P, while
we believe their growth prospects are the strongest they have ever been during
this time.

Maintain Perspective
At the risk of flogging Economics 101 once again, high prices begin as a
function of supply relative to demand.  When there are overwhelming forces at
work for a commodity with no readily available substitution, the situation can
get out of hand as is the case in California.  While demand was rapidly
increasing the past 10 years and consumer prices were either frozen or reduced
since '97 (few discuss the fact that California consumers benefited for 
several
years without a rate increase) the CA environment virtually prohibited any new
supplies from being built.  At the same time, end users (including the
utilities) were forced to buy primarily on the spot market, exacerbating 
market
volatility.  While hindsight is 20/20, it should be no surprise that given 
zero
price feedback from consumers and a flawed bidding process, it was only a
matter of time before this quasi-regulated market became unraveled.

Laws generally do not prohibit people from making money in the U.S. in a tight
supply/high demand marketplace, particularly in volatile markets such as
commodities on the Nymex or stocks on the NYSE. This is key because anyone
willing to except trading risks and that have the financial and risk 
management
wherewithal can and do participate in these markets - freely.  It should be no
different in the secondary energy commodity OTC market.  To suggest price caps
or a WPT are the answer is to suggest that we put a cap on stock prices and
place a WPT on stock trading profits if they are higher than one's liking,
despite the risks involved!

In our view many parties have participated in creating California's energy
deficiency problems.  A dysfunctional market that is inefficient due to
ignorance of market realities is hardly against the law - as painful as it
might be to correct.  Obviously, if any direct, collusive or illicit form of
market manipulation is involved that would be a different story.

And once the facts are allowed to unfold, we are likely to see just who was
responsible for the current situation - hopefully before CA takes an even
greater toll on the nation's energy infrastructure, or worse, on the national
economy.

As the lightning rod to the California Troubles - our four EMCs as a group 
have
lost a combined $36 billion in market cap value or 21% since the beginning of
the year. Yet at worse, we assess the CA exposure for these players to be only
a bit over $1.6 billion in gross receivables (and likely only half this on a
net basis)!

Despite the challenges, however, it is exactly during these periods of 
weakness
that we are reiterating our ratings. Our EMCs are now trading below the S&P
500's relative P/E, off from their recent high of 199% and more notably their
104% 10-yr average.

Unfortunately, with further noise and political uncertainty likely to remain 
in
vogue, more collateral damage is likely.  Bottom line, however, is that EPS
growth prospects not only remain intact, they are the strongest the EMCs have
experienced in their history; ultimately, we believe this will be the last
dynamic left standing.  Those seasoned energy investors that recognize reality
over rhetoric should, in our view, realize gains for stepping up at today's
levels.


India: MSEB unruffled amid power talk

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

MUMBAI, June 5. EVEN as officials from various financial institutions and 
banks split hairs in Singapore on whether to sink or sail with the Dabhol 
power project, the Maharashtra State Electricity Board (MSEB) is cool about 
the entire affair. 
Unlike previous instances when the odds were stacked against it, this time 
MSEB knows pretty well that whatever happens, it will remain unscathed. If 
someone has to take a hit, it has to be the financiers and maybe the 
Governments.
At the hearing before the Maharashtra Electricity Regulatory Authority 
(MERC), the Advocate-General, Mr Goolam Vahanvati, had said on behalf of the 
board that MSEB was being kind towards Enron when it rescinded the contract 
for "material misrepresentation". One more step, and it's fraud, he had told 
MERC. 
Knowing this fully well, MSEB has kept its cool throughout the altercation. 
It firmly believes that if nothing else, it can pin down the company on just 
this one point at any forum. Enron too has not said at any point of time that 
it can actually perform as per the "cold-start graph" in the power purchase 
agreement. In fact, it has said such performance - making available full 
power in 180 minutes - is "not possible" by any such plant in the world. 
In a way, it was MSEB's defiant posturing coupled with the Maharashtra 
Government's passing the buck up that got the Central Government to act. 
One thing evident throughout the crisis is that all the players are trying to 
save their own skin. In spite of the developments, Enron has played its cards 
close to its chest, and hinted to institutions at taking a hit on its returns 
only a few days ago. Even that, Mr Wade Cline, Managing Director, Enron India 
Pvt Ltd, is reported to have told Indian lenders, would hinge on substantial 
give and take. 
Indian lenders have a genuine case in that they are the ones without any 
assurances apart from the plant itself.They cannot do much except try get the 
players to somehow shake hands. 
They had tried to convince the Government some time ago to get MSEB to 
activate the escrow and increase the letter of credit amount. But they were 
told off by MSEB which was in no mood to relent. Tomorrow, Enron will make 
presentations at Singapore on what it feels can be done to move ahead. 
Whatever the outcome of the meeting, MSEB is unlikely to let anything queer 
its pitch. 
- Dinesh Narayanan

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


OMAN LNG STRIKES DEALS WITH INT'L ENERGY COS ON SPOT SALES

06/06/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

MUSCAT, June 6 Asia Pulse - Oman LNG has signed agreements with a several 
major international energy companies for future short term sales of liquefied 
natural gas to the United States and Europe. 
The company has also clinched a deal with Enron Corporation to sell a 
shipload of LNG to the US market in August this year.
This is in addition to six LNG cargoes that the US-based energy giant will be 
lifting from Oman LNG's Qalhat plant between March and December this year, 
using its own vessel, the Hoegh Galleon. 
The deals, according to a senior marketing official of the company, mark a 
significant breakthrough in Oman LNG's efforts to consolidate its presence in 
the fiercely competitive transatlantic energy market. Master Agreements, 
which broadly set out terms governing transactions between two entities, have 
now been signed with TotalfinaEif (France), Sempra Energy (US), and Cabot LNG 
(US), said Adnan J Rajab, OmanLNG's Gas Marketing Negotiator. Similar 
agreements are also being finalised with CMS Energy of the US, British 
Petroleum, GAz de France and Shell North America, he added. 
We are very encouraged by these agreements because Western markets have 
traditionally been the stronghold of more established LNG producers. By 
signing Master Agreements with most of the biggest players in the US and 
European energy markets, Oman LNG stands a far better chance of exporting 
some of its surplus volumes in remarks to the Observer. 
Until exports to India commence early next year, Oman LNG will have some 
excess capacity on its hands, which it is aggressively looking to sell in 
short term and spot sales. The trasatlantic market appears to be the most 
prospective at present. 
Meanwhile, Enron Corporation has signed a contract to lift 135,000 tonnes of 
LNG to the US market in August this year. 
It is the second such spot deal signed with Enron, which lifted a similar 
quantity of gas from Oman LNG's Qalhat facility in August last year, Rajab 
said. 
Enron's Dabhol Power project in India is also committed to buying 1.6 million 
tonnes per annum (mtpa) of Omani LNG over a 20-year period. The first 
shipment to Dabhol is due early next year. 
According to Rajab, the successful export of spot cargoes to the US through 
Coral Energy and Enron led to Master Agreements being signed with a number of 
International energy firms, with discussions under way with several other 
majors. 
Exports to the European and American markets, Rajab explained, largely hinge 
on the availability of LNG carriers, which are invariably in short supply 
throughout the year. Without carriers of its own, Oman LNG has to depend on 
chartered vessels. 
(ONA)l 06-06 1009

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


AES looks to recover Rs 209 cr Gridco dues
Santosh Tiwary NEW DELHI

06/06/2001
Business Standard
2
Copyright (c) Business Standard

After Enron-promoted Dabhol Power Company in Maharas-htra, it is now AES' 
turn to explore various options for recovering the Rs 209 crore dues from the 
state-run Grid Corporation of Orissa (Gridco). 
AES is the 49 per cent stake holder in Orissa Power Generation Company (OPGC) 
owning two units of 210 mw each in the Ib valley complex. It supplies power 
through Gridco, the transmission company.
"We are currently considering various options, keeping OPGC's best interest 
in mind," a company spokesman told Business Standard. 
The company gave an ultimatum to Gridco last month by not reopening one unit 
for a week after the scheduled outage. AES spokesman said that after verbal 
assurance by the Orissa energy minister and energy secretary on taking 
concrete steps to pay the outstanding dues, the unit was restarted. 
With no such steps in sight, AES is forced to explore the options available 
under the power purchase agreement (PPA), he added. Incidentally, the PPA 
between the two parties, also provides for arbitration in India. 
AES acquired 49 per cent stake in OPGC in December 1998 by paying $145 
million on the basis of secured payments from Gridco and full control of the 
day-to-day management. 
In the absence of timely payments from Gridco to OPGC, AES decided to curtail 
generation to around 68.5 per cent annual PLF against 90 per cent as demanded 
by Orissa, said the spokesman. The decision was taken to prevent further 
increase in the receivables and protect cash flow, he added. 
He added that linking distribution company Cesco's default to Gridco with the 
whole issue was not justified. "We acquired OPGC on secured payment backed 
escrow arrangement for 100 per cent of OPCG's dues. Our subsequent 
acquisition of Cesco in no way dilutes Gridco's payment obligations in terms 
of our PPA, escrow and other contractual arrangements," he said.

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


MSEB refuses DPC power at 90% PLF
Renni Abraham MUMBAI

06/06/2001
Business Standard
1
Copyright (c) Business Standard

The Maharashtra government will not buy power from the first phase of the 
Dabhol Power Company's (DPC) project at a 90 per cent plant load factor 
(PLF), a senior state government official said here today. The statement 
represents a hardening of Maharashtra's position on talks with DPC and 
virtually kills the latter's proposal to split tariffs for the Centre and 
Maharashtra. 
The Maharashtra State Electri- city Board (MSEB) is now required to buy 90 
per cent of the power generated by the first phase (740 mw) of the project. 
But during negotiations with the Godbole Committee, it has been demanding 
that the requirement be cut to 35 per cent.
At the last Godbole Committee meeting, DPC had put forward a plan to split 
tariffs for the Centre and Maharashtra, with the Centre paying Rs 3.30 per 
unit of power and MSEB paying Rs 3.50. The Centre, DPC suggested, could buy 
two-thirds of the power it generated, once the second phase (1,444 mw, taking 
the total capacity to 2,184 mw) was completed. 
Maharashtra's latest position undermines DPC's proposal since the Enron
-promoted company's tariff hinges on MSEB absorbing 90 per cent of the power 
it generates in the first phase. 
A senior state government official said: "The Centre has been talking a lot 
about playing the role of a facilitator. What we need is a buyer for the 
second phase." 
Despite recent central government pronouncements, state government officials 
privately argue that the Centre is not playing an active role in resolving 
the problems that have plagued the DPC project. At the very first Godbole 
Committee meeting he attended, the Centre's nominee, AV Gokak, adopted a 
non-committal stand. 
The Maharashtra government official added: "Gokak said he was merely 
attending the meeting in the capacity of a messenger and would communicate to 
the Centre any solution worked out by the renegotiation committee. The Union 
power ministry has stated that a solution worked out by the renegotiation 
committee would be acceptable to it. Unless the Centre takes an active part 
and assures the offtake of the second phase, no solution can be worked out."

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


MEXICO: Enron Corp. to sell energy in Mexico in 2002.

06/05/2001
Reuters English News Service
(C) Reuters Limited 2001.

MONTERREY, Mexico, June 5 (Reuters) - U.S. energy giant Enron Corp. said on 
Tuesday its Mexican subsidiary would begin selling electrical power in Mexico 
late next year, after construction of its Nuevo Leon plant is completed. 
Enron Mexico President Jaime Alatorre said the unit began building the 
co-generation plant in May to supply energy to supply Mexican glassmaker 
Vitro SA , industrial conglomerate Grupo IMSA and No. 2 Mexican cement maker 
Apasco .
He said the $200 million project would eventually generate 245 megawatts and 
supply varying amounts of energy to each of the Mexican industrial giants. 
"Vitro will consume 110 megawatts, IMSA 90 and Apasco the remaining 45 
megawatts," Alatorre said at a forum for Mexican business executives in the 
northern city of Monterrey. 
According to Vitro, the new plant will provide energy to at least 12 of its 
production units in Mexico and will save it some $10 million in annual energy 
costs. 
IMSA President Eugenio Clariond Reyes told Reuters the new plant will cut 
annual energy costs at the industrial conglomerate by about 13 percent. 
Alatorre said Enron is looking at other co-generation projects but would not 
provide further details. 
Mexican law reserves the sale and distribution of electricity to the state, 
and only allows private investment in projects meant for co-generation, or 
for co-generation of energy meant for personal consumption. 
Alatorre said that would have to change if Mexico is to continue providing 
for its energy needs into the near future. 
"Congress must be made conscious of the fact that the issue of sector reform 
can wait no longer," he said.

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


US Democrats Seek Hearing On Cheney Energy Task Force

06/05/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

WASHINGTON (AP)--Democrats on a House committee urged Rep. Dan Burton, 
R-Ind., to look into U.S. Vice President Dick Cheney's energy task force, 
which met privately with major Republican donors in formulating the Bush 
administration's energy policy. 
California Rep. Henry Waxman, the ranking Democrat on the Government Reform 
Committee, asked chairman Burton to conduct a congressional hearing on what 
took place at the Cheney group's secret meetings and the identities of all 
participants.
"The Cheney task force has conducted its meetings in private, and reportedly 
has obtained input from private citizens and groups, including political 
contributors," Waxman wrote Burton. 
The Associated Press reported last month that GOP contributors, including 
executives from power wholesaler Enron Corp. (ENE) and the Edison Electric 
Institute, the utility industry lobbying group, had met with Cheney to 
discuss energy policy. 
Committee spokesman Mark Corallo said the Republican staff hasn't had a 
chance to discuss the letter with Burton. 
Democrats criticized Burton's aggressive congressional investigations of the 
Clinton administration, especially the campaign fund-raising scandal 
surrounding the 1996 presidential election. Waxman and other Democrats said 
Burton's fund-raising probe was conducted in a highly partisan fashion that 
ignored Republican fund-raising excesses.

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