FYI
---------------------- Forwarded by Kay Mann/Corp/Enron on 09/01/2000 03:40 
PM ---------------------------


Cheryl Costa@ENRON_DEVELOPMENT
09/01/2000 01:52 PM
To: Kay Mann@ENRON
cc:  

Subject: Re: Report on Damage of the Generator for the CALME Gas Turbine

Hi Kay, this info should help you...

Cheryl
---------------------- Forwarded by Cheryl Costa/ENRON_DEVELOPMENT on 
09/01/2000 01:52 PM ---------------------------


Matthew Tezyk
08/25/2000 05:56 PM
To: Hemmat Safwat/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Dan Shultz/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sam 
Habash/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dwight 
Alexander/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Cheryl 
Costa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Re: Report on Damage of the Generator for the CALME Gas Turbine  

Hemmat,

In answer to your first question; yes, I am the Project Manager currently 
handling the Westinghouse 501D5A that is due to be complete in September 2000.

I was assigned to the project in late June 2000 and do not have any 
inspection, shipping / receipts, or etc. at this time.  I do have a QA/QC 
inspector on this project to ensure Enron and CALME get a quality turbine for 
their money.  I am also working on an AFE to cover the expenses of this work 
from July 2000 until the turbine is turned over to a dedicated project site.  
This cost will include proper storage of the GTG and inspections so we do not 
have another debacle like the Iuka, MS frame 6B's.  At the present, I 
anticipate the cost to be from $50,000 to $75,000 till the end of this year.  
Any money left over will be carried over into the following year or rebated 
when the turbine is turned over to a dedicated project site (i.e. CALME will 
only need to cover what is actually spent).

The only deviation to the contract that I am aware of is the change order for 
the duel fuel option.  I believe that other changes are being negotiated, but 
I am unaware of the content of those changes, if any, at this time. 

To begin the summary, the gas turbine is in the Houston, Texas Powerserve 
shop going through final assembly.  The turbine is expected to ship to the 
delivery point (Port of Houston) by mid to late September, 2000.  The 
generator is a different story. It was shipped from Nasan, South Korea on 8 
JUN 00.  It arrived in the Port of Houston on or about 23 JUL 00.  As the 
cargo ship was off-loading it's cargo, the ship listed to one side.  The crew 
went to re-balast the ship; however they did not close certain valves, or 
something to that effect, and flooded the cargo bay containing our 
generator.  When the mistake was realized, 19 inches of seawater was in and 
around the generator.  The water touched the parallel rings but not the core 
of the generator.  Talking with Lynn DeKrey, Westinghouse Project Manager, he 
informed us that Westinghouse engineering has declared the generator 
non-salvageable.  Lynn is currently gathering information so we can claim an 
insurable event occurred as well as trying to find us a generator as soon as 
possible. Lynn is also going to send an accident report so we may evaluate 
the damage as well. We have not accepted delivery of the generator and 
turbine; furthermore, title has not been transferred to Enron.  I have 
alerted Dan Shultz, Brian Barto, and Dwight Alexander of these events. 

In short, the Westinghouse 501D5A WILL NOT be available, as a GTG set, in 
September 2000.  Options to repair the generator were discussed with Lynn and 
it is estimated to take anywhere from six to twelve months and cost $3.5 to 
$5 million dollars.  The next option is to take delivery of an Erferd 
generator from Germany in late July, 2001.  The last option, which Lynn is 
currently working, is to supply a generator in sufficient time for a 
Commercial Operation Date of June 1, 2000.

If you have any questions, or would like me to speak with you further on 
this, please feel free to contact me at 713-646-8258.

Sincerely,

Matthew Tezyk
Project Manager



Hemmat Safwat
08/25/2000 07:07 AM
To: Matthew Tezyk/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Dan Shultz/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dwight 
Alexander/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Cheryl 
Costa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sam 
Habash/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 
Subject: Report on Damage of the Generator for the CALME Gas Turbine
Project: Sadaf
Doc. Nbr.: 

Matt:

I understand that you have been following the order of the CALME gas turbine 
with Siemens Westinghouse.

Please summarize for us the status of inspections, shipments of the order. 
What took place what remains (where and when). Are you the custodian of the 
various inspection, shipping / receipts etc.
What deviations if any from the Contract.

I would appreciate it if you can address specifically what is the situation 
with the Generator, we understand that while it was being unloaded in the 
Houston port, it encountered some damage.
Please indicate what is the damage, and what is the steps that is now in 
place to fix the problem. again who is doing what.

Are we still on target that the complete GTG will be in storage by September 
2000.

Regards,

Hemmat Safwat