Saudi To Announce Gas Proj Winners In Next Two Wks-Report
Dow Jones, 05/03/01

Missing link
The Daily Deal, 05/03/01

World Bond Markets: Healthy Supply Boosts Activity In Eurobond Market --- 
General Motors Acceptance, International Finance Launch
Dow Jones Newswires, 05/03/01

REVIEW & OUTLOOK (Editorial) Power, Pricing and Politics
The Asian Wall Street Journal, 05/03/01

INDIA: Foreign funds plough money into Indian shares
Reuters, 05/03/01

India: Parties up the ante for probe into Enron deal
The Hindu, 05/03/01

India: Handle Enron cautiously: Deshmukh
The Hindu, 05/03/01

India: Promoters holding parleys on future course of action
Business Line (The Hindu), 05/03/01

India: Bank of America to invest $50 m more in India
Business Line (The Hindu), 05/03/01 
India: Renegotiation with Enron likely, says Deshmukh
Business Line (The Hindu), 05/03/01  
Let Enron Exit
The Times of India, 05/03/01

IDBI: whose life is it, anyway?
Business Standard, 05/03/01 
UK names coastal zones
Lloyd's List International, 05/03/01
UK: Emetra delays derivatives, to focus on physicals
Reuters, 05/03/01
Scottish Power Earnings Fall But US Strategy On Track
Dow Jones, 05/03/01
Scottish Power CEO: Hunter Plant Fully On Line
Dow Jones, 05/03/01
UK: UPDATE 3-Scottish Power restructures as profits slip
Reuters, 05/03/01
Distractions interfere with key growth questions
Financial Times, 05/03/01
USA: UPDATE 2-Calpine, Kinder Morgan plan N.M.-Calif. natgas line.
Reuters, 05/02/01
USA: Enron says vice chairman Clifford Baxter resigns
Reuters, 05/02/01
Enron Vice Chairman Cliff Baxter Resigns
PR Newswire, 05/02/01
PARDON ME WHILE I SCREAM IN THE DARK
The Press Democrat, 05/02/01
LNG carriage to be preserve of India-flag ships
Lloyd's List International, 05/02/01
SCOTTISHPOWER REPORTEDLY TRYING TO PURCHASE PGE
Portland Oregonian, 05/02/01
SCI ups profile with Petronet deal
Lloyd's List International, 05/02/01
CALIFORNIA GENERATORS REPORT RECORD PROFITS THAT DWARF FERC'S LATEST REFUND 
ORDERS
Foster Electric Report, 05/02/01

 


Saudi To Announce Gas Proj Winners In Next Two Wks-Report

05/03/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

DUBAI -(Dow Jones)- Saudi Arabia will announce the names of international oil 
companies which have been awarded a role in the kingdom's three core gas 
ventures in the next two weeks, a Saudi official said in published remarks 
Thursday. 
The Arabic daily Al Watan quoted Abdulrahman Al-Sahibani, a member of the 
Saudi negotiating committee which has been consulting with IOCs on the 
projects, as saying that a Saudi ministerial committee had made its 
recommendations to the country's Supreme Petroleum Council about 10 days ago 
and that the SPC will now make the final selection.
Al-Sahibani said the ministerial committee didn't recommend some of the IOCs 
originally shortlisted to the SPC. He wouldn't elaborate. 
The 11 companies shortlisted last year for consideration are Royal 
Dutch/Shell Group (RD), BP PLC (BP), Exxon Mobil (XOM), Chevron (CHV), 
TotalFinaElf (TOT), ENI SpA (E), Enron Corp. (ENE) and Occidental Petroleum 
Corp. (OXY) who are bidding jointly, Marathon Oil Canada Inc. (T.M), Conoco 
Inc. (COCA) and Phillips Petroleum (P). 
The three ventures on offer have been estimated at a combined value of about 
$25 billion. 
Saudi Arabia invited international oil companies in October 1998 to 
participate in proposals for downstream gas projects and upstream gas 
enhancement. 
-By Dyala Sabbagh, Dow Jones Newswires; 9714 3314260; 
dyala.sabbagh@dowjones.com



Post Mortem
Missing link
by Claire Poole

05/03/2001
The Daily Deal
Copyright (c) 2001 The Deal LLC

Buying Illinova gave Dynegy a key piece in a puzzle for trading energy 
anywhere, anytime. 
When Chuck Watson decided to take his company beyond natural gas trading, he 
changed its name to Dynegy Inc. and took as its logo a tangram, a seven-piece 
puzzle that can be assembled in thousands of ways. Buying utility Illinova 
Corp. in February 2000, gave him a piece for delivering such flexibility. 
"The Illinova acquisition was probably the most well-timed and best conceived 
buy of the year," raves Jeremy Butler, an analyst at Value Line Publishing 
Inc.
ReportCard 
DYNEGY -- ILLINOVA 
Stock Price A 
Profitability B+ 
Strategy A- 
Braintrust B 
Culture B 
Competitive Position A 
Overall A- 
Why? Besides providing electricity to 650,000 customers in a 
15,000-square-mile area in Illinois, Decatur, Ill.-based Illinova also had 
recently received regulatory approval to transfer its coal and gas-fired 
generating plants -- 3,800 megawatts in all -- to an unregulated subsidiary 
as part of the state's deregulation of its electricity industry. 
Thanks to soaring energy prices, as well as to $125 million to $165 million 
in overall earnings estimated or achieved from optimizing Illinova's 
generation assets and improving its operating efficiencies, Dynegy is seeing 
the effects of the deal on its bottom line. "Illinova has been extremely 
accretive to earnings," said M. Carol Coale, an analyst at Prudential 
Securities in Houston. 
Last year, in fact, Dynegy's revenues nearly doubled to $29.4 billion, while 
its net earnings almost tripled to $452 million, or $1.43 per diluted share, 
as a result of the $4 billion Illinova deal. In the first quarter, Dynegy's 
net earnings jumped 73%. 
Investors have been amply rewarded. Dynegy's stock took off last year, 
jumping 135% to $56.06 per share, making it the second best performing stock 
in the Standard & Poor's 500. Since the Illinova deal was announced June 14, 
1999, Dynegy's stock has skyrocketed an astounding 207%, from $18.25 to 
$56.11. (One of those happy investors is San Francisco-based oil and gas 
giant Chevron Corp., which owns about 27% of Dynegy.) 
For Watson, who formed Dynegy in the late 1990s out of Houston energy company 
NGS Corp., where he was CEO and chairman, the success of the Illinova deal 
underscores his quest to take power and trade it anywhere he wants, anytime 
he wants, at any price he wants. That's why he dubbed the company Dynegy, a 
hybrid name taken by combining "dynamic" with "energy." 
If energy prices stay high and Dynegy's traders continue to make winning 
bets, analysts expect the company's net earnings per share to increase 
another 25% this year to $575 million, or $1.80 per share. But Dynegy hasn't 
been immune to the power crisis afflicting California, where it co-owns four 
power plants with NRG Energy Inc. of Minneapolis that generate 2,800 
megawatts of capacity. 
Indeed, since the crisis began, Dynegy's been defending itself against 
allegations that it's overcharging for power. 
The California situation has hurt Dynegy in other ways, too. On April 6, for 
example, its stock fell 5%, to $48.34, after utility Pacific Gas & Electric 
Co., a unit of PG&E Corp., filed for bankruptcy. (Dynegy provides power to 
the California market as a wholesaler but not to PG&E directly.) 
Dynegy has also been quibbling recently with another teetering California 
utility, Sempra Energy's San Diego Gas & Electric, which claimed April 12 
that Dynegy ordered it to shutter some of the facilities the utility sold it 
in 1999 -- but that it still operates -- because it doesn't think it will get 
paid. 
Dynegy denied the charge. "Dynegy did not instruct SDG&E to shut down 
generating units, nor did we suggest that we would not make power available 
to creditworthy buyers," Stephen W. Bergstrom, Dynegy's president and COO, 
wrote in a letter to SDG&E Chairman and CEO Stephen Baum. 
Dynegy has tried to downplay its exposure to the state's power woes. It's 
repeatedly pointed out to the press that its 50% stake in the four power 
plants in California only represents 1,400 of its total generating portfolio 
of 13,000 megawatts, or about 10.8%. Analysts, however, estimate Dynegy's 
exposure in California could give its earnings a haircut of as much as 15% 
this year. 
Even so, Dynegy's stock has recovered to a recent $56. "Illinova has created 
some volatility to Dynegy's stock because of the addition of power generation 
to its business," Prudential's Coale said. "But overall, it's been a great 
deal." 
While keeping most of Illinova management in place, Dynegy made the company's 
chairman, president and CEO, Charles Bayless, a nonexecutive director of the 
combined entity. Dynegy's also marketing and trading all of Illinova's 3,800 
megawatts of output. "They've streamlined power generation and traded around 
the assets while keeping the distribution business in a sweet spot," said 
John Olson, an analyst at Sanders Morris Harris in Houston. 
Illinova, meanwhile, solved a big investor-related problem for Dynegy. Before 
the merger, only 10% of Dynegy's shares were available to the public. As part 
of the deal, Watson convinced two of Dynegy's strategic partners, British Gas 
plc and Nova Chemicals, to sell their combined 50% stake for approximately 
$542 million in cash and 3,348,888 shares of a new convertible preferred 
stock. It also issued 3.3 million shares after the deal closed. 
Those moves increased Dynegy's float to more than 60% of the shares 
outstanding, which led money managers to flood in. The company's market 
capitalization has since tripled to $18.3 billion. 
Operationally, in its effort to focus on power generation, trading and 
marketing, Dynegy has been dumping some of its mid-stream assets, such as 
processing plants and pipelines, particularly in the mid-Continent region. 
The idea now is to increase Dynegy's so-called merchant power capacity -- or 
the electricity it sells wholesale to anyone who needs it -- to 70,000 
megawatts by 2004 through acquisitions, new construction and asset management 
agreements. 
As a result, Watson has become what some are calling "an acquisitions hound." 
He's already acquired some facilities. On Jan. 31, Dynegy completed the 
purchase of two power plants in the Hudson River Valley -- the 1,200-megawatt 
Roseton power plant in Newburgh, N.Y., and the 500-megawatt Danskammer plant 
nearby -- from various area utilities for $376 million. Banc of America 
Securities llc advised Dynegy on both purchases. 
Dynegy has had trouble picking up other power plants, however. Witness the 
deal it announced Nov. 20 to acquire 1,330 megawatts worth of 
electricity-generating assets in Nevada from Reno-based Sierra Pacific 
Resources for $634 million. The deal got scotched April 18 when Nevada 
regulators -- spooked by its next-door neighbor's power crisis -- repealed 
the state's electricity deregulation plan and put a moratorium on all power 
plant sales in the state. (Dynegy estimated the acquisition would have added 
5 cents per share to 2001 earnings.) 
Still, since the Illinova merger, the total generating capacity built or 
acquired by Dynegy now exceeds the total capacity added through the merger. 
That includes 1,160 megawatts of new natural gas-fired generation facilities 
in Georgia, Kentucky and Louisiana that are expected to begin commercial 
operation by June -- just in time for summer. 
Like its cross-town rival, Enron Corp., Dynegy has also expanded via 
acquisitions into broadband telecommunications. (Dynegy also competes with 
Houston-based Reliant Energy and Charlotte, N.C.-based Duke Energy.) 
Both Enron and Dynegy see a big opportunity in broadband, given that there 
are few other suppliers and that managing its movement is akin to what's 
involved with natural gas or electricity. 
In August, Dynegy announced it was acquiring Aurora, Colo.-based Extant Inc., 
a privately held developer of telecom solutions, for $188 million in cash and 
stock. It completed the deal in September. Then in November, Dynegy announced 
it was acquiring privately held Iaxis Ltd., a London-based telecom that owned 
and operated an 8,750-mile fiber-optic network throughout Europe, for almost 
$200 million. Dynegy completed the deal in March. 
Dynegy is now developing a 20,000-mile fiber-optic cable network in the U.S. 
that it will link to Iaxis' network in Europe. It hopes its broadband unit, 
which lost $11.6 million in the first quarter, will be profitable by the 
second half of 2002. 
Still, Dynegy has differentiated itself as the "anti-Enron" because, among 
other things, it continues to buy power plants rather than sell them. (Enron, 
meanwhile, has been trying to dump its hard assets, such as Portland General 
Electric in Portland, Ore.) 
Enron CEO Jeff Skilling -- a polished former McKinsey & Co. consultant -- 
just wants to be a go-between, and not just in energy, but in broadband, pulp 
and paper and metals, while Dynegy's Watson -- a scrappy former commodities 
trader -- thinks he can play power generation and trading off each other. 
It'll be interesting to see who is right. 
Looking back at the Illinova deal Dynegy Inc.'s acquisition of Illinova Corp. 
has proven one of the best deals of the year. 
Company Dynegy Inc. 
President Charles L. (Chuck) Watson 
Headquarters Houston 
Market cap $13.6 billion* 
Date Action 
1/03/00 Federal regulators 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic%2BFTContentServer?pagename=Futu
 reTense/Apps/Xcelerate/Render&c=TDDArticle&cid=A12621-2000Jan3&preview=true 
for Dynegy Inc. and Illinova Corp. to complete their $2 billion merger 
1/06/00 Dynegy has to say in a release that the 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic%2BFTContentServer?pagename=Futu
 reTense/Apps/Xcelerate/Render&c=TDDArticle&cid=A12891-2000Jan6&preview=true. 
Late in December the companies said the deal's completion, scheduled for Jan. 
4, would be postponed until mid-January because of a delay in Dynegy's sale 
of assets to El Paso Energy Corp. 
1/14/00 Watson is betting that he can succeed where Enron failed: by 
http://www.thedeal.com/cgi-bin/gx.cgi/AppLogic%2BFTContentServer?pagename=Futu
 reTense/Apps/Xcelerate/Render&c=TDDArticle&cid=A13445-2000Jan14&preview=true 
to boost the fortunes of its lucrative energy trading business 
2/02/00 Dynegy, Illinova complete merger, creating a new entity named Dynegy 
Inc. Shareholders in the previous Dynegy Inc. receive 0.69 shares in the new 
company, or $16.50 cash, for each of their shares, while Illinova 
stockholders receive one share for each of their shares. 
* Figure from 5/02/01 Source: The Deal 
Back to story 
http://www.thedeal.com




World Bond Markets: Healthy Supply Boosts Activity In Eurobond Market --- 
General Motors Acceptance, International Finance Launch
Dow Jones Newswires

05/03/2001
The Asian Wall Street Journal
M9
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LONDON -- Activity in the primary Eurobond market picked up early Wednesday 
amid a growing pipeline of supply, with a $500 million issue of five-year 
bonds by General Motors Acceptance Corp. and a $300 million 10-year issue by 
International Finance Corp. 
The market also was awaiting the landmark GBP 2 billion ($3.2 billion) 
equivalent asset-backed issue from Glas Cymru, due to launch via Royal Bank 
of Scotland and Schroder Salomon Smith Barney, dealers said.
The deal will fund Glas Cymru's acquisition of Welsh Water from WPD and was 
expected to come in slightly tighter than original talk for triple-A tranches 
of between 110 and 120 basis points, or hundredths of a percentage points, 
over U.K. government bonds. 
Elsewhere, Finance for Danish Industry, rated A1, was set to issue 600 
million euros ($535.7 million) of four-year bonds via Deutsche Bank, ABN Amro 
and BNP Paribas. Energy group Innogy PLC also was expected to tap the market 
again Wednesday with a 500-million-euro seven-year issue, expected at a 
spread of 110 basis points over midmarket swaps. 
Meanwhile, Finland has mandated ABN Amro, Deutsche Bank and Nordea to joint 
lead manage the issue of a syndicated government bond due 2007, ABN Amro 
said. According to market speculation, the size is around three billion 
euros. 
Energy group Enron has mandated Schroder Salomon Smith Barney as bookrunner 
for a multicurrency credit-linked notes trust transaction, consisting of 
tranches in intermediate maturities. Launch will follow a European roadshow, 
subject to market conditions, and UBS Warburg is joint lead manager. 
Secondary market activity was once again dominated by the telecommunications 
sector, where British Telecommunications bonds were between 10 and 15 basis 
points tighter on news that it will sell its stakes in Japan Telecom, the 
J-Phone Group and Airtel to Vodafone for GBP 4.8 billion in cash, reducing 
its debt burden by GBP 4.4 billion. 
"This is undoubtedly positive news for BT bond holders," HSBC said in a 
research note.




REVIEW & OUTLOOK (Editorial)
Power, Pricing and Politics

05/03/2001
The Asian Wall Street Journal
7
(Copyright (c) 2001, Dow Jones & Company, Inc.)

India's electricity shortage can't be solved without a new approach. 
India's power problem is back on the front burner because global generating 
giant Enron is threatening to turn off the lights at its Dhabol plant and 
walk away from a contract with the Maharashtra State Electricity Board. In an 
effort to collect $48 million owed for electricity already supplied, the 
American company has invoked central government guarantees and declared a 
political force majeure, but without much success. So technically India is 
facing a sovereign default, after which Enron would spend years battling 
through the courts to get compensation for the $3 billion project. Of course 
everyone knows that's not going to happen. After more brinksmanship from both 
sides, in the coming days they will have to sit down and negotiate a 
settlement.
Some of the problems with Enron are unique to that particular arrangement, 
but in its basic outline the saga epitomizes a flawed attempt to deal with 
India's power problem, narrowly defined: a shortage of generating capacity. 
The country suffers constant blackouts due to a supply shortage of about 6%, 
and even more during times of peak demand. In the early 1990s, the central 
government sought to solve this shortfall by opening the doors to private 
investors like Enron. 
But this proved to be a mistake because power distribution is controlled by 
the state governments -- they run it as a system of wealth redistribution 
rather than a business. California recently made the earth-shattering 
discovery that a lack of market pricing at the consumer level leads to 
disaster. But India's state electricity boards, or SEBs, proved that long 
ago; they have long been bankrupt, and often default on payments to private 
generators. As a result, most of the big names in power have now pulled out 
of India. 
Yes, the country does need to worry about generating capacity. It's estimated 
that in the next 12 years demand will more than double, with an additional 
100,000 megawatts needed, but only half of that is likely to be built. That 
could increase the shortfall during peak demand to 24%, a frightening 
prospect. But the first order of business is to reform distribution. 
There is a debate now about how to give state governments the right 
incentives to reform their SEBs. These owe almost $6 billion to central 
government-owned generators and mines, from whom they buy much of their power 
and coal. In the recently passed budget, New Delhi included a provision to 
forgive this debt as long as the state governments commit to either 
privatizing their SEBs or putting a floor on electricity prices. Electricity 
meters would actually be installed to measure power usage, but subsidies 
would still be allowed; many customers wouldn't pay enough to cover the true 
cost of that power. 
Still, this would be big progress by Indian standards if it happened. Many 
farmers currently get their power for free, and over 30% of power generated 
is stolen -- something the SEBs euphemistically call "transmission and 
distribution losses." As a result, the electricity boards average a return on 
investment of negative 18%. 
However, New Delhi is offering quite a big carrot and not much stick. After a 
March 3 meeting between the prime minister and state leaders, Rajnath Singh, 
the chief minister of Uttar Pradesh, said quite clearly that he wouldn't hike 
energy charges for farmers. The reason is obvious -- he faces elections next 
year, and free power has become an entitlement that no politician lightly 
takes away. Chief ministers will likely sign on to New Delhi's plan in order 
to get debt relief, but will backslide on implementation. 
The only thing that will make the states serious about reform is a hard 
budget constraint, which is the opposite of what the government is offering. 
One way to provide it would be to hand over the centrally owned power 
generators and mines to the states. They would then have to figure out how to 
keep the system running. If they still chose not to charge for electricity, 
they would have to find the money for power generation from other parts of 
their budgets. 
Another reform some have suggested is to pass a national law which legalizes 
private power producers. Some states allow companies to have their own 
"captive" power plants to maintain supply when the public grid fails. But 
these are typically not permitted to sell their power outside of the parent 
company. If larger plants that could supply several industrial firms were 
legalized, the states would come under greater pressure to reform. The 
private power suppliers could cherry-pick the best customers, those willing 
to pay for reliable power, leaving the state to subsidize the freeloaders. 
This would also have the benefit of quickly boosting the country's power 
supply, since captive plants already have about 10,000 megawatts of unused 
capacity. 
New Delhi is still trying to reform the country's power market by fiat. This 
means years of political wrangling while a growing economy is strangled by a 
shortage of electricity. Instead, the would-be reformers could let the power 
of the invisible hand push the state governments in the right direction.




INDIA: Foreign funds plough money into Indian shares.
By Anurag Sood

05/03/2001
Reuters English News Service 
(C) Reuters Limited 2001. 

BOMBAY, May 3 (Reuters) - A stock market scandal, the high-flying software 
sector skidding to a slowdown, a faltering industrial growth and fears 
India's biggest foreign investor might pull out. 
These are some of the events that shook Indian investors, regulators and 
legislators in the first four months of 2001.
Yet foreign funds with deep pockets seem undeterred and have pumped money 
into emerging Asia's third biggest stock market by market capitalisation. 
Official data show foreign institutional investors were net buyers in Indian 
shares of $340 million in April, boosting the January-April tally to $1.98 
billion - exceeding the $1.53 billion in the whole of 2000. 
"There has been a higher allocation to Asia this year, part of which has 
found its way into India," said Singapore-based Samir Arora, head of Asian 
Emerging Markets at Alliance Capital. 
He said these were funds deserting the United States on fears of a slowdown 
and losses on Wall Street, but afraid to get into crisis-ridden Japan, and 
hence hunting for better returns in emerging Asia. 
According to Lipper Asia Ltd, a Reuters global funds data company, 
investments by the 20 biggest fund investors in Asia soared to $615.8 billion 
in the January-March period, up from $354.3 billion in the same quarter last 
year. 
But the country's stock market this year has been among the worst performers 
in the region. The Bombay benchmark index is down 10.92 percent since the 
start of January, only ahead of Indonesia. 
THE BUY LIST 
The shopping cart shows pickings this year have been widespread, from 
technology where fund managers say valuations were attractive after the 
meltdown, to the old industrial firms they feel could ride the wave of a 
turnaround. 
The Indian economy, number two in developing Asia by gross domestic product, 
is seen growing close by an average six percent - the IMF estimates 5.6 
percent, the Asian Development Bank 6.2 percent and the Indian central bank 
6.0-6.5 percent. 
Ajit Ranade, economist at ABN AMRO Bank, says India's large domestic economy, 
resilient to the global slowdown, could pull more funds into the country. 
But a blizzard of stock market scandals which revealed share price 
manipulation has unnerved some foreign investors. 
"Weak regulation is a part of an emerging market risk, but that does not rule 
out caution," said an India strategist at a foreign brokerage. 
Analysts say foreign fund flows are unlikely to be influenced much by events 
such as the Enron controversy, where the U.S. energy giant is threatening to 
pull out of its $2.9 billion power project in the western Indian state of 
Maharashtra. 
Enron is India's single biggest foreign direct investor. 
They say factors that influence foreign portfolio investments are different 
from the considerations that drive longer term direct investments. 
The Indian government's decision to hike foreign funds' investment limit in 
Indian firms to 49 percent has also added to fresh buying in Indian software 
services firms. 
"India's technology sector is still the best in the region. It has got low 
capital expenditure, no inventory, and increasingly their customers are 
outside the technology sector, in areas like banking, insurance and other 
industrial sectors," Arora of Alliance Capital said.



India: Parties up the ante for probe into Enron deal
Mahesh Vijapurkar

05/03/2001
The Hindu 
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire 

MUMBAI, MAY 2. All left-of-centre political parties, either partners in the 
coalition or supportive of the Democratic Front Government, today thrashed 
its effort to renegotiate the power purchase agreement (PPA) with the Enron
-sponsored Dabhol Power Company. The least- cost option was to initiate a 
judicial probe into the deal, which was replete with fraud, and seek the 
scrapping of the project, they said. 
This view was made public after the parties - Peasants and Workers Party, the 
CPI(M), the Janata Dal (Secular), the Samajwadi Party and others - met here 
and decided to press the demand at a meeting of the coordination committee of 
all parties, including the Congress and the Nationalist Congress Party, on 
May 8. Its scheduled meeting for today was put off as the Chief Minister, Mr. 
Vilasrao Deshmukh, was away electioneering in the South.
These parties, worried about the huge, unpayable DPC bills, had been 
demanding a probe under the Inquiries Commissions Act but today upped the 
ante, saying "we are convinced of fraud" in the agreement with DPC. "The 
renegotiation," Mr. N. D. Patil, who leads the Left grouping and heads the 
all-party coordination panel said, "is not what we want... we don't want it 
at all." He and Mr. Prabhakar Sanzgiri, CPI(M), said "we no longer suspect 
it. We are convinced" of malfeasance. 
Along with Mr. Pradhyumna Kaul of the Anti-Enron Campaign, they told a press 
conference that the moment fraud was proved, the PPA could be annulled and 
"the huge liquidation penalties can be avoided." 
The demand was to scrap the 1,444 mw phase II, "take over" the 740 mw Phase I 
and initiate a probe. "The Godbole Committee (report) has provided enough 
grounds," though Phase I "was a reality and Phase II only an eventuality." 
Even a small criminal probe would put any arbitration decision, sought by the 
DPC, "on hold." 
The lobby pressing for scrapping the PPA said an FIR against the Maharashtra 
State Electricity Board, under the provisions of Section 10 of the 
Electricity Supply Act, would suffice as there were enough grounds to prove 
that the entity or persons concerned had 'played games' at one time or the 
other. It cited bloated projections of energy demand in Maharashtra, provided 
by the MSEB to DPC, to justify the work on the Phase II which is now under 
stress following lenders' reluctance to provide funds till the issue is 
sorted out. 
When asked why Mr. Deshmukh preferred renegotiation and trimming of power 
tariff to a probe, Mr. Patil said "that is his view." For their part, the 
parties "would press for change at the meeting on May 8... We are not witch 
hunting. There have been fraudulent acts and we want them probed."


India: Handle Enron cautiously: Deshmukh
Our Special Correspondent

05/03/2001
The Hindu 
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire 

THIRUVANANTHAPURAM, MAY 2. The Maharashtra Chief Minister, Mr. Vilasrao 
Deshmukh, today advised the State to handle the Enron issue cautiously and 
refrain from committing the mistakes made by his State. 
Addressing a press conference here today, Mr. Deshmukh said the Maharashtra 
Government was treading carefully on the Enron issue and it hoped to 
renegotiate the power tariff with the U.S. company.
Mr. Deshmukh's observations assume significance in the context of the running 
controversy regarding the Kannur Power Project, which had been denied 
permission by the LDF Government. 
Mr. Deshmukh said that Enron had written to the Maharashtra State Electricity 
Board that it was ready to renegotiate the power tariff provided the 
Government of India made a formal request. He said the renegotiation would 
start as soon as the Union Government handed over the formal letter asking 
for a renegotiation. 
Mr. Deshmukh pointed out that the basic issue in Enron's Dabhol project was 
related to the power tariff. The foreign exchange rate was fixed at Rs. 32 a 
dollar at the start of the project. But now, it had gone up to Rs. 47 a 
dollar, thereby pushing the cost of power up. He indicated that the 
renegotiations would focus on this aspect as well. 
The Maharashtra Government had proposed renegotiation on the basis of the 
Godbole Commission recommendation. He was confident that the Enron would 
agree to renegotiate the tariff in the interests of the Maharashtra 
Government and its own interests. 
In reply to a question, Mr. Deshmukh said the Enron project had been a major 
drain on his State's finances, but it had overcome all problems by handling 
them very carefully. 
He said the Maharashtra Government would extend all support to the UDF if it 
were to come to power to process the various parameters relating to the 
Kannur project so that it did not commit the same kind of mistake as 
Maharashtra did. He, however, made it clear that his Government welcomed 
foreign direct investments but not at the cost of the State's interests. 
Mr. Deshmukh attacked the Centre for not using the various options available 
under the WTO agreement to come out with a balanced import-export policy. 
Asked for his comments on Mr. Sharad Pawar's statement that the NCP was 
considering joining the People's Front, Mr. Deshmukh made it very clear that 
his party's alliance with the NCP was confined to Maharashtra alone. 'The 
alliance with the NCP is a post- election affair as part of the attempts to 
unite all secular forces. The Congress had fought the NCP and several other 
parties which are now part of the Congress-led Government. But the alliance 
had been formed in order to keep the BJP-Shiv Sena combine out,' he said. 
Asked how his party could accept the NCP which had an alliance going with the 
BJP in Meghalaya, Mr. Deshmukh said the Congress- NCP ties were confined to 
Maharashtra. 'If the NCP creates any problems in Maharashtra, the alliance 
would end,' he said. 
Mr. Deshmukh attacked the CPI(M)-led LDF for its five- year misrule which had 
left the State virtually bankrupt. 'The credibility of the LDF is so low that 
the people would not vote for it.' The CPI(M)-led Left parties would be 
defeated in Kerala and West Bengal, he added.


?
India: Promoters holding parleys on future course of action

05/03/2001
Business Line (The Hindu) 
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire 
NEW DELHI, May 2. THE Shipping Corporation of India, Mitsui O.S.K. Lines, 
Atlantic Commercial Inc (an Enron affiliate) are holding parleys at Houston, 
US, the headquarters of Enron Inc,to decide the future course of action on 
its LNG shipping deal for the Dabhol Power Company (DPC). 
The controversy surrounding the Enron-promoted DPC and the apprehension 
raised by the lenders to the LNG shipping project has made the three shipping 
promoters of Greenfield Shipping Company take stock of the situation.
"A final view on the LNG shipping deal will depend on what Enron decides on 
the power project per se and not just the second phase of the project which 
is being planned as a LNG- driven plant. Even the first phase is expected to 
switch-over to LNG in a couple of years", sources tracking the sequence of 
events told Business Line. 
The promoters have already paid 70 per cent of the vessel building cost to 
Mitsubishi Heavy Industries, Japan, where the 135,000-cubic metre capacity 
vessel is being constructed at a total cost of $ 224 million. 
According to the delivery schedule, the LNG vessel named Laxmi is expected to 
be completed and delivered by October end this year. 
A consortium of 11 global banks led by ANZ Investment Bank has taken a high 
exposure on the LNG shipping project. The Greenfield Shipping Company had 
struck a 10-year loan with the lenders worth $ 165 million at 325 basis 
points over libor. 
SCI has a 20 per cent equity stake in the project while Mitsui O.S.K.Lines 
hold 60 per cent and Atlantic Commercial Inc. 20 per cent. The LNG shipping 
deal for Dabhol was the first LNG shipping contract in the country involving 
an Indian shipping line. 
Greenfield Shipping Company had entered into a time- charter agreement with 
DPC to transport LNG from West Asia to its power plant in Maharashtra at a 
time-charter hire rate of $ 98,600 per day for 20 years. 
Unlike in the case of other ships, LNG ships do not have a secondary market 
since these are acquired against specific long-term contracts. 
In case of any eventuality, Greenfield Shipping Company would find it 
difficult to divert the vessel elsewhere as globally spot trade in LNG is 
almost nil. 
Fortunately for the Greenfield Shipping Company, the prices for new LNG 
buildings have started "firming up" after travelling through a downward trend 
till recently. 
Mitsui O.S.K.Lines-NYKK Line-KKK Line-SCI consortium which recently bagged 
the shipping contract from Petronet LNG Ltd also, has placed an order with 
Daewoo Shipbuilding Yard to construct two LNG tankers of 1,38,000 cubic metre 
capacity each at $ 185 million per vessel. 
This phase witnessed LNG building prices go down substantially, but has since 
started picking up. 
Our Bureau


India: Bank of America to invest $50 m more in India

05/03/2001
Business Line (The Hindu) 
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire 

MUMBAI, May 2. BANK of America plans to invest around $50 million (Rs 235 
crore) to expand its business in India in the next two years, according to Mr 
Viswavir Ahuja, who took over as Country Manager of the bank in India from 
May 1. 
"We have already obtained FIPB and RBI clearance and the first installment of 
$10.5 million will be brought in shortly," Mr Ahuja said.
The bank is setting up a 100 per cent subsidiary - Banc of America Securities 
Pvt Ltd - for undertaking primary dealership in Government securities and 
dealing in other debt products. 
In a chat with presspersons here on Wednesday, Mr Ahuja said in terms of 
strategy, "the bank intends to favour judicious balance sheet usage while 
increasing trading and distribution and advisory capabilities." 
Bank of America, which exited from retail banking a couple of years ago, is 
now focussing on the wholesale segment. It would open a new branch in 
Bangalore, the fifth in the country, in the third-quarter. 
The bank has an exposure in power, telecom and other segments of the 
infrastructure sector. Bank of America is among the foreign lenders to the 
Enron's Dhabol Power Project. 
Our Bureau


India: Renegotiation with Enron likely, says Deshmukh

05/03/2001
Business Line (The Hindu) 
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire 

THIRUVANANTHAPURAM, May 2. THOUGH it continues to be a major embarrassment 
and a heavy draw on its finances, the Enron issue seems to have armed the 
Maharashtra Government with enough "expertise" to advise on similar projects 
elsewhere in the country. 
This was one of the upshots at the news conference by the Maharashtra Chief 
Minister, Mr Vilasrao Deshmukh, who is on an election campaign on behalf of 
the United Democratic Front (UDF), here on Wednesday.
In the course of his interaction with the newspersons, he said his Government 
would extend all support to UDF, if it came to power, to process the various 
parameters relating to the Kannur project so that it did not commit the same 
kind of mistakes such as Maharashtra. 
He, however, made it clear that his Government would welcome foreign direct 
investments, but not at the cost of the State's interests. 
Mr Deshmukh said the Maharashtra Government was hopeful of renegotiating the 
issue of tariff for the power from Dhabol project with Enron. 
He said Enron had written to the Maharashtra State Electricity Board (MSEB) 
that it was ready to renegotiate power tariff provided the Union Government 
made a formal request. 
The renegotiation would begin as soon as the Union Government handed over the 
formal letter in this regard, he added. 
The Chief Minister said the basic issue was related to the power tariff. 
The foreign exchange component was fixed at Rs 32 per dollar at the start of 
the project, which had now gone up to Rs 47 per dollar thereby pushing up the 
cost of power. He indicated that the renegotiations would focus on this 
aspect as well. 
He explained that the Maharashtra Government had proposed renegotiation on 
the basis of Godbole Commission recommendation. He was confident that Enron 
would agree to renegotiate the tariff in its own interest as well as that of 
the State Government. 
Our Bureau


Let Enron Exit
ADITYA CHATTERJEE & POOJA KOTHARI

05/03/2001
The Times of India 
Copyright (C) 2001 The Times of India; Source: World Reporter (TM) 
FOR years, Enron tried to woo Indian policy-makers, who couldn't seem to 
decide whether the Dabhol project was a good idea or not. Today, the boot is 
on the other foot, and it seems to be pinching. Enron's management is keen to 
stop investing in huge, capital-intensive plants around the world. In keeping 
with this strategy -and no doubt exhausted by its ceaseless crisis management 
in India - Enron is mulling a pullout. But both the Centre and Maharashtra 
government want to renegotiate the power purchase agreement and have 
entrusted this responsibility to the Madhav Godbole panel. 
Is Enron really as indispensable as the authorities seem to think it is? 
Financially, no. Indeed, if the only way to continue the project is on the 
present terms, then it makes better sense to simply scrap it. After all, it's 
better to amputate a gangrenous limb than to let the problem spread further.
A little arithmetic will make this amply clear. If the Dabhol Power Company 
(DPC) does scrap its agreement with the Maharashtra State Electricity Board, 
the Centre will have to cough up a sum of Rs 2,910 crore - a penalty amount 
of Rs 1,500 crore for one year's electricity bill, and $300 million as 
termination fees (which works out to Rs 1,410 crore at an assumed exchange 
rate of 47 rupees to one dollar). This is a one-time payment, and the figure 
of Rs 2,910 crore is corroborated by a recent statement by Union power 
secretary A K Basu. 
Now, if India were to continue with the present arrangement, it would end up 
paying at least Rs 1,500 crore per year for the next 10 years to DPC. On the 
other hand, what would happen if the project were scrapped? Well, very 
simplistically, India would save Rs 15,000 crore (Rs 1,500 crore multiplied 
by 10 years). But things aren't quite that simple, because that money could 
earn interest, while inflation would mean that Rs 15,000 crore after 10 years 
would not have the same value it would have today. To get around this 
problem, financial experts use a concept called net present value, which 
discounts future earning streams as well as inflation, to evaluate the 
attractiveness of a project. If we use a discount rate of 10 per cent, then 
the value of the amount India would save by scrapping the Dabhol project 
works out to Rs 9,217 crore, over three times the amount India would have to 
pay today if the agreement with DPC is terminated. 
Indian financial institutions (FIs) and banks which have lent money to DPC 
are actively lobbying to prevent such an eventuality. But how badly would 
they be hit? Well, FIs led by Industrial Development Bank of India have 
provided loans of $95 million and $333 million in two phases. This brings 
their total exposure to $428 million (Rs 2,012 crore at an exchange rate of 
47/$). Besides, State Bank of India also underwrote the maximum portion of a 
$557 million cross-border loan, and has an exposure of about $175 million (Rs 
823 crore). Thus, the cumulative exposure of Indian banks and FIs in DPC 
works out to around Rs 2,835 crore. 
However, since only 80 per cent of this amount has been disbursed so far, the 
net exposure of Indian lenders amounts to Rs 2,268 crore. Since the Indian 
lenders are not covered by any counter-guarantee, their bottomline would be 
hit if Enron backs out. The government, being a majority stakeholder in most 
of these institutions, would also be affected. But even if all these loans 
are taken into account and added to the one-time payment of Rs 2,910 crore, 
the total cost to the government would be Rs 5,178 crore - still lower than 
Rs 9,217 crore. 
Thus, the termination option will prove less costly for the nation than 
proceeding on the present terms. What will happen to the assets and the 
plant, did we hear you ask? Well, the government can sell it to private 
players and re-negotiate the cost factor with them - this time hopefully 
after doing a cost-benefit analysis! A sale of assets would also lessen the 
load on the government. Who knows, the government may actually manage to sell 
the ownership of DPC at a premium to another private sector player! 
Of course, fears have been raised that cancelling the project might cost us 
foreign direct investment since Enron is the biggest investor in India so 
far. After all, Brazil raised $31 billion and China $49 billion last year in 
comparison with India's measly $4 billion. But there's another way of looking 
at the problem - what does India really have to lose? In short, it's a case 
of losing what you don't even have in the first place. 
Many developing nations which were pushed into signing expensive power 
projects by multinationals have successfully re-negotiated their contracts 
with no serious financial consequences. Many nations simply did not have the 
money to pay for the inflated bills, some refused to pay even after losing 
international arbitration awards, while others like Costa Rica declared that 
the 15 contracts signed with independent power producers (like Enron) have no 
legal status or are bad in law. 
In July 1999, the Hungarian parliament declared that a PPA signed with 
multinational RWE was unconstitutional and void. In August 2000, the Croatian 
government tore up a PPA signed between Enron and a previous government. The 
contract was considered to be unaffordable, and was allegedly signed in 
suspicious circumstances. Enron subsequently abandoned the original 
agreement. In September 2000, the Philippines took a decision to not renew 
financially crippling contracts with IPPs. 
Controversy has accompanied the Dabhol project from the start. In August 
1994, the finance ministry had written to the power ministry that the size of 
"the potential liability for a 1,000 megawatt plant was around Rs 3,000 crore 
per year". The department of economic affairs had also warned that the 
"...risk of counter-guarantees being invoked was not unreal, given that state 
electricity bills had been defaulting in payments". Caution was thrown to the 
winds then. The least India can do now is ask for a re-negotiation. But does 
the Indian government have the courage to go eyeball-to-eyeball with Enron 
and not blink first? 
* Scrapping the power purchase agreement involves a one-time payment of Rs 
2,910 crore 
* However, India would save over Rs 9,000 crore by doing so 
* There would be a net saving even after writing off FI loans to Dabhol Power 
Company



IDBI: whose life is it, anyway?
Tamal Bandyopadhyay

05/03/2001
Business Standard 
14
Copyright (c) Business Standard 

On April 30 a terse one-line announcement by the finance ministry gave the 
acting chairman and managing director of Industrial Development Bank of India 
(IDBI), S K Chakrabarti, a three-month extension. The government was generous 
enough not to keep the CMD as well as the institution waiting till late 
evening which it normally does for the fax message from North Block. 
But the acting IDBI chief may be asked to step down even in three weeks if 
the government is able to identify his successor. He has been reappointed for 
a period of three months or till a regular CMD takes charge "whichever is 
earlier". Could there have been a better way to insult the country's largest 
financial institution (and its chief)?
First, the government planned to merge the Industrial Finance Corporation of 
India (IFCI) _which is on the brink of collapse under the burden of 
ballooning non-performing assets with IDBI to make them sink together. Unable 
to push through the proposal in the face of stiff resistance put up by IDBI, 
the government now appears to be keen on leading the country's premier 
financial institution to its grave alone. This, not by giving an extension to 
the existing acting chief but by failing to identify his successor and 
thereby continuing the uncertainty at the top. Nothing can move in an 
organisation when the CEO himself does not know how long he will survive. 
India's financial institutions have been repositioning themselves by going 
short-term both on the assets as well as the liabilities sides. But for that 
transformation to take effect, they need leaders with a long-term tenure at 
the helm. 
To understand this, let's look at what's happening at ICICI, another 
financial institution in the country that is breathing down on IDBI's neck 
and threatening to overtake it. K V Kamath, CEO and managing director of 
ICICI, got a second five-year term seven days ahead of the expiry of his 
first term on March 30. Once his second term is complete, Kamath will have 
ended up running the show at ICICI for a decade. ICICI does not only give its 
chief a long term to steer the ship but also grooms talent to take over the 
institution in due course. Kamath was groomed by his predecessor N Vaghul. In 
turn, he is now grooming Nachiket Mor to succeed him. 
Mor, a former senior general manager of ICICI, has recently been shifted to 
ICICI Bank as an executive director in charge of wholesale banking. He is 
likely to be made the managing director of the bank when the present 
incumbent H N Sinor steps down next year. Eventually, he will take over the 
mantle from Kamath in 2006 by which time his stint at the bank will have 
given him enough operational experience in addition to his treasury 
management and other skills. 
Given the circumstances, IDBI is fighting a losing battle. It will not be 
surprising if it goes the IFCI way with an uncertain leadership unable to 
steer a demoralised, overstaffed ship becalmed by the apathetic bureaucracy 
of the North Block. This is despite its tremendous brand value in project 
financing and widespread corporate relationships. 
Carved out of the Reserve Bank of India by an Act of Parliament in 1976, IDBI 
has business relations with virtually every corporate house in India. But 
that is not helping it tide over the crisis, because the key to any financial 
intermediary's success at this juncture is how it handles its resources _both 
currency as well as human. In an ideal situation, the cost of funds should be 
lower while the cost of human resources should be market-driven. In IDBI's 
case, it is the reverse: its cost of funds is on the higher side in the 
absence of aggressive treasury operations and it is not allowed to pay 
market-driven salary to its employees. 
The net result? There has been an exodus of talent from IDBI and the 
institution is struggling to stay afloat just when recession has prompted 
corporations to cut back on their borrowings. IDBI's sanctions and 
disbursements have been falling and non-performing assets increasing. It is 
sitting on piles of cash but finding deployment avenues hard to come by. 
Two former chiefs of IDBI S H Khan and G P Gupta spent a large chunk of their 
tenure and energy pleading with the finance ministry to delink IDBI's salary 
structure from that of the Reserve Bank of India, but without success. Small 
wonder that Chakrabarti, who became acting chairman on February 1 for a 
three-month term, has singled out the low morale of the staff as his prime 
concern. He wants to address this on a war footing. The Centre has now 
successfully demoralised him by offering him another uncertain term. 
Former finance minister Manmohan Singh accepted Khan's argument on 
market-driven package (he reportedly wanted a pay scale for his employees 
that was higher ICICI's) but could not do anything about it. P Chidambaram 
repeated Singh's failure on this front and Yashwant Sinha too thinks the 
proposal is not worth considering because it will have a ripple effect in the 
industry. For instance, RBI employees will immediately demand their pound of 
flesh. The finance ministry refuses to see the point that the country's 
central bank is not a commercial organisation and does not have to compete 
with ICICI. 
When three successive finance ministers failed to address IDBI's, problems, 
the institution went for soft options. It ended up appointing three 
consultants for restructuring in six years! First, Booz, Allen & Hamilton (in 
1997), followed by M B Athreya (in 1999) and finally Boston Consulting Group 
(2001). The third consultant, BCG, is yet to submit its report. 
While Booz, Allen & Hamilton charted out the roadmap for diversification and 
suggested that the institution spread its wings overseas and tap new business 
opportunities, the Athreya panel said it must convert itself into a bank and 
the government's stake should come down without delay. 
Over the last few years, the institution has been planning its conversion 
into a bank and blaming the economy for its indifferent performance even as 
ICICI has been going full steam with new initiatives. ICICI Bank is also 
exploiting synergies with its parent to the hilt while IDBI Bank seems to be 
embarrassed about ackowledging its pedigree. 
It's not that everything is great at ICICI. Over the past few years, the 
institution has lost some senior executives: I-Sec managing director Kishore 
Chaukar left to join the Tata group, ICICI senior general managers Anando 
Mukherji joined Enron and N J Subaiah took charge at Centurion Bank (which he 
subsequently left). The industry suspects the quality of ICICI's assets and 
is not comfortable with the scorching pace of growth. 
Even the well-paid ICICI executive cadres find the pace of work is too much 
to handle and complain of fatigue. In private, they hate the mad rush for 
excellence. And yet there is a method in ICICI's madness. It has trimmed the 
flab with two successive voluntary retirement schemes, branched out into 
consumer loans in a big way and transformed treasury operations into an art. 
The finance ministry would do well to explore the possibility of divesting 
the government's stake in IDBI to ICICI. Instead of pumping in Rs 300 crore 
as recapitalisation funds into IFCI it can simply let it die and sell its 
assets to other banks and financial institutions. IDBI's bulk and the brand 
name in project financing would combine well with ICICI's growing retail 
presence and unbridled aggression. The combination would be formidable enough 
to give the State Bank of India a run for its money. 
Of course, a whole lot of issues need to settled before the process takes off 
like trimming the flab in IDBI and delinking it from the RBI pay structure et 
al. IDBI merging with ICICI may sound like an absurd dream but it is 
certainly a better option than merging IFCI with IDBI. If Reliance is willing 
to bid for state-run oil majors HPCL and BPCL, what's the harm in wooing 
ICICI to take over IDBI?


UK names coastal zones
HUGH O'MAHONY

05/03/2001
Lloyd's List International 
6
Copyright (C) 2001 LLoyds List; Source: World Reporter (TM) 
For wind farm installations The UK's potential to exploit wind energy 
offshore has taken a step closer to reality. 
The Crown Estate has nominated 13 zones in UK coastal waters for wind farm 
installation, marrying 18 developers to nominated 10 sq km sites.
The 18 developers have pre-qualified to obtain lease of seabed agreements, 
with each of the sites having space to accommodate 30 The largest of the 
sites calls for the installation of 90 turbines at the Shell Flat, 7 km off 
Cleveleys (northwest England). 
This is in the hands of three developers: Shell WindEnergy Aegir; Elsam; and 
Celtpower. 
Other developers are: Solway Offshore and Offshore Energy Resources (at 
Solway Firth); Warwick Energy (Barrow); EnergieKontor UK Offshore 
(Southport); SeaScape Energy (Burbo); NWP Offshore (North Hoyle); Celtic 
Offshore Wind (Rhyl Flats); Hyder Industrial (Scarweather Sands); NEG Micon 
(Kentish Flats); Enron Wind Gunfleet (Gunfleet Sands); Powergen Renewables 
(Scroby Sands); Beaufort Consortium (Cromer); AMEC Offshore Wind Power 
(Lynn); Offshore Wind Power (Inner Dowsing); and Northern Offshore Wind 
(Teesside). 
By the end of July, Crown Estates will issue full lease arrangements. 
No more than three years later, the licensees must take up 20-year leases, 
committing to construction within two years. 
By 2006, offshore wind farming should be a reality in the UK. 
Should all the 18 projects go ahead, the combined energy output from the 
various sites could reach between 1,000 MW and 1,500 MW, depending on whether 
developers install 2 MW or 3 MW turbines. 
The existing standard is 2 MW but, by 2005, it is anticipated that 3 MW units 
will be practicable. 
The DTI has suggested that offshore wind energy will contribute 1.8% of total 
UK electricity by 2010, equivalent to 2,612 MW. 
While this may not be relative to non-the developments already mooted call 
for the installation of 540 turbines, and overall investment from the private 
sector of Pounds 1.6bn (Dollars 2.3bn), and the plans offer significant 
potential for UK-based turbine construction. 
For offshore use, the turbines feature a monopile steel foundation, driven 
into the seabed. 
The wind turbines, connected in daisy-chain fashion, are linked to land-based 
substations via conventional submarine cable, plugging into the national 
grid. 
Danish specialist Vestas Wind Systems is preparing its first major offshore 
wind farm site, the 80 turbine, 160 MW Horns Rev site off the coast of 
Denmark, in concert with utility Elsam. 
Vestas has also already turbines to Scroby Sands and Blyth, pilot UK projects 
using two turbines respectively off the coast of Great Yarmouth and Blyth. 
The supplier is now keen to develop a UK-based manufacturing site and has 
been in negotiations with the Scottish Executive over construction of its 
first UK-based turbine tower plant, at Machrihinish, the former US airbase, 
which remains in the hands of the MoD. 
NEG Micon, another Danish builder of offshore wind turbines, is also one of 
the developers in the UK, with a proposal to install 30 turbines at Kentish 
Flats. 
NEG Micon has installed offshore wind turbines at Yttrestengrad, Sweden, and 
is also participating in the Danish coastal programme. 
NEGhas already established a UK manufacturing presence, having bought out 
Aerolaminates in 1998 from Taylor Woodrow, and developed a riverside 
blade-building facility on the Isle of Wight, capable of building blades of 
up to 50 m in length. 
This size of blade will equip turbines to develop 3 MW of power, which the 
manufacturer expects to be in place by 2005.



UK: Emetra delays derivatives, to focus on physicals

05/03/2001
Reuters English News Service 
(C) Reuters Limited 2001. 

LONDON, May 3 (Reuters) - Metals Internet trading group EMETRA has postponed 
the development of its derivatives platform and will focus on building its 
physical business, company CEO Peter Sellars said on Thursday. 
"The world has changed in the past six months. It will be very tough to 
launch the derivatives project right now," Sellars said. "We are focusing on 
developing the physical platform and speeding that up a bit," he said.
EMETRA has secured fresh funding from its shareholders to continue developing 
the physical metals trading platform, Sellars said. 
EMETRA and Deutsche Boerse announced a letter of intent to develop a 
derivatives platform in June of last year; under the terms of the deal DB was 
to contribute the trading platform and take an equity stake in the 
derivatives project. 
The companies initially targeted January 2001 for the start-up of derivatives 
trading; this deadline was gradually pushed back, but as recently as Copper 
Club week in February EMETRA officials were indicating September of this year 
as a likely launch date. 
The company began trading on its physical platform last October at its 
website, www.emetra.com, with over a million tonnes of initial liquidity. 
EMETRA was founded in February 2000 as ajoint venture between London Metal 
Exchange ring dealer MG plc - subsequently bough by U.S. energy and power 
giant Enron Corp - Internet Capital Group and Safeguard International Fund.


??
Scottish Power Earnings Fall But US Strategy On Track
By Andrea Chipman
Of DOW JONES NEWSWIRES

05/03/2001
Dow Jones International News 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

LONDON -(Dow Jones)- U.K. multi-utility Scottish Power PLC (SPI) reported 
lower earnings for the 2000-2001 fiscal year Thursday but said it has 
resolved problems with its U.S. Pacificorp subsidiary and has streamlined its 
domestic business for further growth. 
Scottish Power said pretax profit before goodwill, amortization and 
exceptional items for the year ending March 31 fell to GBP628 million from 
GBP736 million a year ago, in line with overall analyst expectations. Sales 
rose to GBP6.35 billion from GBP4.12 billion a year ago.
The company reported adjusted earnings per share of 30.65 pence for the 
current fiscal year, down from 41.22 pence a year earlier, and said it will 
pay a total dividend of 26 pence a share after paying 24.8 pence a share a 
year earlier. 
Scottish Power said it has taken a number of steps to improve shareholder 
value, including restructuring into three divisions - a U.S. division to 
include its Pacificorp unit, and two U.K. sectors concentrating on generation 
and power supply, and infrastructure - to focus on energy growth and expand 
its activities overseas. Analysts reached before a meeting with the company 
said they were looking for more details on the company's growth strategy. 
The company said its Utah-based Hunter power plant is back on line feeding 
electricity into the local grid after a six-month outage that exposed the 
company to inflated western U.S. wholesale electricity prices and cost 
Scottish Power an estimated $160 million. 
"This year's financial results have been impacted by the outage at the Hunter 
power station in Utah at a time of exceptional volatility in the western U.S. 
power markets, and by the expected reductions in revenues resulting from the 
U.K. regulatory reviews" Chief Executive Ian Russell said. 
With Hunter back on track, Scottish Power is looking to grow the business of 
Pacificorp, Hunter's owner, and plans to add some 1,000 megawatts of new 
capacity by the end of the year, Russell said. 
He didn't rule out plans for further acquisitions in the U.S., but declined 
to confirm or deny reports earlier this week that the U.K. utility is 
considering bidding for Enron Corp.'s (ENE) Oregon-based subsidiary, Portland 
General. 
"Obviously Portland is in our own backyard," Russell said. "Frankly, we're 
still busy with Pacificorp and at the moment; that's what we're focusing on." 
Closer to home, competition in the wholesale generation and retail supply 
markets squeezed Scottish Power's profit margins, with generation operating 
profits at GBP93 million, down GBP14 million from the 1999-2000 fiscal year. 
The company's customer base remained flat at 3.5 million. 
Scottish Power is interested in further expansion in both generation and 
supply, Russell said. 
"Our strategy is very definitely to expand in the UK, both in generation and 
supply," Russell said. "We are very focused on expanding the value that we 
get from that integrated chain. At the moment, we are doing well on the 
organic side and would seek opportunities in acquisitive supply if we thought 
we could do so profitably." 
The company's regulated infrastructure business was also hit by strict 
revenue limits, cutting total operating profit in its power systems and water 
business to GBP545.5 million from GBP647.7 million a year earlier. The 
company's 90% debt levels are likely to increase pressure on Scottish Power 
to sell its Southern Water unit in order to fund its expansion strategy, 
Lehman Brothers analyst Gareth Lewis-Davies said. 
Speaking to journalists on a conference call Russell reiterated that the 
company is still considering all options for the water company, although he 
confirmed that Scottish Power had received "a number of offers" from 
potential buyers. 
"We have had a number of offers of interest, but we are weeks, or months, 
away from announcing anything," Russell said. "The underlying performance of 
Southern Water as a business has been very good." 
He declined to identify bidders or discuss prices offered. Italian energy 
company Enel SpA (ENI) is the only company to publicly declare its interest 
in Southern Water. 
The chief executive also insisted that his company is still committed to its 
telecoms unit Thus, in which it holds a 50.1% stake, despite the company's 
report Tuesday of a 2000 fiscal year loss before interest, taxation, 
depreciation and amortization of GBP21.4 million. 
"We're very supportive of Thus's strategy. I think the results show they have 
turned the corner," he said, noting that the unit demonstrated growth of more 
than 30% in its underlying business. "We are very happy with them." 
Company Web site: www.scottishpower.com 
-By Andrea Chipman, Dow Jones Newswires; 44-207-842-9259; 
andrea.chipman@dowjones.com



Scottish Power CEO: Hunter Plant Fully On Line

05/03/2001
Dow Jones International News 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

LONDON -(Dow Jones)- Scottish Power PLC's (SPI) Utah-based Hunter power plant 
is fully on line following a six-month outage, Chief Executive Ian Russell 
told a media conference call Thursday. 
"The plant started commissioning this last weekend, has been building up and 
is now producing electricity," Russell said. The plant is pumping electricity 
into its regional grid.
The plant, which belongs to Scottish Power's Portland, Oregon-based 
Pacificorp unit, went out of service in November after an electrical short in 
the laminate ends of the plant machinery started a fire. 
The outage exposed the U.K. utility to wholesale electricity prices inflated 
by the power crisis in the Western U.S. market, costing the company an 
average of $1 million a day. The total cost of the outage is around $160 
million, Russell said. 
He said the company is planning 1,000 megawatts of new capacity in the U.S. 
by the end of this year, a 10% increase in its U.S. capacity. The new 
capacity will include 100 MW of peaking plant from the Gadsby generator in 
Salt Lake City, which is already up and running, and 400 MW from its Klamath 
Falls plant in Oregon, which is scheduled to be on line by the end of the 
month. 
Russell declined to comment on reports earlier this week that Scottish Power 
is considering buying Enron Corp.'s (ENE) Oregon-based subisidiary, Portland 
General. 
"Obviously Portland is in our own backyard," Russell said. "Frankly, we're 
still busy with Pacificorp and at the moment that's what we're focusing on." 

Turning to Scottish Power's U.K. businesses, Russell said it had received "a 
number of offers" for its Southern Water unit but reiterated the company 
hasn't yet decided on a sale. 
"We have had a number of offers of interest, but we are weeks, or months, 
away from announcing anything," Russell said. "The underlying performance of 
Southern Water as a business has been very good." 
The company is continuing to look at all options for the unit, including 
refinancing it to draw out more value, he said. 
Italian energy company Enel SpA (ENI) is the only company to publicly confirm 
its interest in the water company, although Enel has declined to comment on 
the size of its bid. 
Less than two months after completing its acquisition of the 715 MW Rye House 
power station from Powergen PLC (PWG), Scottish Power is interested in 
further expansion in both generation and supply, Russell said. 
"Our strategy is very definitely to expand in the U.K., both in generation 
and supply," he said. "We are very focused on expanding the value that we get 
from that integrated chain. At the moment, we are doing well on the organic 
side and would seek opportunities in acquisitive supply if we thought we 
could do so profitably." 
Russell also emphasised his company is still committed to its telecom unit 
Thus PLC (U.THS), in which it holds a 50.1% stake, despite Thus' report 
Tuesday of a fiscal 2000 loss before interest, taxation, depreciation and 
amortization of GBP21.4 million. 
"We're very supportive of Thus' strategy. I think the results show they have 
turned the corner," he said, noting that the unit demonstrated growth of more 
than 30% in its underlying business. 
"We have no plans for doing anything other than be supportive," he said when 
asked if Scottish Power would consider selling Thus. "We are very happy with 
them." 
Company Web site: http://www.scottishpower.com 
-By Andrea Chipman, Dow Jones Newswires; 44-207-842-9259; 
andrea.chipmandowjones.com



UK: UPDATE 3-Scottish Power restructures as profits slip.

05/03/2001
Reuters English News Service 
(C) Reuters Limited 2001. 
(Recasts with exec comment on Thus, updates shares, adds fund manager 
comment) 
By Andrew Callus
LONDON, May 3 (Reuters) - Scottish Power Plc announced a restructuring on 
Thursday reflecting plans for expansion in the United States and a tighter 
power sector focus in its British home market. 
Britain's largest power utility was reporting a decline in pre-tax profits 
before exceptional items and goodwill for the year to March 2001 to 628 
million pounds ($892 million) from 736 million a year ago. 
But its shares rose 2.8 percent to 453-3/4 pence on some good news on costs 
and power generation in the United States, where plant breakdown and high 
prices have hit earnings and investor sentiment. 
Hunter, a power station in Utah, came back on line on Thursday after a 
160-day breakdown that cost $1 million a day and helped deliver 10-percent 
sector share-price underperformance over the period. New U.S. plants are also 
coming on stream. 
The profit figure was in line with analysts' forecasts, hit by UK regulation, 
the Hunter outage and high U.S. power prices. 
"They are keeping those costs down in the United States," said one sector 
analyst. "There were stories out there they were going to be worse than they 
have been saying, and it wasn't." 
The breakdown at Hunter, part of the UK group's 1999 PacifiCorp acquisition, 
was unusually costly because power had to be bought in to replace the 430 
megawatts (MW) of lost capacity while power prices in the region were very 
high. 
Even with Hunter back up, PacifiCorp has more customer demand than plant to 
supply it, so high wholesale prices will continue to be a problem. 
The new structure unveiled on Thursday consists of a U.S. division including 
PacifiCorp's regulated and unregulated businesses, a UK division covering 
generation and energy supply in Britain, and a third, infrastructure division 
which includes power systems and Southern Water in the UK, and create a link 
between U.S. and UK infrastructure businesses. 
NEW U.S. PLANT 
Chief Executive Ian Russell told reporters by telephone the Hunter power 
plant was now reconnected to the grid and would reach full operating capacity 
"within a few days". 
He was also upbeat about prospects for expanding generation in the United 
States, where Scottish Power aims to have new plants with an extra 1,000 MW, 
or 10 percent of current capacity, on stream this year. 
He announced that the first of these, a 100 MW plant at Gadsby in Salt Lake 
City, Utah, began producing on Thursday as well. Another, 400 MW, plant being 
built in Oregon "will be onstream in a month or so", Russell said. 
PORTLAND 
Scottish Power confirmed it was still looking at the possible sale or 
refinancing of its Southern Water business in Britain, and Russell said there 
had been "a number of expressions of interest" for the business, worth about 
1.8 billion pounds "but we are some way away from a conclusion". 
He also said he was still looking for a further U.S. acquisition, but would 
not confirm reports he was in talks with U.S. power trading group Enron Corp 
about buying its Portland, Oregon power arm. 
"When we acquired PacifiCorp we said it was a platform for further growth... 
obviously Portland is right in our own back yard," he said. "Frankly we're 
still very busy with PacifiCorp and for the time being that's what we are 
focused on." 
Investors have been concerned about the group's dealmaking plans given the 
weak market for UK water infrastructure assets and volatility in the U.S. 
market. "There is still a bit of deal risk there amidst worries they may sell 
Southern Water too cheaply," said one fund manager who is underweight in the 
stock. CEO Russell said the three-way restructuring would help the group 
"sharpen our focus on improving shareholder value" and "capture opportunities 
in the (U.S.) western power markets". 
PacifiCorp contributed operating profit of 351 million pounds, after the 
impact of the Hunter outage, compared to 152 million pounds four month 
contribution a year earlier. 
The group's 140 million pounds-a-year three-year UK cost saving plan was on 
track at the end of its first year, Russell said. 
Finance director David Nish expressed continuing support for Thus, its 
spun-off startup telecoms business in which it still holds just over 50 
percent. 
Thus is still lossmaking and has been struck by general investor disaffection 
with telecoms companies and concerns about how it would secure future 
funding. 
But Nish said Scottish Power had "no plans to do anything other than be 
supportive" of the company. 
(additional reporting by Sonya Dowsett).




Distractions interfere with key growth questions
Financial Times, May 3, 2001
By Andrew Taylor in London



Cynics claim that Scottish Power's legal action launched this week, to 
rewrite a long term electricity supply contract, was more about distracting 
attention from the group's poor results than a realistic bid to cut costs. 
This judgment is a little harsh. Scottish Power would benefit considerably if 
it could renegotiate the deal that requires it to buy three-quarters of 
Scotland's nuclear output. The British Energy contract is worth o1bn 
($1.44bn) in the next four years. 
Shareholders could do with some distraction. Scottish Power, by its own 
admission, has had a tough year, which will be confirmed today when it 
publishes results for 2000. 
Ian Russell, who took over as chief executive in March, may even indulge in 
the new boy's practice of including the cost of further forseeable bad news 
in the figures, making any subsequent improvement appear greater. 
His biggest problem will be to convince the City that he is capable of 
developing an effective strategy to change the group's direction, now it has 
abandoned plans to become a multi-utility. 
The group no longer believes adequate returns can be earned from developing a 
growing range of products to sell to its more than 5m customers. The 
investment required to develop national brands, win new customers and retain 
old ones is too high in an increasingly competitive UK retail sector, it 
says. 
Mr Russell, who as Scottish Power's former finance director was closely 
associated with the previous policy, has already withdrawn from joint 
ventures with Royal Bank of Scotland to provide financial services and with 
Thus to provide telecommunications. 
The group is also discussing the future of Southern Water, its south of 
England utility, which Enel, the Italian state-controlled energy group, is 
interested in buying. Cross-selling electricity and gas to Southern Water 
customers, let alone other products, has been disappointing, it admits. 
The group plans to concentrate on developing its energy interests in the UK 
and US. But these also have their difficulties. 
Some of the biggest problems involve PacifiCorp, bought 18 months ago in a 
deal worth about o7bn, including debt. The price is looking more expensive, 
following big rises in US electricity wholesale prices. 
PacifiCorp has not been as badly affected as some US electricity groups. But 
it has faced problems because of a power station breakdown in Utah that 
forced it to buy higher priced electricity from other generators to meet 
customer demand. 
The failure of a 430MW generating unit at its Hunter power plant in November 
has cost the group $1m (o600m) a day since. One piece of good news for 
shareholders today will be the timing of its return to service this month. 
Another positive note is that PacifiCorp is negotiating higher retail prices 
with US state regulators to offset increased generation charges. It also has 
about 1,000MW of its own new power plant due to start production this year. 
In the UK, the group is facing increased competition for retail electricity 
and gas sales, particularly in the household market. It has also had to 
absorb big price cuts imposed on its power distribution side by Ofgem, the 
industry regulator. 
The shares, which fell 1p on Wednesday to 441-1/2p - have fallen by more than 
35 per cent against the FTSE All Share Index since December 1998 when the 
PacifiCorp offer was announced. 
So where does the group go from here? It made its reputation in the 1990s as 
a shrewd acquirer of UK utilities - Southern Water for o1.6bn and Manweb, the 
north-west of England electricity supplier, for o1.1bn. Effective cost 
cutting increased value, particularly at Manweb. 
The group was also one of the first electricity companies to string 
telecommunication lines along its electricity pylons. The sale of a 49.9 per 
cent stake in Thus, which operates the telecoms network, raised o1bn in 1999. 
Financing further UK and US acquisitions will be challenging. Thus shares 
have fallen from 844-1/2p a year ago to 61p on Wednesday night. Scottish 
Power has net debt of some o5bn with interest thinly covered three times by 
earnings before tax and interest. 
It has been talking with Enron about buying Portland General, its 
Oregon-based electricity utility. The group might need to sell Southern to 
cover the purchase price of about $3bn, including debt. 
Buying in the UK may be even harder. Scottish Power has been outbid recently 
for regional electricity suppliers by the deeper pockets of large continental 
European utilities. 
What Scottish Power's shareholders will want to know is where growth will 
come from and how the group will pay for it. 







USA: UPDATE 2-Calpine, Kinder Morgan plan N.M.-Calif. natgas line.

05/02/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, May 2 (Reuters) - Calpine Corp. and Kinder Morgan Energy Partners, 
L.P., said on Wednesday they plan to build a new natural gas pipeline from 
New Mexico's San Juan basin to California to help meet California's growing 
energy demand. 
The companies said the Sonoran line would be developed in two phases, with 
400 million cubic feet of gas a day (mmcfd) already contracted by Calpine for 
the first phase of the planned 1,160-mile line.
The first phase, slated for completion in the summer of 2003 pending 
regulatory approval, involves building a 36-inch diameter line from San Juan 
County, N.M., to Southern California with a transport capacity of 750 mmcfd 
to 1 billion cubic feet a day (bcfd). 
Phase two would extend the line to Northern California and could carry up to 
1.5 bcfd. 
Calpine has contracted for 500 mmcfd of gas for the second phase of the 
pipeline. 
An open season seeking a 20 year minimum commitment will be held this month 
for phase one of the pipeline, during which shippers will place bids for 
capacity on the line. No precise day was given for when this open season will 
begin. 
Another bidding process will take place for phase two, but no terms or exact 
dates were provided for the second open season. 
Calpine, based in San Jose, Calif., and Houston-based Kinder Morgan Energy 
Partners did not disclose how much the project would likely cost. 
In the past two months, several pipeline operators, including El Paso Corp. 
Enron Corp. unit Transwestern, Sempra Energy unit Southern California Gas 
Co., Williams Cos Inc.'s Kern River Transmission, PG&E Corp.'s National 
Energy Group, and Questar Corp. have announced plans to expand existing gas 
lines that feed California. 
California, fighting a severe power shortage that already triggered four days 
of blackouts this year, has over the past two years approved building 13 
major gas-fired power plants with a combined generating capacity of more than 
8,900 megawatts. 
Nine power plants totalling more than 6,000 megawatts are currently under 
construction.



USA: Enron says vice chairman Clifford Baxter resigns

05/02/2001
Reuters English News Service 
(C) Reuters Limited 2001. 

HOUSTON, May 2 (Reuters) - U.S. energy giant Enron Corp. said on Wednesday 
that its vice chairman J. Clifford Baxter is resigning after 10 years with 
the company. 
Enron said in a statement that Baxter, who joined the company in 1991, is 
resigning to spend additional time with his family.
Baxter will continue to work as a consultant with the firm. He was chairman 
and chief executive officer of Enron North America before becoming vice 
chairman in October last year. 
Enron shares were down $1.81 trading at $60.60 during late afternoon.

?

Enron Vice Chairman Cliff Baxter Resigns

05/02/2001
PR Newswire 
(Copyright (c) 2001, PR Newswire) 

HOUSTON, May 2 /PRNewswire/ -- Enron Corp. (NYSE: ENE) announced today that 
Vice Chairman J. Clifford Baxter is resigning from the company. 
"Over the past 10 years, Cliff has made a tremendous contribution to Enron's 
evolution, particularly as a member of the team that built Enron's wholesale 
business," said Jeff Skilling, Enron president and CEO. "His creativity, 
intelligence, sense of humor and straightforward manner have been assets to 
the company throughout his career. While we will miss him, we are happy that 
his primary reason for resigning is to spend additional time with his family, 
and we wish him the very best."
Baxter, who will continue working for the company as a consultant, joined 
Enron in 1991 and was chairman and CEO of Enron North America prior to being 
named chief strategy officer for Enron Corp. in June 2000 and vice chairman 
in October 2000. 
Enron is one of the world's leading electricity, natural gas and 
communications companies. The company, with revenues of $101 billion in 2000, 
markets electricity and natural gas, delivers physical commodities and 
financial and risk management services to customers around the world, and has 
developed an intelligent network platform to facilitate online business. 
Fortune magazine has named Enron "America's Most Innovative Company" for six 
consecutive years. Enron's Internet address is www.enron.com. The stock is 
traded under the ticker symbol "ENE". Contact: Mark Palmer of Enron Corp., 
713-853-4738. 
MAKE YOUR OPINION COUNT - Click Here 
http://tbutton.prnewswire.com/prn/11690X78605983

/CONTACT: Mark Palmer of Enron Corp., 713-853-4738/ 15:40 EDT 

?

LOCAL
Chris Coursey
PARDON ME WHILE I SCREAM IN THE DARK
Chris Coursey

05/02/2001
The Press Democrat Santa Rosa, CA 
CITY
B1
(Copyright 2001) 
I'm no economist, and I'm certainly not an expert on utilities. But I've got 
two eyes and a nose, and I can see that something stinks. 
I refer, of course, to California's energy market, or -- as the power 
generators call it -- "Who Wants to be a Multi-Billionaire?"
It's becoming clear that this game is fixed. Regis is giving all of the $100 
questions -- "What color is the sky?" -- to contestants like Enron and 
Reliant, PG&E and Southern California Edison. Meanwhile, we consumers are hit 
with "How many kwh did the BPA generate in the month of May 1973? Sorry, 
you're out of lifelines." 
How are consumers supposed to compete in this game? Even our legislators, who 
belong to the same party as Gov. Gray "The Negotiator" Davis, don't know 
what's going on. 
"It's like trying to play poker while everybody else is holding the cards," 
said Assemblywoman Pat Wiggins. 
But while we may not be holding the cards, we'll for sure be left holding the 
bag when this thing plays out. 
So who do we blame? State Sen. Wes Chesbro has an idea: "In the long term, 
the gougers need to be held accountable," he said in a Monday article. 
Ah, yes. The gougers. Those outrageous, out-of-state, dirty- dealing, 
price-fixing electricity-rate gougers who have driven PG&E right into 
bankruptcy and threaten to do the same to Southern California Edison. Let's 
get 'em. 
But hold on a minute. It turns out that some of those gougers that caused 
PG&E and Edison all that trouble are just PG&E and Edison wearing different 
hats. Both utilities produce power, and sell it on the same market as the 
"gougers." Then they buy it back. 
Also, out there with the Enrons and Reliant Energies of the world - - the 
other power generators that sell electricity to the utilities - - is a 
company called National Energy Group. It has 30 power plants in 10 states and 
controls a natural gas pipeline to Northern California. 
And it's owned by PG&E Corp., the parent company of PG&E Co. 
Try to keep up with me here. PG&E Co. is the company that has been so 
devastated by California's energy deregulation debacle. It's the company to 
which you are writing monthly checks that are beginning to resemble your 
mortgage payment. It is the company that for decades was guaranteed a profit 
by the rates set by the state's Public Utilities Commission. It is the 
company that said it lost billions before it declared bankruptcy last month. 
Poor PG&E Co. 
PG&E Corp., on the other hand, is squatting in tall cotton, as my daddy used 
to say. The Corp. received more than $4.1 billion from the Co. from 
1997-1999, according to a PUC audit. 
But the Corp. says it wouldn't be fair if it had to put any of that money 
back into the Co., its ailing subsidiary. It wants the people whose utility 
bills created that profit to pay higher bills now to bail out the Co., so the 
Corp. can avoid bankruptcy of its own. 
Who is being unfair? 
Meanwhile, Southern California Edison also has been shipping its profits -- 
also more than $4 billion at last report -- to its parent company while 
looking to the state for a bailout. 
Now Gov. Gray "The Generator" Davis wants the taxpayers of this state to pay 
$2.7 billion to Southern California Edison for that utility's transmission 
system. But as far as I can tell, Edison's rate payers already paid to build, 
maintain and operate that system with rates set by the PUC that guaranteed 
that company a profit. Now we're being asked to buy what those ratepayers 
built. 
I know that PG&E's and Edison's accountants and public relations people would 
argue that I'm all wrong here. And to tell the truth, when I try to follow 
the money through a maze of "stranded costs" and "contract power" and 
"uncollected power purchase costs" and "rate reduction bond credits" and the 
like, my eyes start to blur. 
But there's nothing wrong with my sense of smell, so I can tell you for sure 
this whole thing stinks. 
What can we do? Turn off the lights, and scream. 
Call Coursey at 521-5223 or e-mail ccoursey@pressdemocrat.com.



LNG carriage to be preserve of India-flag ships

05/02/2001
Lloyd's List International 
16
Copyright (C) 2001 LLoyds List; Source: World Reporter (TM) 
In an attempt to cash in on the liquefied natural gas revolution, India's 
shipping ministry is pushing through a proposal to restrict the 
transportation of the gas only to companies registered in India and vessels 
carrying the Indian flag. 
It would seem that the logic primarily is to ensure that Indian shipping does 
not get left behind in the LNG transportation race. Until now, the ministry 
has managed to get LNG ferried by energy companies on fob basis.
'We hope that this new proposal would give further impetus to Indian 
bottoms,' says shipping secretary Michael Pinto. 'We will do all we can to 
get approval from the committee of secretaries and the Cabinet.' Since some 
of the shipping contracts have already been finalised, this proposal would 
only be made applicable to future contracts. However, shipping experts are 
extremely doubtful whether the proposal can be implemented. 
The leading Indian shipping companies have neither the funds nor the 
expertise of carrying LNG, and would need the assistance of foreign companies 
to make the ventures a success. 
'A foreign LNG carrier is not going to settle for a minority stake unless the 
Indian shipper is able to put up his share of the equity, which would be 
quite a handful,' says Sudhir J Mulji, executive vice-chairman of Great 
Eastern Shipping Company and current president of the Indian National 
Shipowners' Association. 'The proposal really does not seem to be feasible.' 
For the moment, just two major contracts have been signed, both involving the 
state-owned Shipping Corporation of India (SCI). The first one involves SCI, 
American power major Enron and Mitsui of Japan, for the carriage of 2.5m 
tonnes of LNG per annum for Enron's 2,184 MW mega power project at Dabhol, 
near Ratnagiri in southern Maharashtra. 
SCI had entered into this memorandum of understanding with MOL (formerly 
Mitsui OSK Lines) and Atlantic Commercial Finance, which is an Enron 
affiliate. However, it is only a 20% partner in the consortium, with Enron 
holding a 60% stake and Mitsui OSK the balance 20%. 
The gas will be ferried by the LNG Lakshmi, brand-new 130,000 cu m capacity 
vessel being constructed in Japan at the Mitsui Shipyard. The contract is 
valid for 25 years from the date of starting. 
However, the consortium is registered in the Cayman Islands, which is a tax 
haven, and the LNG vessel will carry the flag of Malta. 
SCI has also secured the contract for carrying 5m tonnes per annum of LNG for 
the government-owned pipeline company Petronet LNG. The gas is to be ferried 
from RasGas of Qatar to the company's upcoming LNG terminal at Dahej, in 
Gujarat. 
A similar Petronet terminal, but half the size of Dahej, is coming up in 
Kochi, Kerala state. The transportation contract for this is to be decided 
later. 
Two other major Indian shipowners, who have taken a step towards LNG 
transportation are Great Eastern Shipping and Essar Shipping. The former has 
formed a consortium with Indian Oil Corporation and Exmar, while Essar has 
joined hands with Malaysia International Shipping Corporation (MISC) to form 
a 50:50 joint venture dedicated to gas transportation. 
The Dollars 2.3bn MISC, the national shipping line of Malaysia, is one of the 
world's leading owners and operators of LNG tankers. As a listed company on 
the Kuala Lumpur Stock Exchange, MISC has the state-owned petroleum and oil 
giant Petronas (a Fortune 500 company) as its largest shareholder, with a 
stake of 62%. 
'Our memorandum of understanding has both companies holding an equal equity 
share in the joint venture,' said Essar Shipping's chief executive, Sanjay 
Mehta. 
'However, at a later date we may both dilute our stakes equally in favour of 
a third strategic partner, and continue to hold equal equity. 
'The final debt-equity ratio for the acquisition of the LNG vessels will be 
decided by the management of the joint venture.' Shipping secretary Mr Pinto 
feels that there are many opportunities for Indian companies, but is 
insistent that the tonnage be registered in India, so that ancillary business 
activities in the sector are spurred. 
'We will try and secure tax benefits for the shipowners concerned, since they 
badly need to gain the experience, management and manpower training in a 
niche segment,' he said. 
'It would also help in Indian fleet expansion, since tonnage has remained 
virtually stagnant for the last five years.'Michael Pinto: impetus.

?

BUSINESS
SCOTTISHPOWER REPORTEDLY TRYING TO PURCHASE PGE
GAIL KINSEY HILL of the Oregonian Staff

05/02/2001
Portland Oregonian 
SUNRISE
C03
(Copyright (c) The Oregonian 2001) 
Summary: Under such a deal, 70 percent of Oregon's electricity users would be 
served by one entity 
ScottishPower may be pursuing Enron Corp.'s Portland General Electric.
PGE's pending sale to Nevada's Sierra Pacific Resources officially fell apart 
Thursday, and ScottishPower reportedly has held talks with Enron about buying 
PGE, Oregon's largest utility, for $3 billion. 
ScottishPower owns Portland-based PacifiCorp, bought in 1999 for $10.9 
billion, and has said it would like to increase its U.S. holdings. A purchase 
of PGE would bring together Oregon's largest investor-owned utilities and 
create a powerhouse entity serving more than 70 percent of state users. 
PacifiCorp also serves customers in Washington, Idaho, Utah, Wyoming and 
California, for total of 1.5 million residential and business customers. PGE 
serves 728,000 customers, primarily in the populous northern Willamette 
Valley. 
Speculation about the potential hookup with PGE surfaced during the weekend 
in Britain's Observer newspaper. In the article, an unidentified source 
described the merger as "an obvious one and, yes, there have been 
discussions." 
On Tuesday, officials from the various utilities and parent companies would 
neither confirm nor deny that talks, formal or informal, had taken place. 
"It's a vigorous 'no comment' on the rumors," said Mark Palmer, Houston-based 
Enron spokesman. 
"We don't comment on market speculation," said Rachel Sherrard, a spokeswoman 
for PacifiCorp. 
The speculation, whether of substance or whimsy, has drawn the attention of 
state regulators and consumer advocacy groups. 
"I think it would get a great deal of scrutiny, and I think there would be 
some serious concerns," said Ron Eachus, head of the Oregon Public Utility 
Commission. 
The PUC must approve utility mergers. The agency hasn't received any notice 
that talks are occurring, Eachus said. 
Bob Jenks, executive director of the Citizens' Utility Board, said his 
organization, which represents customers of investor-owned utilities, likely 
would oppose a PGE-PacifiCorp merger. "We're not pleased" by the idea, he 
said. 
The Citizens' Utility Board has become increasingly critical of PacifiCorp's 
handling of the West's electricity crisis, which has forced the utility into 
the expensive wholesale power market. The board is fighting PacifiCorp's 
efforts to raise rates by 24 percent. 
In November 1999, Sierra Pacific announced plans to buy PGE for $3.1 billion. 
But the energy shortage slammed into Sierra Pacific's finances and spoiled 
the bid.



SCI ups profile with Petronet deal

05/02/2001
Lloyd's List International 
14
Copyright (C) 2001 LLoyds List; Source: World Reporter (TM) 

With the Shipping Corporation of India taking a major stake in the Petronet 
LNG, India's maritime industries a high profile, SHIRISH NADKARNI ON the 
final Thursday of March, there was a celebration in NeDelhi, involving the 
four members of the consortium that had bagged the Dollars 400m liquefied 
natural gas transportation contract of Petronet LNG. 
'It is the Japanese custom to celebrate an event like this; and only the 
consortium members and their officials were invited to the function,' says KM 
Joseph, director, bulk carriers and tankers, with the Shipping Corporation of 
India (SCI), which has a 34.21% equity stake in the winning partnership.
The other members of the consortium are Japan's MOL (formerly Mitsui OSK 
Lines), NYK Line and K Line; and the contract involves ferrying 5m tonnes per 
annum of LNG from the Middle East to Petronet LNG's terminal at Dahej, in 
Gujarat. 
Two LNG carriers will be involved in the deal, each capable of carrying 
138,000 cu m of gas, and expected to cost Dollars 185m each. The vessels are 
to be constructed at Daewoo Shipbuilding Yard in South Korea. 
This was India's second major LNG transportation deal; and SCI, the public 
sector shipping monolith, which owns roughly half of the country's 
ocean-going fleet of 239 vessels, has a stake in both of them, as does MOL. 
'MOL is a professionally managed company whose cultural ethos is similar to 
ours,' says the goatee-bearded Prabhat Kumar Srivastava, SCI's chairman and 
managing director. 'Our relationship is based on total transparency and 
trust; and we therefore feel comfortable with them. There may well be more 
such tie-ups in the future.' The earlier deal was also sealed with MOL, which 
has a 60% stake in a joint venture named Greenfield Shipping Company (GSC), 
with US energy major Enron holding the remaining 20% equity. 
The three members will have joint ownership of the 135,000 cu m LNG carrier, 
LNG Lakshmi, now under construction at the Mitsui Heavy Industries shipyard 
in Japan. When ready, the vessel will ferry 2.5m tpa of LNG from RasGas of 
Qatar to Enron's mega-power facility at Dabhol, near Ratnagiri in southern 
Maharashtra. 
However, to return to the Petronet deal. The MOL-SCI consortium won the 
coveted contract by quoting a charter hire rate of Dollars 68,900 per day, 
which was substantially lower than the bids of the two other competing 
consortia, MISC-Essar and Exmar-Great Eastern Shipping-Indian Oil 
Corporation. 'The Petronet LNG deal was the most prestigious and important 
LNG shipping project in the country, and we were very keen to secure it,' 
says Mr Srivastava. 
'So we told our Japanese partners to quote the best possible rates.' A 20% 
stake in the consortium formed with Enron may only be sufficient to net SCI a 
boardroom presence in GSC, but its 34.21% stake in the Petronet LNG shipping 
venture will allow the shipping major to exercise much more power on the 
latter company's board. 
There are other issues involved. 'If we had not emerged winners in Petronet's 
shipping deal, it would have done us a lot of harm for the other LNG shipping 
projects that are fast coming up in the country,' says Mr Srivastava. 
'We have already made tremendous headway in LNG shipping by being part of the 
Dabhol project, and we were very keen to maintain the momentum.' Experts rate 
SCI as one of the best managed public sector enterprises; and the bottom line 
of the company reinforces this feeling. 
For the first nine months of the financial year 2000-01, SCI had a sales 
turnover of Rs22.03bn (Dollars 474m), which was 16.2% better than the 
Rs18.96bn recorded for the corresponding nine months of the previous year. 
The net profit zoomed from Rs766m during the period April to December 1999 to 
Rs2.32bn for the same nine months of 2000. 
While the results for the financial year ended March 31, 2001, are still 
being compiled, SCI officials place the sales turnover at around Rs29bn, and 
the net profit at just above the Rs3bn mark. 
While the company's tankers have produced spectacular results, even the 
loss-making liner division is expected to turn round the corner. 
'We have removed nearly 70% of the non-performing assets in the division, and 
the balance will be chopped off in the fiscal year 2001-02,' says Sudhir S 
Rangnekar, director, liner shipping division. 
Recently, international consultants Pricewaterhouse Coopers (PwC) carried out 
a SWOT analysis for SCI. 
They suggested a 'corporate transformation' of the company, apart from going 
ahead with the information technology initiatives taken earlier. 
The company went ahead and signed a memorandum of understanding with the 
ministry of shipping for the financial year 2001-02, whereby two new criteria 
will be used for judging the organisation's performance. 
'A new criterion, 'corporate transformation project implementation', has been 
introduced in the MoU, reflecting the emphasis that we are placing on 
enhancing the efficiency and effectiveness of our operations,' says Mr 
Rangnekar. 
'It also reflects our keenness to develop greater customer focus through 
process re-designing and improvement, and adoption of the latest IT systems 
and applications.' Another new criterion introduced in the MoU is 'annual 
operating earnings per employee', which is supposed Continued on page 15 
Petronet project: The MOL LNG carrier, Surya Satsuma. MOL is a member of the 
successful consortium. Inset:s: KMSCI director, bulk carriers and tankers 
(left) and Sudhir S Rangnekar, SCI director, liner shipping (right). Rangnekar


CALIFORNIA GENERATORS REPORT RECORD PROFITS THAT DWARF FERC'S LATEST REFUND 
ORDERS

05/02/2001
Foster Electric Report 
3
(c) Copyright 2001, Foster Associates, Inc. 

About the same time that PG&E Corp. and Edison International announced 
combined write-offs of nearly $5.3 billion in unrecovered purchased power 
costs, four major California energy suppliers reported increases ranging from 
126 percent to 281 percent in first-quarter 2001 revenues. Meanwhile, FERC 
has issued new refund orders requiring many of these same generators to 
justify $587,000 in overcharges during March 2001. 
PG&E and Southern California Edison Co.'s Write-Offs -- After a long delay, 
PG&E and Edison during the middle of April confirmed what many knew was 
coming --huge write-offs for unrecovered purchased power costs during the 
year 2000. Edison announced that it was writing off $2.5 billion in 
undercollected power costs for the year, leaving the company with a $1.9 
billion loss for the year. Edison chief John Bryson was hopeful, 
nevertheless, that a recent memorandum of understanding (MOU) his company 
signed with the state will allow Edison to recover some of those costs and 
help keep its Southern California Edison Co. (SoCal Edison) affiliate out of 
bankruptcy. "Prompt implementation of the MOU can avoid the large costs of a 
[SoCal Edison] bankruptcy and make it possible for the company to restore its 
financial health and ability to maintain a reliable power grid," said Bryson 
in a statement accompanying Edison's financial results.
Whether Bryson's hope for quick implementation of the MOU will be realized is 
questionable. Gov. Gray Davis has been having a hard time finding the 
necessary legislative support for the proposal, and to date, has been unable 
even to find a legislator to sponsor a bill to implement the MOU. Instead, 
several state legislators are exploring alternatives, including having the 
state buy SoCal Edison's transmission assets as well as the whole utility and 
turn it into a state power agency. 
Edison's northern California neighbor, PG&E Corp., reported a strong growth 
in revenues for 2000 led by the strong performance of its energy trading 
unit, but that revenue growth was completely offset by the $4.5 billion in 
losses incurred by its now bankrupt Pacific Gas and Electric Co. utility 
subsidiary. 
"While standard accounting rules required the utility to record a charge 
against earnings for unreimbursed wholesale and transition costs, taking this 
charge does not diminish our conviction that the utility is entitled under 
law to recover these costs, nor does it diminish our ongoing lawsuit in 
federal district court," said PG&E Corp. chief Robert Glynn. 
Generators' First-Quarter Revenue Reports -- In sharp contrast with PG&E's 
and Edison's financial performance, the parent companies of four of 
California's largest generators reported large jumps in first-quarter 2001 
revenues. Enron Corp. reported revenues of $50.1 billion, a whopping 281 
percent increase from a year earlier. The company owns only a small amount of 
wind generation in California, but sells power into the state through its 
Portland General Electric subsidiary and is an energy trader in the state. 
Enron's commodity sales and service unit showed a 207 percent increase in 
first-quarter earnings. 
Reliant Energy Inc. saw first-quarter earnings jump 215 percent to $13.3 
billion. The company's wholesale energy business unit produced $216 million 
in operating income for the first quarter, up sharply from the $22 million 
loss the company reported a year earlier. 
Reporting a slightly lower but still a substantial 165 percent jump in 
first-quarter revenues was Dynegy Inc. Of the company's $14.4 billion in 
revenues for the period, its marketing and trading subsidiary realized $100.3 
million in earnings, nearly double the $50.3 in earnings reported a year 
earlier. The parent company reported a 73 percent jump in first- quarter 
earnings over the previous year. 
Duke Energy Corp. announced a 126 percent boost in first-quarter revenues to 
$16.5 billion, led by a 324 percent increase in earnings by wholesale energy 
unit. 
FERC's Refund Order -- Similar to separate orders regarding January and 
February power sales in California, FERC on 4/16/01 issued a notice demanding 
that three generators justify $587,000 in combined power sales during March. 
FERC staff set a $300/MWh proxy clearing price for the month, and then 
applied it to the 14 hours of Stage 3 power alerts that were declared during 
March in California. The staff's proxy prices for January and February were 
$273/MWh and $430/MWh, respectively. The clearing prices' fluctuations can be 
attributed to changes in operating costs, including fuel and emissions 
credits. 
The latest refund order is the smallest of the three, asking for cost support 
for just $587,000 in transactions, while the previous two orders cited a 
combined $124.4 million in potential overcharges. The three wholesale sellers 
being questioned by the current refund order --Dynegy Power Marketing Inc.; 
Mirant California, Mirant Delta, and Mirant Portrero; and Williams Energy 
Services Corp. -- were named in the previous orders as well. 
Once again, Dynegy led the pack with the largest amount of potential refunds 
for March -- nearly $470,000. Combined with the previous two orders, the 
company is on the hook for more than $46 million in potential refunds. Mirant 
was asked by the latest order to justify close to $93,000 in March sales, and 
Williams $25,500 in March sales.