Bush Adviser Rove Owns Stock in Major U.S. Firms
The Wall Street Journal, 06/04/01

Saudi Arabia Sets Pacts With 9 Oil Firms
The Wall Street Journal, 06/04/01

Saudi Arabia in Pacts With Nine Global Oil Firms Energy: Deals to develop 
natural gas fields and other projects, worth at least $25 billion, are first 
major foreign funding in sector since 1975.
Los Angeles Times, 06/04/01

Enron is my spiritual teacher
The San Francisco Chronicle, 06/04/01

Gloom today, glut tomorrow
The San Francisco Chronicle, 06/04/01

INDIA: Rating firms may be judging India harshly-analysts.
Reuters English News Service, 06/04/01

INDIA: India rupee ends off lows, fwds close higher.
Reuters English News Service. 06/04/01

UK: Spectron trades UK's first post-NETA spark spread.
Reuters English News Service, 06/04/01

INDIA: Enron India lenders meet in Singapore on Tuesday.
Reuters English News Service, 06/04/01

INDIA: UPDATE 1-India's Prabhu says power reforms enter new phase.
Reuters English News Service, 06/04/01

Nigerian president slams US energy firm Enron for "poor performance"
BBC Monitoring, 06/04/01

India: India and Bush Administration: Beyond assumptions
Business Line (The Hindu), 06/04/01

Enron's Indian Creditors Seek to Salvage Dabhol Project
Bloomberg, 06/04/01

Enron Japan's Hirl on Power Deregulation: Commodity Comment
Bloomberg, 06/04/01



Bush Adviser Rove Owns Stock in Major U.S. Firms
By Jim VandeHei
Staff Reporter of The Wall Street Journal

06/04/2001
The Wall Street Journal
A4
(Copyright (c) 2001, Dow Jones & Company, Inc.)

WASHINGTON -- President Bush's chief political strategist owns hundreds of 
thousands of dollars worth of stock in companies potentially affected by the 
president's top legislative priorities, newly released federal records show. 
Karl Rove, one of the president's most trusted advisers on almost every major 
legislative initiative, owns between $100,000 and $250,000 of stock in Enron 
Corp., Pfizer Inc., General Electric Co., Boeing Co. and Johnson & Johnson, 
among other holdings. (Federal law requires public officials to report their 
assets, income and debts in broad ranges only). All of these companies could 
be affected by one or more of the policies or legislative initiatives on 
which the president consults Mr. Rove: tax cuts, increased defense spending, 
an industry-oriented energy policy and health-care reform.
Mr. Rove said yesterday that he has been waiting for several months for 
approval from the Office of Government Ethics to sell all of his stock 
holdings and roll the proceeds into a diversified account without having to 
pay capital-gains taxes, as permitted by federal law. In the meantime, "I 
have had to avoid being involved in matters that specifically and materially 
affect my specific holdings," Mr. Rove said. 
Mr. Rove said he filed his financial disclosure reports Dec. 30 and was later 
informed by the Office of Government Ethics that he should sell all of his 
stock holdings to avoid even the appearance of a conflict of interest. 
But the government ethics office, which couldn't be reached for comment 
yesterday, has yet to officially grant Mr. Rove a certificate of divestiture, 
which would allow him to roll his proceeds into diversified accounts, 
according to White House spokeswoman Anne Womack. It appears that Mr. Rove 
has lost tens of thousands of dollars as a result of the delay because most 
of his stocks have lost value since the beginning of the year. 
Mr. Rove insisted that he has been careful to avoid any discussions that 
directly affect companies he is invested in, as federal conflict-of-interest 
laws require. But that can't be easy for Mr. Rove, widely regarded as one of 
the most powerful and influential figures in the White House. Mr. Rove serves 
as the president's top political adviser and runs the administration's 
long-term strategy team. He is also the president's top liaison to outside 
groups, including corporations. 
"He's involved in virtually every decision that is made here," says a White 
House aide. It is unclear how many times, if ever, Mr. Rove recused himself 
from discussion inside the White House. 
President Bush, already under fire from Democrats for his administration's 
close ties to industry, is likely to draw more scrutiny as a result of the 
new disclosures of financial links between top White House officials and 
major U.S. corporations, especially energy firms. 
The White House disclosed the personal finances of Mr. Rove and several other 
top administration officials at the behest of the media. It appears that as a 
result of an administrative backlog, Mr. Rove is the only member of the 
senior staff who hasn't been given the green light to sell his stock, 
according to a White House aide. 
The reports show that Mr. Rove was one of several White House officials with 
a financial connection, past or present, with Enron and other energy 
companies. Larry Lindsey, the president's top economic adviser who helped 
draft the energy plan, received $50,000 from Enron in 2000 for consulting 
work he did for the company, the documents show. 
Lewis Libby, chief of staff to Vice President Dick Cheney, who was chairman 
of the White House task force that wrote the energy plan, recently sold tens 
of thousands of dollars of stock in Enron and other energy companies, 
including Texaco Inc., Exxon Mobil Corp. and Chesapeake Energy Corp. It is 
unclear when the transaction went through. 
Clay Johnson, director of presidential personnel, reported holding between 
$100,000 and $250,000 in El Paso Energy Partners LP. And National Security 
Adviser Condoleezza Rice had $250,000 to $500,000 worth of Chevron Corp. 
stock and was paid $60,000 last year for her work as a director at the 
company. Mr. Rove disclosed smaller holdings in BP PLC and Royal Dutch/Shell 
Group.

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



International
Saudi Arabia Sets Pacts With 9 Oil Firms

06/04/2001
The Wall Street Journal
A17
(Copyright (c) 2001, Dow Jones & Company, Inc.)

JEDDAH, Saudi Arabia (AP) -- Saudi Arabia signed agreements with nine oil 
companies yesterday, a move that marks the first major foreign investment in 
its energy sector since the industry was nationalized in the 1970s. 
The expected deal, valued at $25 billion at least, involves the development 
of three natural-gas fields in the kingdom, as well as a number of related 
power plants, transmission pipelines and water-desalinization projects.
Exxon Mobil Corp., the world's largest publicly traded oil company, is the 
lead manager on two of the projects, including the $15 billion Ghawar Core 
Venture 1 project. It also will lead the Red Sea Coast Core Venture 2 
project. Royal Dutch/Shell Group was chosen to lead the Shaybah Core Venture 
3 project. 
The Western companies will help Saudi Arabia convert its utilities from oil 
burning to natural gas, which would free up more of the kingdom's crude oil 
for export. 
The other companies selected were BP PLC, TotalFinaElf SA, Conoco Inc., 
Phillips Petroleum Co., Occidental Petroleum Corp., Enron Corp. and Marathon 
Oil Canada Inc. 
Saudi Arabia's state-owned energy company, Saudi Aramco, will be an equity 
owner in the projects. 
Saudi Arabia nationalized its oil fields in 1975 after tension caused by the 
Arab oil embargo against the West that began two years earlier, and it closed 
its energy exploration and production sectors to foreign investment. 
Although locked out of the production of energy, Exxon Mobil has $5 billion 
in refining and petrochemical joint ventures in the country, and it said it 
is also the largest foreign purchaser of crude oil and other hydrocarbons 
from Saudi Aramco.

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


Business; Financial Desk
Saudi Arabia in Pacts With Nine Global Oil Firms Energy: Deals to develop 
natural gas fields and other projects, worth at least $25 billion, are first 
major foreign funding in sector since 1975.
From Associated Press

06/04/2001
Los Angeles Times
Home Edition
C-2
Copyright 2001 / The Times Mirror Company

JIDDAH, Saudi Arabia -- Saudi Arabia signed agreements with nine 
international oil companies Sunday, a move that marks the first major foreign 
investment in its energy sector since nationalizing the industry in 1975. 
The deals, worth a total of $25 billion or more, involve the development of 
three natural gas fields in the kingdom and a number of related power plants, 
transmission pipelines and water desalinization projects.
The Western companies will help Saudi Arabia convert its utilities from 
oil-burning to natural gas, which would free up more of the kingdom's crude 
oil for export. 
Exxon Mobil Corp., the world's largest publicly traded oil company, is the 
lead manager on two of the projects, including the $12-billion-to-$16-billion 
Ghawar Core Venture 1 project. It also will lead a second core project. Royal 
Dutch/Shell was chosen to lead a third project. The last two projects have a 
value of $7 billion to $10 billion each, Prince Saud al Faisal told 
reporters. 
The other companies selected were BP of Britain, TotalFinaElf of France, 
Conoco Inc. of Houston, Phillips Petroleum Co. of Bartlesville, Okla., 
Occidental Petroleum Corp. of Los Angeles, Enron Corp. of Houston and 
Marathon Oil Co. of Houston. 
Harry Longwell, director and senior vice president at Exxon Mobil, said the 
financial terms of the deal are still being discussed. But he said his 
company is ready to begin the work when the final contracts are signed. 
"The Saudis' expectations are extremely aggressive," Longwell said. "It's a 
very tight schedule and in recognition of that, the ability to get this done 
is one of the key reasons we were chosen to lead two of these ventures. We 
already have a senior management team in place and are ready to go to work 
immediately." 
Saudi Oil Minister Ali Ibrahim Naimi said the companies are expected to 
profit on returns from the exploration and development of gas fields with 
more than 15% of the investment cost. 
Saudi Arabia's state-owned energy company, Saudi Aramco, will be an equity 
owner in the projects. 
Saud said if the companies discover oil, they will be compensated and the 
fields will be repossessed by Saudi Arabia. 
Saudi Arabia nationalized its oil fields in 1975 and closed its energy 
exploration and production sectors to foreign investment. 
Although locked out of the production of energy, Irving, Texas-based Exxon 
Mobil has $5 billion in refining and petrochemical joint ventures in the 
country and is the largest foreign purchaser of crude oil and other 
hydrocarbons from Saudi Aramco.

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


DAILY DATEBOOK
JON CARROLL
Enron is my spiritual teacher
Jon Carroll

06/04/2001
The San Francisco Chronicle
FINAL
E.10
(Copyright 2001)

THE BUDDHA SAYS that we take wisdom where we find it. Perhaps the Buddha does 
not say that, but it's not a bad idea anyway. The Buddha would have said it, 
maybe, had he not been saying the other things. 
Our enemies can teach us lessons. Our adversaries can make us stronger. They 
can be consumed with greed and contempt, their very breath can be toxic, and 
yet their actions can open upward-flowing paths.
Take Enron, the energy company, or Chevron, another energy company, or El 
Paso Natural Gas, yet another energy company. These organizations are the 
minions of Satan. They pillage and they profit. They are in the ascendant. 
Their enemies fall before them like cordwood. Ordinary citizens cower and 
meekly hand over tribute. 
And yet we thank them. We send our investigators after them and we pray that 
their executives land in jail, but we thank them. They have shown us the 
nature of our enslavement. They have defined the nature of our sloth. 
We have believed the Big Lie. We have believed in the free lunch. We have 
trusted those who would pander to us. We have eaten energy in great dripping 
gobs. Did we know it was not infinitely renewable? Oh yes. Did we understand 
that energy companies could create "shortages" whenever they wanted merely by 
closing plants for "maintenance"? You bet we did. And did we confuse the 
energy companies with charitable organizations and/or alchemists able to 
repeal the laws of nature? We did not. 
But it was more convenient to forget those things, and so we did. We have 
busy lives. We must do the things we must do. The infrastructure is 
everywhere crumbling, and we are patching it up ourselves. We are paying 
bureaucrats with taxes, but the bureaucrats are inadequate, so now the spirit 
of volunteerism is much praised. 
Volunteers are people who do jobs that other people are being paid to do but 
don't. 
AND SOMEHOW, EVEN in a society as relentlessly materialistic as this one, we 
forgot about our own checking accounts. Already seduced by the idea that 
credit card debt is good clean fun, we decided to waste a lot of money using 
energy we didn't need. 
I'm not talking about using a washing machine instead of going down to the 
river and beating your clothes with small stones -- I'm talking about washing 
machines with quarter-full loads and settings far too powerful for the task 
at hand. Right? Lights burning in unoccupied rooms. Appliances plugged in but 
never used. 
We pay for it. We send our wonderful money straight to the largest villains 
in American commerce because we are too stupid to do anything else. You 
wonder why they have contempt for us. You wonder why Dick Cheney believes he 
can fool all of the people all of the time. Because he has. 
Look: Last week the secretary of commerce suggested means-testing Social 
Security -- that is, means-testing a pension plan. You gave us the money, we 
kept it for 40 years, now -- prove that you need it! 
Why did he suggest that? Because he can! Why did PG&E demand additional 
compensation for its executives, who are moral dimbulbs and social criminals 
under any fair definition? Because they can get away with it! They will get 
away with it! You watch! 
I AM NOT saying that we have no one to blame but ourselves. There are active 
villains, and there are people who allow villainy to occur. Everyone in a 
corrupt system is corrupt. The fools are the ones who don't end up with any 
extra money. 
We are the fools. If we understand our foolishness, we begin to be wise. We 
send lovely bread-and-butter notes to Enron -- once we were blind, but now we 
see. And we await developments, or create them. 
-------------------------------------------------------- 
It would be foolish to mention SUVs. When the brain is ready, the ear will 
hear.

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


EDITORIAL
WASHINGTON INSIGHT
Gloom today, glut tomorrow
Carolyn Lochhead

06/04/2001
The San Francisco Chronicle
FINAL
A.19
(Copyright 2001)

WHAT GOES UP usually comes down. And few industries are more prone to boom 
and bust than energy. 
Imagine the news stories a few years from now: "Crisis hangover -- energy 
stocks sink as prices plunge; But California consumers still stuck with high 
bills."
"The energy industry is suffering its worst downturn since the supply glut of 
the 1990s, as dozens of big new power plants come on line, and the 
just-completed Alaskan gas pipeline sends natural gas prices to their lowest 
levels in six years. 
"The one bright spot for Texas generators is California, where consumers are 
locked into long-term contracts for wholesale electricity that the state 
signed at the peak of its blackouts in the summer of 2001. 
"Sacramento lawmakers have appealed to President Daschle to help get the 
state off the hook, arguing that California will never claw its way out of 
its economic slump if businesses continue to flee to states where energy is 
cheap. 
"But top Enron lobbyist Gray Davis, a former governor of California, warned 
Daschle that suppliers would have little choice but to go to court to enforce 
the contracts the state signed." 
Washington and Sacramento are agog with the energy crisis and bursting at the 
seams with plans to fix it. But the one thing no one - - even 
environmentalists -- suggests is letting high energy prices discourage energy 
consumption or encourage new supplies. 
"To economists, letting the price rise is the solution," said Paul Portney, 
president of Resources for the Future, a Washington think tank. "To elected 
representatives, having the price go up is the problem." 
Political memories tend to be selective and short. But it was the energy glut 
of the 1990s that contributed to California's blackouts, $3 gasoline and 
$400-a-month heating bills. Likewise, high prices are now laying the seeds of 
their own destruction. 
As a story in the New York Times noted, an energy investment boom "promises a 
cyclical increase in supplies that is expected to stabilize or reduce prices 
in coming months, many industry executives and private analysts say." 
Through much of the 1990s, there was a glut of energy. Fuel of all kinds was 
really cheap. 
How cheap? Adjusted for inflation, as cheap as in 1949, economists calculate. 
Energy is the oxygen of the economy, and rock-bottom prices contributed to 
the long economic boom. But low prices also caused energy production to slump 
and consumption to soar. 
People ditched their economy cars for SUVs. Houses got bigger, ceilings got 
higher and kitchens sprouted industrial stoves with enough BTUs to melt 
aluminum. Stores, offices and homes turned into summertime refrigerators. 
Low prices discouraged energy development. 
"Oil was so cheap for so long, that people were selling their refineries," 
Portney said. "You had virtually no exploration for new natural gas when 
prices were at $2 a BTU." 
As demand soared and supply fell, prices rose. Profits have grown so robust 
that green fuels, such as biomass and wind, are becoming economically viable. 
The oil industry is booming. Refineries are expanding. The long-delayed 
construction of a natural gas pipeline from Alaska now looks likely. So many 
power plants are under construction that the market may be flooded with as 
much as 200,000 new megawatts by 2004. 
Investments in energy efficiency -- from new-age superconducting transmission 
wires to better light bulbs -- are suddenly looking attractive for the first 
time in decades. 
"High prices will dampen demand, high prices will encourage supply, and will 
encourage people to make better use of what they've got," said Robert Ebel, 
director of energy for the Center for Strategic and International Studies. 
"So we're starting on the down slope. We're not very far down. When prices 
start to decline, I can't say how far they will go. But they will decline, 
because that's just the law of supply and demand. Prices decline, demand 
starts to creep up again, there's less incentive to add to supply, and here 
we go again."

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



INDIA: Rating firms may be judging India harshly-analysts.
By Vidya Ranganathan

06/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, June 4 (Reuters) - Analysts have reacted with surprise to last week's 
decision of ratings agency Fitch to cut India's sovereign ratings outlook to 
negative from stable, and say there are no grounds to downgrade the country. 
Fitch, which rates India's foreign currency obligations at BB-plus, a notch 
above Moody's Investors Service and Standard & Poor's, cited concerns about 
fiscal policy, privatisation and deterioration in foreign investment climate.
However, economists speculated it could either be on account of Fitch 
adjusting its ratings in line with other global agencies, or a fallout of 
U.S. energy giant Enron Corp's threat to exit an Indian power venture over 
payments problems. 
Moody's and S&P said on Friday they have not revised ratings or outlook but 
are disappointed with fiscal reform efforts. 
Local currency and stock markets reacted nervously to the announcement, but 
economists said most concerns were exaggerated. 
"When the direction of reforms is positive and government flows are 
improving, the outlook should not change," said Mohan Nagarajan, chief 
economist at local rating agency CARE Ltd. 
Even if the provocation for the rating review was the Enron episode, analysts 
said the problems were specific to the power sector and will not affect the 
robust foreign investment the country has been receiving. 
"Enron was a bad deal, made on unreasonable terms in the first place and does 
not reflect the ability of the government to pay its dues," said an economist 
with a U.S.-based fund. 
Some of the confusion arises from the various ratings assigned to India. 
Moody's has retained a positive outlook on its Ba2 rating since late 1999, 
while S&P has a stable outlook and a BB rating. 
CONCERNS OVERSTATED 
Analysts said none of the factors Fitch cited had deteriorated in the past 
year, since it first rated India. 
Fitch said India's fiscal-monetary mix was unfavorable, real interest rates 
were high and there was the risk of a debt trap. 
India marginally overshot its budgeted fiscal deficit in 2000/01 
(April-March) to 5.2 percent of GDP, down from the previous year's 5.6 
percent. 
But laws to control government spending are awaiting parliament's approval, 
there are incentives for disciplined state governments and a determined 
effort at privatising state-run firms has begun. 
Burgeoning fiscal deficits have persisted for a decade and public debt at 60 
percent of GDP is high, but at six percent annual growth, India is one of the 
fastest expanding economies in Asia. 
"In terms of external liquidity, India is much stronger than its BB+ rating 
while even its public debt to GDP ratio is lower than that of some Asian 
nations," said P.K. Basu, chief economist for South East Asia at Credit 
Suisse First Boston, Singapore. 
Foreign investment has been pouring in - portfolio flows at $2.2 billion so 
far in 2001 are at record levels and compare with $1.56 billion for the whole 
of 2000 - and foreign exchange reserves are strong at $42.8 billion. 
Interest rates and yields have also dropped, with the Reserve Bank of India 
(RBI) adopting an aggressive easing stance this year to prop the slowing 
economy, and inflation is benign. 
"The hardest initial steps are being taken and there is still a lot of 
inertia, but soon there will be a willing audience and reforms can progress 
faster," CARE's Nagarajan said. 
But critics said the changes were still very superficial and structural 
reforms that would spur long-term growth and demand were lacking. 
"What the rating agencies have emphasised is fiscal consolidation, which 
means better revenue streams, efficient expenses, user charges for public 
utilities...we promised these three years back and haven't moved very far on 
those," said Saumitra Chaudhari, economist with local rating agency ICRA Ltd. 
"We still do not have a securities bill, mature debt market and our banks 
have not cleaned up,".

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


INDIA: India rupee ends off lows, fwds close higher.

06/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, June 4 (Reuters) - The rupee ended unchanged on Monday, recovering 
from the day's low after a large European bank sold dollars, dealers said. 
It had slipped to a low of 47.04 per dollar in early deals on dollar 
purchases by a jewellery importer.
The rupee ended at steady at d47.01/02 per dollar. 
Dealers said there was no impact of Friday's comments from international 
rating agencies which had raised concerns over continuity of foreign 
investment and dragged shares lower. 
The currency recovered from lows around 47.085 on Friday, reacting to 
international rating agency Fitch's revision in the outlook for India's 
ratings on sovereign debt to negative from stable, citing worries about 
fiscal policy, privatisation and deterioration in the country's foreign 
investment climate. 
Later, rating firms Moody's and Standard & Poor's (S&P) said they were 
disappointed over the government's reform effort. 
Moody's also raised a concern about India's Maharashtra state utility's 
ongoing tussle with Houston-based Enron Corp and said: "the dispute indicates 
that India's government may not be willing to live up to its contractual 
obligations". 
It added this would further deter foreign direct investment from coming into 
the country. 
The comments weighed on bond prices, which extended losses on Monday, and in 
turn led to paying in dollar forwards. 
"After a long gap, there was corporate paying interest in forwards today," a 
dealer with a state-run bank said. 
The six-month forward ended at an annualised 5.10 percent compared with 
Friday's 4.95. 
For a speed guide to Reuters treasury coverage, ((Bombay Treasury Desk, +91 
22 265-9000 fax +91 22 264-1699, vidya.ranganathan@reuters.com)).

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


UK: Spectron trades UK's first post-NETA spark spread.

06/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

LONDON, June 4 (Reuters) - Energy brokerage Spectron said late on Friday it 
had traded the first brokered gas-electricity arbitrage, or "spark spread", 
deal in the UK since the launch in March this year of new electricity trading 
arrangements (NETA). 
"Now that liquidity has returned to the electricity market post NETA, such 
transactions are expected to become more common...", said Spectron in a 
statement.
The deal was concluded between UK utility Powergen and U.S. energy group 
Enron . 
Spectron said the trade, covering winter 2002, was for 60 megawatts of 
electricity at 21.42 pounds a megawatt hour and for 100,000 therms of gas at 
24.85 pence a therm. 
The winter period specified in the deal ran from October 1 to March 31. 
For the electricity, one day was defined as 2300 hours to 2300 hours. 
For the gas, one day was 0600 hours to 0600 hours. 
The deal comes as the industry moves to create standard terms and conditions 
for spark spreads. 
Powergen is due to meet in mid-June with other traders, including Aquila 
Energy , for talks aimed at agreeing standard terms. 
"It is hoped that the market will soon establish standardised documentation 
leading to a standardised product that will help promote liquidity in one or 
more levels of efficiency," said Spectron.

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


INDIA: Enron India lenders meet in Singapore on Tuesday.
By Sriram Ramakrishnan

06/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, June 4 (Reuters) - Lenders to Enron Corp's troubled Dabhol Power 
Company begin a two-day meeting in Singapore on Tuesday to try and settle 
differences over continued support to a controversial $2.9 billion power 
project in India. 
Representatives of some of the world's largest banks like Citibank , ABN AMRO 
, and Bank of America, will be at the meeting. Indian lenders like the 
Industrial Development Bank of India , State Bank of India and ICICI will 
also participate.
Market analysts speculate that the meeting will attempt to forge a joint 
stand on supporting the project which now produces 740 MW of power and is 
slated to increase it to 2,184 MW shortly in its second phase. 
But it comes against a backdrop of rising tension between Dabhol and the 
Indian state utility, the Maharashtra State Electricity Board (MSEB), which 
is the sole buyer of Dabhol's electricity. 
Indian lenders, who have lent the bulk of the funds to the plant, want to 
continue supporting the project. 
But they are being opposed by offshore lenders who want to withdraw their 
loans. Loans of around $638 million of the offshore lenders are covered by 
guarantees provided by Indian institutions. 
The Indian lenders, fearing for their profitability if the foreign banks pull 
the plug, plan to oppose any such move. 
But they have been forced on the backfoot by MSEB's decision last week to 
stop buying power from Dabhol and terminate its 1995 contract with the 
company under which it agreed to lift the entire output. 
The MSEB has complained that Dabhol produces costly power while Dabhol has 
blamed MSEB for defaulting on payments worth $48 million. 
Last month, Dabhol issued a preliminary notice to terminate its contract to 
sell power. It has also filed for arbitration in London. This provoked MSEB 
to haul Dabhol before a local regulatory body, the Maharashtra State 
Electricity Regulatory Commission (MERC), which issued a temporary order 
staying the arbitration proceedings. 
The dispute has already affected India's image among foreign investors. 
Last week, global rating agency Moody's expressed concern over slippage in 
the Indian government's reform programme and cited the Enron's dispute as an 
example that the country may be losing credibility with foreign investors. 
"The dispute indicates that India's government may not be willing to live up 
to its contractual obligations. As a consequence, this would further deter 
foreign direct investment from coming into the country," Moody's said. 
India's federal Power Minister Suresh Prabhu tried to dispel those fears in 
an interview with Reuters on Sunday. 
"India is always in favour of making sure that international contracts are 
respected," he said. "There is no need for concern." ($1 = 47 Indian rupees).

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


INDIA: UPDATE 1-India's Prabhu says power reforms enter new phase.
By Clarence Fernandez

06/04/2001
Reuters English News Service
(C) Reuters Limited 2001.

BOMBAY, June 4 (Reuters) - India's reforms of its sputtering power sector 
have entered a new phase, with plans afoot to free up private supply, 
overhaul debt-ridden state utilities and recraft tariffs, Power Minister 
Suresh Prabhu told Reuters. 
With investors' fears fanned by a squabble between U.S. energy giant Enron 
Corp and a local utility, Prabhu said in an interview late on Sunday that 
India is standing behind international contracts.
"Sanctity of contracts has to be kept," Prabhu said. 
The row began late last year when the utility in western Maharashtra state 
defaulted on payments of $48 million to Dabhol Power Company, 65 percent 
owned by Enron. The 2,184 MW power project is India's largest foreign 
investment, at $2.9 billion. 
Prabhu has vowed to take Indian reforms in a new direction. 
"Absolutely," he said in reply to a question whether India's reforms have 
entered a different phase. The Power Ministry will now also focus on power 
distribution, he added, besides its early preoccupation with generation 
needs. 
"In India unfortunately for the last 10 years...reforms policy was skewed in 
favour of generation," he said. "We never really realised that distribution 
is the more important part of the process." 
Prabhu added, "We have now decided we will make enough structural changes in 
distribution so that at the end of distribution enough investment is made." 
CHARTERED ACCOUNTANT 
A chartered accountant, Prabhu hails from the verdant regions of India's 
western coastal strand, and chaired a co-operative bank that was one of the 
country's largest, in terms of deposits, before his foray into politics. 
An errant lock of hair straying across his forehead, Prabhu eschews the 
Indian politician's traditional uniform of starched white handspun cotton for 
the shirtsleeves and trousers preferred by the professionals who have entered 
government, and whom local media call "technocrats". 
Prabhu said India has decided to allow private producers to sell power direct 
to consumers, lifting curbs that have hobbled the country's decade-old reform 
effort. 
He said the question of power affordability had spurred him to ask India's 
states to permit third-party sales of power, which analysts have called a 
stumbling-block for foreign investment. 
"They cannot force a generator to sell power only to the SEBs, and that's a 
major change we are trying to make," Prabhu said, referring to the states. 
SEBs or state electricity boards are owned by the state governments, and 
supply power to most of India. 
India estimates that 100,000 MW of fresh capacity will have to be installed 
over the next 12 years to meet its power needs. Most of the $200 billion in 
funds that will be required will have to come from foreign private 
investment. 
But India's spotty reform record over the last decade has made investors 
wary. Bureaucratic procedures, legal delays and political wrangling have held 
up reform moves. 
RATING REVISED TO NEGATIVE 
Last week global rating agency Fitch revised India's sovereign rating outlook 
to negative from stable, citing fiscal concerns, the slow pace of 
privatisation and deterioration in the country's foreign investment climate. 
Competing agency Moody's sees signs of slippage in the reforms, and Standard 
& Poor's has expressed worries over India's budget deficit. 
Prabhu said he wants to overhaul state power utilities by introducing 
standard accounting policies, cutting transmission and distribution losses to 
15 percent, and tackling crushing debt, thus helping to lure foreign 
investment into the sector. 
The poor financial health of the utilities, expected to run up combined 
losses of about $6 billion in the 2001/02 fiscal year, has proved a hurdle in 
efforts to draw private investment. 
Prabhu said an expert panel examining ways to restructure SEB finances - 
looking at technical, commercial and tariff issues - is expected to report 
within a few weeks. 
"For the first time we will be preparing commercial data which is 
internationally accepted. We will be preparing technical data which is 
internationally appreciable. And thirdly, we'll be creating an information 
base which will be created by experts and then made available to the states," 
he said. 
The utilities' transmission and distribution losses run to up to 25 percent 
of the electricity they generate, compared to a figure of about eight percent 
internationally, he said. 
Prabhu wants to trim this to about 15 percent within two or three years. 
"In the case of India, I am willing to accept a figure of 14 percent to 15 
percent, because to bring it below that will be technically feasible but 
commercially unviable," he added. 
Other steps to tone up power generation include attempts to link the eastern 
region with the rest of India, efforts to boost plant load factors through 
modernisation of equipment, and to persuade people to use energy more 
efficiently. 
Prabhu said he is building political will to support these moves through a 
programme to tell consumers why they can no longer get power cheap, or even 
free, as many did in the past. ($1=47 Indian rupees).

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


Nigerian president slams US energy firm Enron for "poor performance"

06/04/2001
BBC Monitoring
Source: The Guardian web site, Lagos, in English 4 Jun 01/BBC Monitoring/(c) 
BBC

Text of article by Francis Obinor entitled: "Obasanjo chides Enron on Lagos 
power project"; published by Nigerian newspaper The Guardian web site on 4 
June 
For failing to live up to expectation of the Nigerian government and the 
people as regard its role in the Independent Power Project (IPP) initiated by 
the Lagos State government two years ago, Enron, the American firm got a hard 
knock from President Olusegun Obasanjo at the weekend [2-3 June].
In his conclusion, Obasanjo accused Enron, a major player in the electricity 
project, of poor performance and bad faith. Ostensibly angry at the delay in 
the project's full take-off and the 30 MW recently connected to the national 
grid from the scheme, the president on the American Cable News Network (CNN) 
declared: "Enron has played a dirty game on us. Dirty game in two ways." 
Beside putting up an exorbitant price, the company according to the 
president, also failed to comply with the terms of the contract. Continuing, 
Obasanjo said: "The price at which they (Enron) have tried to sell power to 
us has been very exorbitant. Two, what they told us they would do, they have 
not done." 
While refusing to disclose the firm's charges, Enron Vice-President of 
Marketing John Ambler said the primary objective of the company was to get 
the project on stream. "We have a project that is very close to coming on 
line," he said, stressing that the company's desire is to see the project 
work effectively in Nigeria, especially in Lagos. He added that Enron is 
committed to the IPP and assured Lagosians that they would soon begin to feel 
the impact. 
The state government brought forward the June 2001 deadline it set for the 
commencement of the first phase of the project when it fired the first 30 MW 
of electricity to the national grid two weeks ago. 
At the Government House on 23 May, Governor Bola Tinubu said his 
administration and the contracting firm felt that there was no harm in 
bringing the date forward and assured that another 30 MW would be added soon. 
He noted that, contrary to expectations that the project would cover the 
entire state at a go, it would be in phases and the focus for now would be 
industrial consumption. "The concentration for now is not as private homes, 
we would soon get there," Tinubu assured. 
The controversial IPP programme, which the federal government had at one time 
been accused of frustrating, has suffered several setbacks, including Enron's 
initial plan to sell its shares to AES, another American company. Last April 
was originally fixed for the project's take-off but the failure of Trevi, a 
construction company in charge of transmitters, caused a shift in the date.

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


India: India and Bush Administration: Beyond assumptions

06/04/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

SOON after Mr George W. Bush Jr. won the US elections, Indian observers 
proclaimed quickly that a Republican administration bodes good for India. A 
Republican administration was expected to not pester India about human rights 
violations in Kashmir, not force it to sign the CTBT, and get tougher with 
China. 
Mr George Bush's decision to "drop by" the External Affairs Minister, Mr 
Jaswant Singh's meeting with the American National Security Advisor, Ms 
Condoleezza Rice, seemed to somehow confirm this false sense of euphoria. 
This narrow thinking fails to understand the drivers of Republican ideology. 
The reality is the Republicans care about a range of issues that will force 
the BJP Government to make some difficult decisions.
Take the first issue of human rights violations in Kashmir. It is true there 
are many isolationists in the Republican Party who, probably, do not care 
about human rights violation in Kashmir so long as it does not affect them, 
and is not happening in their backyard. But there is another powerful force 
in Republican politics - the religious wing. This includes powerful members 
of the US Cabinet such as The Attorney-General, Mr John Ashcroft, who are 
Christian fundamentalists. 
Mr Bush himself claims to be a 'born again Christian'. 
The religious right is rarely interested in foreign policy; it mostly 
concerns itself with moral and social issues such as abortion and teenage 
pregnancy. But the few times it does intervene, it is when it feels a country 
is "persecuting Christians". And when it does intervene, no Republican 
administration dares cross it. 
For instance, China is periodically identified as a country that persecutes 
Christians. Christian missionaries and ministers are routinely harassed and 
imprisoned because they are trying to spread their religion. Because of this 
issue, Republican members of the Christian right in Congress have all but 
declared a religious war on China, routinely opposing any attempt to improve 
relations - including trade relations - with that country. 
India, as an emerging power, is more carefully watched, and frequently 
mentioned in the American press. Stories of Christian missionaries being 
burnt alive and nuns raped are attributed to "elements associated with the 
Hindu fundamentalist ruling party". In its latest human rights report, the US 
State Department noted these acts with concern. 
The Pope's mention of these issues to the Prime Minister, Mr Atal Bihari 
Vajpayee, was also noted in the American press. India is, perhaps, half a 
step away from being branded as a country that "persecutes Christians". 
A self-professed born-again Christian like Mr George Bush would quickly take 
up the Christian right's cause, trumping all other bilateral issues. Human 
rights may not matter to the isolationists, but Christian, and to a lesser 
extent Jewish, religious freedom matters tremendously to a Republican 
administration. 
The second fallacy was that since the Republicans in Congress did not pass 
the Comprehensive Test Ban Treaty, they would not force other countries to 
pass the CTBT either. But why are the Republicans are opposed to the CTBT. 
The opponents of the CTBT feel that it fails to safeguard American security. 
They frankly care little about Indian security. They would love to be able to 
restrict India's ability to test and use its weapons. To them, nuclear 
weapons not in American hands translates into an unsafe world. Unless India 
manages to convince the Republicans otherwise, the Republican administration 
is likely to tighten the anti-proliferation screws on India. 
The third fallacy relates to a tough, long-term strategic re-alignment the 
Bush Administration will demand of India. Mr Bush's foreign policy-makers are 
unreconstructed 'Cold Warriors'. In the post-Cold War era, they are 
desperately "searching for an enemy". They appear to have settled on China as 
"the next enemy". Their next step is to search for "allies" 
who rarely challenge their views. Thinkers in Washington and New Delhi 
believe that India and the US are "natural allies". But such a decision has 
an enormous range of long-term consequences for India. 
To discuss just a few: Most of the Indian military's equipment comes from 
Russia and the former Soviet Union. Allying with the US will be seen by the 
Russians as abandoning them, and this could have an enormous impact on the 
legacy military equipment. Recent noises from the Foreign Ministry suggest 
India is also eager about Mr George Bush's proposed missile defence 
programme. But this technology is far from proven, and during the decade over 
which it may be developed (if it gets past Congress), China will most 
certainly develop many nuclear weapons. These may, primarily, be a deterrent 
against the US, but it will force India into an arms buildup it can barely 
afford. 
The Americans are reserving their missile defence system for their "closest 
allies". India today is neither fish nor fowl - not quite a threat, but not 
quite an ally either. It is unlikely that India will be able to convince the 
Americans to give it the defence system. 
Even if the Americans agree to sell it to India, it could never afford the 
sticker price. So, before it rejoices at the notion of anti-China hawks in 
the White House, let India ponder over the unexamined consequences. 
The final issue is one that may precipitate in the very near term. 
Enron and Maharashtra find themselves in a dispute that neither wants to 
lose, and that appears to be rapidly getting shriller. Mr George Bush's 
background is as a Texas oilman - and he is widely accused in the US of being 
beholden to the interests of the energy industry. 
In fact, they were among the biggest "contributors to his campaign". 
The Enron Chairman, Mr Kenneth Lay, is a friend of Mr Bush's, and was 
seriously considered for a job in his Cabinet. He is so well connected that 
he was recently accused of influencing who is appointed by the White House to 
regulate the energy industry. In the near term, Mr Bush could quite possibly 
lean heavily on New Delhi to "make sure that Enron's interests are not 
neglected". If New Delhi does not respond to his satisfaction, his opinion of 
India, and consequently, his administration's dealings with the country, are 
likely to be coloured far more than we think. 
Giridhar Srinivasan

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


Enron's Indian Creditors Seek to Salvage Dabhol Project
2001-06-04 08:41 (New York)

Enron's Indian Creditors Seek to Salvage Dabhol Project

     Mumbai, June 4 (Bloomberg) -- Indian banks that loaned money
to Dabhol Power Corp., the local unit of Enron Corp., will try and
persuade their international counterparts to keep alive the $3
billion project at a meeting of lenders in Singapore tomorrow.
    The two-day meeting will be the first between the two groups
of bankers since they met in London on April 24-25 to discuss an
escalating dispute on power prices that has pitted Enron against
the Maharashtra State Electricity Board, Dabhol's only customer.
     ``We will discuss how we can go about resolving the
problem,'' R.S. Agarwal, executive director at Industrial
Development Bank of India, or IDBI, said. IDBI is the biggest
lender to the Dabhol project.
     The outcome of the Singapore meeting, to be held in the
offices of ABN Amro Holding NV, one of the biggest international
lenders to the project, will be crucial to the banks, which have
loaned as much as $2 billion to Dabhol.
     Indian banks fear the Maharashtra State Electricity Board's
decision to stop buying power from Dabhol may strengthen
international lenders' resolve to terminate the project and invoke
government guarantees to recover their loans.
     ``Foreign lenders want to close the (Dabhol) chapter,'' said
Pradyumna Kaul, an activist with Enron Virodhi Andolan, a non-
government organization opposed to the project. ``They are eager
to call in their loans, even if it means taking a 10 to 15 percent
cut, rather than spend more on supervision and legal expenses
while watching the saga linger.''
     Local banks such as IDBI are most at risk as the Maharashtra
and federal governments have guaranteed only foreign banks' loans
of about $600 million to the venture.
     IDBI alone has exposure totaling 21.58 billion rupees ($460
million) to the project, including 15.28 billion rupees in
guarantees.
     Foreign lenders such as ABN Amro, Citibank N.A., a unit of
Citigroup Inc., Bank of America and Credit Suisse First Boston in
April approved Dabhol's decision to begin termination of its power
supply contract with the board. They are in favor of canceling the
project.
     India's government risks having to pay 170 billion rupees in
fines, resulting from guarantees it has offered on payments and
loans, if Enron pulls out of the project.

                             The Fight

     Maharashtra State Electricity Board Wednesday stopped buying
power from Dabhol as the dispute escalated. The board on May 24
told Dabhol Power Co. it was canceling its power purchase
contract, six days after Dabhol gave the board notice it was set
to pull out of the project because of the six-month dispute over
bills owed by the board.
     ``The MSEB's move has complicated the matter. We did not
expect MSEB to do this,'' Agarwal at IDBI said last week.
     Dabhol, 65 percent owned by Enron, and the board are in
dispute over 3 billion rupees in unpaid bills for December and
January. Others bills through March have been paid.
     The board has refused to pay the December and January bills,
saying they should be lowered to reflect a 4 billion rupee penalty
the board imposed on Dabhol for not supplying power at full
capacity on Jan. 28.
     The dispute Thursday prompted debt-rating company Fitch to
change its outlook on India to ``negative'' from ``stable.'' Fitch
said the climate for foreign investors has deteriorated.
     ``The dispute indicates that India's government may not be
willing to live up to its contractual obligation,'' the Economic
Times quoted Kristin Lindow, India analyst at Moody's Investors
Service, as saying. ``As a consequence, this would further deter
foreign director investment from coming into the country.''
     Moody's and Standard & Poor's have stable outlooks on the
country's sovereign rating. S&P has an investment grade rating of
``BBB'' on the country's sovereign debt. Moody's, like Fitch,
rates India's debt as junk at ``BB2.''



Enron Japan's Hirl on Power Deregulation: Commodity Comment
2001-06-04 06:29 (New York)


     Sydney, June 4 (Bloomberg) -- Joseph Hirl, chief executive of
Enron Corp.'s Japanese unit, Enron Japan Corp., comments on the
outlook for deregulation of Japan's electricity industry. He spoke
at the Coaltrans Asia conference in Sydney.

On Japanese government policy:
     ``The government does have a strong commitment to
deregulation, but there are some significant policy concerns''
including a ``greater than 80 percent reliance on imports'' of
energy.
     ``The market has been open a bit over a year, however not
much has happened. No genuine competition exists under the current
system. The companies there recognize that it will happen. It's
inevitable.
     ``The level of competition in Japan now is similar to the
U.S. in 1994-95, or Europe in 1996-97. Prices are about 400
percent higher than the U.S.
     ``To put it in perspective, I won't give the name of this
large chemical company, but it consumes about 600 megawatts. If
you compare that business with a company that's just like it in
Houston, Texas, the difference would be about $250 million a year
in the cost of electricity.
     ``For such an export-led economy, that's a difficult
situation to be in, and it's contributing to the overall malaise
in the economy.''

On the likelihood of a California-style electricity crisis in
Japan:
     ``Despite exploitation of California by the utilities, METI
(Ministry of Economy, Trade and Industry) and others recognize it
was a problem of design, not competition'' in California.