This will indeed be a St Patrick's Day for us to remember in years to come. 
Now that I am back in the office from Adelaide let me give some more 
considered replies.

It appears there has been a bit a communication mix-up no doubt not helped by 
me being out of the office. So l let me go back to the beginning. Enron 
Australia Finance Pty. Ltd. is authorised to trade Australian power 
derivatives with counterparties so long as it follows certain procedures laid 
out by the Government. These require " that before entering into a contract 
with a counterparty, the registered facility provider (ie Enron Australia 
Finance) must be satisfied on reasonable grounds:
(a) about the creditworthiness of the counterparty; and
(b) that the counterparty is contracting on its own account." 

This obligation is imposed on EAF and makes no difference whether the 
counterparty has an Australian presence or not.
 
In the case of EAF there was also a requirement for us to provide 
counterparties with an Enron Corp. guaranty. (Although this strict legal 
obligation
provision was deleted in July 1999.)

 Hence one of the issues that was addressed in our legal checklist  was a 
procedure to vet potential counterparties. We have procedures in place in the 
Sydney office to do this. I understood  that this activity would still be 
done in Sydney ie our list of 26 counterparties. the alternative was to 
develop procedures if it was to done else where.   

On Tuesday we will submitt the formal notification we need to make to the 
Australian Securities and Investments Commission that we are adopting a 
screen based trading system. (This is a legal requirement). Although unlikely 
they may enquire as to our procedures for vetting counterparties.
I was ready to explain there will be a continuation of the same procedures. 

In short there is nothing which needs to be added to extend the GTCs to 
counterparties that do not have an Australian presence. The major sensitivity 
is taxes and withholding tax in particular where the payment is being 
directed outside Australia. On reviewing the subject this evening  I agree 
with Chris Catts there does
not appear to be an issue. But I endorse Heidi's comment that now we know 
that there could be non-resident counterparties (a first for us) lets close 
off the tax 
issue. I have reviewed the various GTCs and probably the attached ECT  
Resources International Corp. GTCs is the most appropriate base to develop an 
appropriate clause. 




Heidi I can reschedule to get some time on Monday to meet with Chris. We 
could hopefully settle the words.  

In the interim  I confirm that the GTCs are satisfactory. David F if you must 
load GTCs Friday (Houston time) then I suggest we go with what we have. I 
would ask for one small change.One small change though. Tana picked up one 
point.  A new paragraph 2.1 (f) should be included as follows. 

"(f)  Subparagragh 2(c) of the ISDA Master Agreement will not apply to all 
Transactions"

             

 
    




Heidi Mason
03/17/2000 04:54 PM
To: David Forster/LON/ECT@ECT
cc: Debbie R Brackett/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, David 
Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mark Taylor/HOU/ECT@ECT, Paul 
Smith/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mark Dilworth/LON/ECT@ECT, Arfan 
Aziz/LON/ECT@ECT, Susan Musch/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Re: Australian Status  

Dave

I have had the following responses on the issues we discussed earlier:

I spoke with David Minns re the 'Eligible Persons' criteria, and he noted 
that while he had discussed the capital/asset holding criteria with Tana, he 
had not provided to anyone the other criteria, and that while these may be 
covered by the US criteria, there will need to be a review of all criteria 
before we can assess that all are covered. 
I spoke with Chris Catt at Price Waterhouse Coopers and he confirmed that 
provided there is no interest component in the cross border settlements made, 
there will be no with-holding tax issues re the payments/receipts. I am going 
to meet with Chris on Monday to discuss both the taxation implications and to 
review the GTC.

On the settlement issue, in the short term the best way to do the settlements 
for non-NEMMCO members would be via wires from Houston (this is how we 
settled our one previous cross border transaction) as this gives a third 
party review of the payments prior to release.

Regards

Heidi



David Forster@ECT
17/03/2000 11:10
To: Debbie R Brackett/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, David 
Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Heidi 
Mason/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mark Taylor/HOU/ECT@ECT, Paul 
Smith/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Mark Dilworth/LON/ECT@ECT, Arfan Aziz/LON/ECT@ECT 

Subject: Australian Status

As I understand it, the current situation with regard to international 
companies being able to transact on Australian power is this:

The only remaining potential issue is witholding tax. This may or may not be 
an issue and is being researched by Heidi Mason. If it is an issue, it is 
possible that we can borrow some language from the U.S. financial GTC. Heidi 
will coordinate with David Minns and suggest a solution (if required) for 
incorporation into the Australian GTC.

An issue was raised with regard to "Eligible Persons", and the requirement 
that an "Eligible Person" hold more than $AUS 10 million. However, Tana Jones 
has been in discussion with David Minns on this issue and determined that the 
U.S. requirements are in fact more stringent than the Australian ones, hence 
the application of U.S. criteria for Financial trades should be more than 
sufficient to meet the Australian "Eligible Persons" requirements. 
Furthermore, a perusal of the approvals by credit indicate that no companies 
with an E-rating of less than 4 have been approved by credit.

An issue was also raised with regard to settlements and the use of 
Austra-Clear. However, as we are unlikely to have large numbers of foreign 
companies transacting on Australian power in the near term, this should be a 
problem which can be resolved in the back office if it arises and should not 
impact the GTC, the planned Monday launch or the customer profiles.

At this point, I am anticipating (possibly) having a witholding tax revision 
to the GTC, which will be uploaded to the system on Friday (Houston time).

If anyone has any questions or concerns, please contact me on 713 853 1861 
(office) or 713 562 8678 (cell).

Thanks,

Dave