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Enron CEO Skilling Reinvents Company, Unnerving Investors
Bloomberg, 05/01/01 World Watch Wall Street Journal, 05/01/01 Setting The Agenda Enron's Kenneth Lay on the Energy Crunch SmartMoney, 05/01/01 WIND ENERGY PROJECT Caribbean Update, 05/01/01 Sector Watch Filling the Generation Gap SmartMoney, 05/01/01 COMPANIES & FINANCE UK: Scot Power eyes Enron utility Financial Times, 05/01/01 ScottishPower in talks to buy Portland utility The Independent, 05/01/01 Scottish Pwr FY00 Income Seen Dn On US, Regulatory Woes Dow Jones Energy Service, 05/01/01 City briefing The Guardian, 05/01/01 Pupils learn to work with water The Northern Echo, 05/01/01 Home Depot, UPS chiefs ranked among America's 50 best CEOs BUSINESS PRESS The Atlanta Constitution, 05/01/01 Henry McKinnell - Pfizer, Roger Joslin - State Farm, Other Top CEOs to Highlight New ``Win-Win'' Corporate Strategies in Low-Income Communities Business Wire, 05/01/2001 Arkansas Today Associated Press Newswires, 05/01/01 Indian Lenders to Enron Unit Ask Govt to Pay Bill, Paper Says Bloomberg News, 05/01/01 INDIA: Indian state to renegotiate Enron project-paper. Reuters, 05/01/01 INDIA: PRESS DIGEST - Indian newspapers - May 1. Reuters, 05/01/01 Enron amenable to reworking power pact with MSEB The Economic Times, 05/01/01 BRIEFING - ASIA ENERGY - MAY 1, 2001 Asia Pulse, 05/01/01 NCS seeks strategic alliances with Indian firms The Times of India, 05/01/01 India: ADB to provide over $5-b assistance to India Business Line (The Hindu), 05/01/01 India: Enron renegotiation panel announced Business Line (The Hindu), 05/01/01 India: Watching outcome of Enron issue: Ambani Business Line (The Hindu), 05/01/01 Enron imbroglio not to affect ADB loans for India Business Standard, 05/01/01 Loss-wary FIs ask govt to defuse Dabhol crisis Business Standard, 05/01/01 USA: Enron buys Huntco's steel ops, makes supply deal. Reuters, 05/01/01 San Francisco-Based Financial Firm Executives To Assume Some of CEO's Duties San Jose Mercury News, 05/01/01 Jesse Jackson Opens Houston Project Office Houston Chronicle, 05/01/01 Investing/MONEY 30 A Slamarama For The New Economy Money Magazine, 05/01/01 Enron CEO Skilling Reinvents Company, Unnerving Investors 2001-05-01 03:09 (New York) Enron CEO Skilling Reinvents Company, Unnerving Investors (Published in May issue of Bloomberg Markets.) Houston, May 1 (Bloomberg) -- A year ago, Enron Corp. CEO Jeffrey Skilling put up a banner in the lobby of his company's Houston office tower that welcomed visitors to ``The World's Leading Energy Company.'' Skilling, 47, has now decided that the company's tag should be more ambitious: ``The World's Leading Company,'' the banner says today. It's no shock that even the CEO isn't sure how to describe Enron, for it's a company swept by constant change. In the 1990s, Skilling transformed a regulated gas-pipeline company into the largest competitor in the business of trading energy, mainly natural gas and electric power. Now Skilling is pushing the company into Internet trading of all sorts of things: paper products, plastics, metals, fiber-optic bandwidth, commercial credit, pollution emission controls, and even weather derivatives. All of this morphing unnerves investors, and some of the company's ventures may not be growing as fast as Enron says, according to analysts and industry insiders. They say the company is overstating the value of the new businesses it's entering. Some investors are increasingly concerned about a lack of clarity regarding where the company is going -- and what exactly it does now. ``Owning Enron is a bit of a leap of faith,'' said John Hancock Advisers Inc. mutual fund manager Greg Phelps, who invests $1.1 billion in utility stocks and doesn't own any Enron. ``I want to buy a stock where I have absolute certainty about the business and direction it's headed.'' Exuding Nervous Energy Skilling, a man who exudes nervous energy and speaks in rapid-fire bursts, says his track record should ease investors' concerns. In the first quarter of 2001, Enron's profit from operations rose 20 percent to $406 million as revenue almost quadrupled to $50.1 billion. Enron shares have soared more than 11-fold since the start of the decade, four times the gain of the Standard & Poor's 500 Index. Enron's shares have dropped 25 percent this year, closing at $62.72 on April 30. Enron isn't merely a trading company, Skilling says. It's a logistics concern that ties together supply and demand for any given commodity and then figures out the most cost-efficient way to deliver that commodity to its destination. Skilling, who joined Enron in 1990 after leading McKinsey & Co.'s energy and chemical consulting practices, is unapologetic about moving the company in so many different directions. ``In five years, we'll be a different company,'' he said. ``We're not finished reinventing ourselves.'' $65 Billion in Assets Enron owns $65 billion in assets, including 32,000 miles of pipeline that span 21 states and transport 15 percent of all of the natural gas consumed in the U.S. The company owns an 18,000-mile fiber-optic network in the U.S. and controls 51 power plants and other energy projects in 15 countries on four continents. Pinpointing what Enron does isn't easy. Some businesses are simple to grasp: In 2000, Enron won $16.1 billion in energy management contracts from such giant corporations as Owens-Illinois Inc. and International Business Machines Corp. The bulk of Enron's money -- 93 percent of revenue and more than four-fifths of profit in 2000 -- came from wholesale energy operations and services: what it calls ``the financialization of energy.'' Cloaked in Secrecy This is largely the gas and electricity trading business it pioneered. Enron cloaks the details of that business in secrecy, citing competitive reasons, which makes its bread-and-butter activities as difficult to understand as the abstract Joan Miro lithograph that looms behind Skilling's desk. ``Enron keeps a lot of facts close to the vest,'' said Andre Meade, an analyst at Commerzbank Capital Markets. ``That makes constructing earnings models a real challenge.'' Even many of Enron's employees are shielded from the intricacies of Enron's business. Signs in stairwells and on office walls forbid employees from freely moving around the building into trading rooms and other off-limits areas. For now, Wall Street is betting that behind closed doors, Skilling and company will figure out how to extend Enron's trading prowess into fast-growing industries. Of the 22 analysts who track Enron, 19 of them rate the stock a buy. Enron traded at 40 times 2000 earnings on April 30. That's exactly double the price-earnings ratio of 20 for rival Duke Energy Corp., the biggest U.S. utility owner and energy trader, and 42 percent higher than the S&P 500's April 30 multiple. `GE of the New Economy' ``Enron is uniquely positioned to be the GE of the new economy,'' said Merrill Lynch's Donato Eassey. ``This isn't a management team to bet against.'' With analyst expectations so positive, some longtime Enron holders are selling stock. ``Especially with its high valuation, the stock's risky, and I don't see much upside,'' said Timothy Ghriskey, senior portfolio manager at Dreyfus Corp., which controls funds that sold about 1.55 million Enron shares at the end of 2000. ``If they fail to deliver for one reason or another, things could get ugly.'' Enron says its 2001 sales will swell to at least $160 billion. Analysts and investors say there are several trouble spots that could slow its growth. Trading Broadband Bandwidth At a late-January meeting in Houston, Skilling told 170 analysts and investors -- and dozens of others hooked in via the Web -- that Enron's biggest immediate opportunity is its plan to trade broadband bandwidth: space on the fiber-optic networks that zip voices, data, and images around the planet. Skilling says that based on discounted cash flow, Enron's broadband business is worth $36 billion, or $40 a share. That's a hefty valuation considering the business lost $60 million on $408 million in revenue in 2000. Enron has already hit a major roadblock in part of its broadband plan: delivering videos over its own high-speed fiber-optic network. In March, Enron and Blockbuster Inc. broke off a planned 20-year venture to deliver movies and other content directly into customers' homes. Enron says Blockbuster didn't provide the quantity and quality of movies needed to deliver the service. Enron and Blockbuster Disagree Blockbuster has a different take. ``Blockbuster wanted out of the deal basically because we had a lack of confidence in Enron,'' said Karen Raskopf, Blockbuster's vice president of corporate communications. Specifically, Blockbuster maintains that Enron couldn't handle technical issues such as protecting the copyright of the films that were to be distributed. ``Maybe Enron could have worked those details out,'' Raskopf said, ``but we decided there were plenty of other carriers out there that were more sophisticated technically.'' Several analysts and industry executives say that Enron's broadband business isn't worth anywhere near the valuation that Skilling talks about. ``I don't want to be disrespectful, because Enron's made remarkable progress from its days as a regulated pipeline,'' said Leo Hindery Jr., former CEO of Global Crossing Ltd., which like Enron has a nationwide fiber-optic network. ``But they're way out of their league in the telecommunications business. The [valuation] numbers they throw around are laughable; they'll be a bit player at best.'' California Energy Crisis The California energy crisis is likely to derail ongoing efforts to deregulate electricity markets in about 25 states and could slow the opening of markets in several Asian and European countries as well, analysts and consultants say, eliminating future profit streams. Not so, says Skilling. Deregulation is here to stay despite the problems in California, he said, adding: ``Deregulation doesn't cause problems. Stupid deregulation does.'' Besides, he said, Enron merely trades and doesn't produce power in California. The company's biggest business is in the wholesale market, serving utilities and big industrial suppliers, not retail customers. 'Japan and Europe Are Opening Up' Plus, wholesale markets in Japan and Europe are rapidly opening up. ``California won't nick us,'' he said. Critics charge that Enron, which doesn't reveal its California financial results, has been reaping huge profits during the crisis. ``California has been a feeding frenzy, with every trading company in the world feasting on it, and Enron is the biggest and shrewdest of them all,'' said Michael Shames, executive director of the Utility Consumers' Action Network. Doubters wonder whether Enron can succeed in new businesses like fiber. ``I don't think this industry is going to evolve as swiftly as Enron believes it will,'' said Rod Woodward, a telecom services industry analyst at consultancy Frost & Sullivan Inc. Skilling brushes off such skepticism. ``People who throw stones at us don't keep me up at night,'' he said. ``I worry about whether the air conditioner will blow and knock out our computer servers.'' Proving Naysayers Wrong Skilling contends he's proved the naysayers wrong once before. In 1991, at the Colorado ski resort of Beaver Creek, in his first presentation to energy analysts and investors, Skilling outlined his plan to transform Enron from an asset- based pipeline company into a trading company. ``I basically laid out our trading model for them,'' said Skilling. ``The crowd yawned. They didn't get it. I was brilliant. So we went out and proved we were right.'' Skilling's intensity permeates Enron's headquarters. In the lobby, about 20 employees wait in line for a Starbucks coffee jolt -- at 4:30 p.m. In the company's elevators, TVs blare with messages to ``maximize revenue.'' There aren't many private offices in Enron's headquarters building; most floors are open to encourage communication between workers. Of the few walls that are around, many are write and wash to encourage extemporaneous diagramming. Skilling's office is filled with toys: a mini basketball hoop, Koosh Ball rackets for his two sons. (He's divorced and also has a daughter.) 182-Mile Bicycle Ride He's working himself into shape so this spring he can lead about 500 employees on a 182-mile bicycle ride from Austin to Houston for charity. He says he hates his 50th- floor office, with its 20-foot ceilings, mahogany paneling, and sweeping views of the nation's fourth-largest city. ``It's too quiet and too removed from any action,'' he said. So he's moving to the seventh-floor trading room of a 40-story tower being built across the street from Enron's current headquarters. Even on vacations, Skilling doesn't kick back. Every year, the Pittsburgh native and Harvard Business School graduate takes important customers on a trip. This isn't the sedate corporate golf outing to Augusta National or Pebble Beach. Skilling leads such jaunts as a seven-day trek through the Australian outback and a thousand-mile dirt bike expedition in Mexico. ``If I can't bust up a couple bikes, I don't really want to go,'' he said. Gung-Ho Atmosphere That sort of gung ho atmosphere is a far cry from Enron's early days in 1985, when it was formed by the $2.4 billion merger of InterNorth and Houston National Gas and became the largest natural-gas pipeline company in the U.S. The industry was in the midst of great upheaval, as the Federal Energy Regulatory Commission began deregulating the gas pipeline business. Until then, the business could have been the poster boy for overregulation. By federal law, companies that owned pipelines could sell gas only to a handful of gas and electric utilities along their routes. If there were a big freeze in Chicago or a heat wave in Atlanta, for instance, pipelines couldn't reroute their supply to meet demand. In 1985, Chairman Kenneth Lay retained Skilling, who was then a consultant at McKinsey, to help spot opportunities as the business deregulated. Government Loosens Rules Over the next few years, as the government slowly loosened rules, Skilling put together a plan to buy natural gas reserves and package them for sale at various prices to any number of customer specifications: fixed prices, floating prices with minimum and maximum caps, guaranteed increases in supply if temperatures soared or plummeted. Both Enron officials and outside analysts say that companies would save as much as 50 percent of their cost of buying gas and Enron would profit from the trades and from packaging other lucrative services such as futures and swaps contracts that companies use to hedge their energy costs. ``There was a lot of initial resistance,'' said Skilling, who joined Enron permanently in August 1990. ``Enron engineers had no concept about what we were trying to do. They wanted to see the gas. It was like trading pork bellies and asking to see the pigs.'' Big Trading Floors With Lay's backing, Skilling pressed ahead. He ripped out walls and built big trading floors to foster interaction. At first, the business grew slowly, through phone-based trading desks. ``In the early days, we'd sit on our hands a lot,'' said Keith Hannon, who was in Enron's power business and is now president and chief operating officer of Enron's broadband unit. ``It took a while to find buyers and sellers and convince them what we could do.'' In the late 1990s, Enron extended its gas-trading business to electricity. The U.S. government encouraged competition in 1992 via the Energy Policy Act. About half of the states began enacting laws or rules to let electricity generators compete for retail customers on price, which opened the door for Enron to replicate its buy-and-sell gas- trading model for electricity. In April 1999, as Internet mania began sweeping through even old-line corporations, John Sherriff, head of Enron's European operations, and Greg Whalley, who was head trader at the time, decided to take another look at using the Internet to boost trading volumes. Torpedoes Previous Efforts Skilling had torpedoed previous online efforts, fearing the complexity of trading energy online and concerned that opening up the system would expose Enron to too much risk. So well-known was his aversion to risk that the team of employees that created EnronOnline didn't even tell Skilling about it until two weeks before it was ready to launch. It isn't a typical business-to-business exchange that brings buyers and sellers together to negotiate trades. At EnronOnline, which cost $20 million to put together, Enron does all of the buying and selling. A trader with gas to market sells it to Enron, which then finds a buyer for the fuel. Enron either finds a way to deliver the gas or ships it through its own pipes. That system enables Enron to skim a profit at every stage of the transaction -- buying, selling, and transporting the commodity -- in addition to packing on lucrative services, such as swaps, options, and forwards. Competitors say that energy buyers won't be satisfied with a site that allows them to buy from only one supplier. EnronOnline ``A market is buyers, sellers, and speculators,'' said Harvey Padewer, president of Duke Energy Group, which oversees Duke Energy's nonutility business. ``EnronOnline is, `Come buy from me,' and that isn't a market.'' Skilling counters that Enron's results speak for themselves. In 2000, its first full year of operation, EnronOnline completed 548,000 transactions with a total value of $336 billion, and its European business posted a threefold increase in power trading and a fourfold gain in gas trading. Enron's trading and risk management business did especially well last year, with revenue up 150 percent and profit up 10 percent, because of wide price swings in California and other markets this past winter. Those swings prompt energy buyers and sellers to try to lock in prices, which Enron does with futures, forwards, and other financial instruments. ``Volatility is what a trader like Enron thrives on,'' said Merrill Lynch's Eassey. Volatility Brings Competitors The volatility also brought in scores of competitors. Last July, six of Enron's biggest rivals, including Duke and El Paso Energy Corp., bought stakes in the Intercontinental Exchange as part of a plan to take business from EnronOnline. Entergy Corp., a New Orleans power company, and Koch Industries Inc., a closely held refiner and gas pipeline owner, formed an energy-trading venture in April. Other companies, including Bloomberg L.P., parent company of Bloomberg News, and BayCorp Holdings Ltd., owner of a New Hampshire utility, have developed electronic marketplaces for energy. Room For Everyone Skilling says there's room for everyone. The total wholesale gas and power market in North America, Europe, and Japan will grow to $1.7 trillion over the next several years from $660 billion today, according to Enron estimates. ``Only about 40 percent of that market has deregulated,'' said Skilling. ``So we still have more than half of the market to go. I think a lot of that will be transacted online.'' While the competition is catching up in the business that Enron pioneered, the company is forging ahead into new opportunities -- such as weather. ``People laugh when they hear about us, and I hate that,'' said Gene Taylor, 30, marketing director of Enron's weather risk management business. ``We've processed 2,000 transactions since 1997 and have been profitable in each of the last three years.'' Weather brokers at other companies say that Enron's claims sound reasonable. This past autumn, for example, an executive at Bombardier Inc., a Montreal aerospace company that also makes snowmobiles, did an Internet search for weather trading and found Enron. Bombardier was offering customers who bought new snowmobiles by October 1 a $1,000 refund if total snowfall in their area was less than half of the average of the prior three years. Bombardier Example Enron collected money from Bombardier for each snowmobile sold and paid premiums in March so Bombardier could refund customers in low-snowfall areas. Enron has doubled, to 26, the size of its weather- trading staff and has tripled, to 9, the number of meteorologists, plucking talent from places like the Weather Channel, to grow the business. Taylor says his analysis of earnings reports reveals that the bottom lines of 45 percent of all publicly traded companies are somehow affected by weather. ``I see no reason why anyone should wear weather risk when they hedge away things like currency fluctuations,'' Taylor said. ``By bringing weather trading online, we have a big opportunity to bring in hundreds of companies and process thousands of weather trades.'' Other major players in this business include Southern Co., Aquila Inc., and Koch Energy Trading. Fiber-Optic Broadband Opportunity Skilling says weather is a sideshow compared with Enron's biggest business opportunity: fiber-optic broadband, the hair-thin glass tubing that transmits data at the speed of light. Until now, telecommunications carriers -- AT&T and Level 3 Communications Inc., among them -- had sold bandwidth in fixed-rate monthly contracts, locking buyers into paying for capacity they didn't always need. Enron can offer customers only as much bandwidth as they need -- and on short notice. In October, for example, Enron signed a three-year pact to manage the fiber-optic needs of i2 Technologies Inc., a Dallas-based Internet software company. Under the deal, terms of which weren't disclosed, Enron will provide i2 with the capacity to link its headquarters with offices in Parsippany, New Jersey; Tokyo; Brussels; and Mumbai and Bangalore, India, on an as-needed basis. Enron will use its own network as well as other, unspecified network providers. Where Profits Will Come From Skilling expects to profit in the broadband business in other ways as well. He hopes Enron's trading system will sell more service through its own network, which covers 18,000 miles -- a small portion of the 200,000 miles of fiber in the U.S. He also expects to make money on the spread between buy and sell prices for the bandwidth, as well as on related activities like risk management. If successful, Enron says, the business could prove to be a gold mine. The global broadband market will expand to as much as $388 billion in 2005 from $155 billion in 2001, Skilling says, and he estimates it could generate $1 billion in annual operating profits in five years. Aggressive Estimates Those estimates are too aggressive, several analysts, consultants, and industry executives say, especially since at least 16 different fiber-optic networks span North America alone, and excess capacity has driven prices down about 75 percent in a year. ``I give them credit for trying to change the market, but they're spreading a lot of misinformation,'' said Chris Lemmer, executive director of broadband trading and risk management at rival Williams Communications Group Inc. in Tulsa, Oklahoma. Lemmer says Skilling is looking at the entire broadband universe -- wholesale, retail, and residential services -- when he projects industry growth. It's unlikely, Lemmer charges, that Enron can get a healthy slice of each of these disparate businesses. Competitors like Lemmer say that Enron isn't being realistic and that its lack of expertise in the business is showing. ``This isn't the gas business, where you can stick pipe in the ground and leave it there for 20 years,'' said Lemmer. ``In this business, infrastructure continually changes, and Enron seems to be ignoring that because it interferes with the propaganda they're trying to spread.'' $36 Billion Value For Business So far, the results don't seem to justify Skilling's $36 billion value for the business. Though Enron says the number of broadband trading transactions in the first quarter of 2001 has risen to 400-500 from just 3 in the same period a year ago, the business isn't yet profitable. In the fourth quarter, the broadband business reported a $32 million loss on revenue of $63 million. ``They really have to post the numbers and show that the broadband business is going somewhere,'' said Commerzbank analyst Meade. Company History A glimpse at company history reveals that Enron doesn't always deliver what it promises. A case in point is the company's October 1998 purchase of Wessex Water Plc of the U.K. for $2.8 billion in cash and assumed debt. Enron officials spoke of the water business in much the same way they now talk about broadband: It's a fragmented international market worth $300 billion a year, and Enron could extend its expertise to this business and win a huge share of that market. Lay tapped Enron vice chairman Rebecca Mark, one of the most prominent women in U.S. business, as chairman and CEO of Azurix Corp., an Enron subsidiary that was supposed to win projects to repair, build, or buy government-owned water systems. Mark cut a distinctive figure in the male-dominated industry, wearing spike heels and miniskirts as she traveled the globe negotiating complex energy projects. Azurix's performance never matched expectations. The company was spun off in an initial public offering at $19 a share in June 1999. The stock rose to a high of $24.25 in August 2000 and then plunged all the way down to $3.38 by October. Executive Quits That prevented Azurix from using its stock for acquisitions as the company had originally planned. Mark quit in August and resigned from Enron's board. An Azurix official says Mark plans to be a private investor in other water businesses. In December, Enron bought back Azurix for $327.5 million, or $8.38 a share. Skilling says he's learned lessons from Enron's struggles, helping him create what he describes as the prototype 21st-century corporation. ``It's part of the learning curve,'' he said. ``I think our legacy will be that we proved you can build a business on intellectual capital, not physical assets.'' A self-described business history buff, Skilling argues that the era of corporate success based on gathering assets is over. He says modern companies that try to emulate J. P. Morgan's assembling of U.S. Steel or Harold Geneen's buying spree to form ITT are making a mistake. Exxon Mobil Merger He cites in particular the 1999 creation of Exxon Mobil Corp. and Daimler-Benz AG's cross-border acquisition of Chrysler Corp. ``Mergers like Exxon/Mobil were good ideas to cut costs, but they'll run out of opportunities, and we won't,'' he said. That's because, he argues, Enron isn't tied to its assets in the same way as a big integrated company. ``If you're stuck with a whole bunch of concrete that you can't move, you're in trouble,'' he said. Only about 20 percent of Enron's $65 billion in assets is tied up in plants and equipment, and Skilling says he's willing to sell anything anytime. Skilling says he'd rather spend money retaining good people, who are easily shifted around to new businesses. ``We're brain-power intensive,'' Skilling said. When Enron created its broadband business, for example, it moved 60 people -- mainly from Enron's energy-trading units -- into the new division in the space of a week. Skilling Not Shy Skilling doesn't shy away from voicing his opinions publicly. In December, he stunned the crowd at Arthur Andersen LLP's annual Energy Symposium in Houston by predicting the demise of Exxon Mobil, an enterprise with $17.7 billion in profit in 2000, and BP Amoco Plc, the third- largest publicly traded oil company. He said that integrated oil companies -- ones that drill for oil and natural gas, transport and refine it, and sell the resulting fuels to consumers -- can't possibly be the low-cost provider and producer in all of their businesses. ``The odds of that are zero,'' he said. ``We have a marketplace now that can provide virtual integration, getting all those components quicker and cheaper. These big companies will topple over from their own weight.'' Soon after that speech, Skilling was promoted to CEO, as Lay stepped aside. Lay, who remains chairman, said the best time for succession to occur was when the company is doing well. Fine Judgments There's always the danger that Skilling will misjudge which industries are ripe for Enron's Internet trading platform and that some of Enron's biggest initiatives, like its much-ballyhooed plans to shake up the broadband business, won't meet their lofty expectations. There are heightened competition and the possibility for unfavorable changes in the regulatory environment to worry about as well. Skilling says his new job and the challenges that come with it won't change too much the way he operates. ``I'll probably have to be a little less blunt,'' he said. For all of Enron's grand plans, that might be this former pipeline company's biggest pipe dream. --Adam Levy in Atlanta (404) 507-1305 or adamlevy@bloomberg.net/kl International World Watch Compiled by David I. Oyama 05/01/2001 The Wall Street Journal A21 (Copyright © 2001, Dow Jones & Company, Inc.) THE AMERICAS BRIEFLY: -- Petroleo Brasileiro will likely pay $240 million for the stake owned by Enron in natural-gas distributor Cia. Distribuidora de Gas do Rio de Janeiro, or CEG, a Petrobras official close to the negotiations said. The Agenda Setting The Agenda Enron's Kenneth Lay on the Energy Crunch By Noah Rothbaum 05/01/2001 SmartMoney 74 © 2001 SmartMoney. All rights reserved. We've all seen what energy deregulation has done to California. Could it happen in your state this summer? We put the question to Kenneth Lay, chairman of Enron, North America's largest marketer of electricity and natural gas. An early supporter of deregulation, Lay has testified before Congress on numerous occasions advocating deregulation. Q. What went wrong in California? A. They didn't deregulate. They tried to, but they never got there. California was halfway in between: The wholesale market was deregulated, but prices for customers were fixed, and fixed in a way that competitors could not compete for customers without losing money. Q. Do you still think deregulation is a good idea? A. We think complete deregulation with consumer choice and competition will result in the lowest prices and the best alternatives for consumers, including a lot of innovations. Q. Are there other deregulated states that may run into problems? A. The New England states aren't nearly as competitive. There is a good chance they will have problems this summer. It could be a power crisis, or their consumers will not end up with the benefits that customers in places like Pennsylvania get. New York will probably be very tight. But it moved very quickly after last summer to buy turbines. I am told they will be generating electricity by this summer, so New York well may avoid a serious problem. Q. Will we see blackouts in other states besides California this summer? A. The most vulnerable area this summer is California. And because of that, other western states will be vulnerable to problems. The West is probably the most interconnected [electricity] reliability area in the country. WIND ENERGY PROJECT 05/01/2001 Caribbean Update Copyright 2001 Gale Group Inc. All rights reserved. COPYRIGHT 2001 Caribbean Update, Inc. In early February, the National Congress approved the decree for the Enron Wind Energy Project to continue to negotiate its power purchase agreement (PPA) with the National Electric Energy Co. (ENEE). President Flores was expected to sign on soon afterwards. Enron is prepared to invest US$75 million in a 60 mw wind generation project. The project would be the first to operate under Honduras' recently approved Renewable Energy Incentives Law, part of a wider effort to expand rural electrification. Street Smart Sector Watch Filling the Generation Gap By Odette Galli 05/01/2001 SmartMoney 32 © 2001 SmartMoney. All rights reserved. These are dark days in Silicon Valley. Literally. Not only are tech companies watching their stock prices race downhill faster than Picabo Street at Lillehammer, they don't even know if the lights will stay on. Take Solectron, the world's largest contract-electronics manufacturer. Rolling blackouts ordered by California's desperate utilities cut off power to seven of the company's buildings for two hours in January, costing "in the neighborhood of a handful of millions of dollars," in the careful phrasing of spokesman Kevin Whalen. It's enough to make a company think about getting off the grid. And some are. The Silicon Valley Manufacturing Group, whose members include industry heavyweights Cisco, Intel and Exodus, is reviewing options for self-generation, also called distributed generation. Known to the cognoscenti simply as "DG," distributed-generation technologies include microturbines (small-scale generators), fuel cells (which generate electricity with an electrochemical reaction) and flywheels, which store kinetic energy within a rapidly spinning wheel. And while it appears to be a drastic move even for power-hungry companies, DG offers tantalizing possibilities to investors who can stomach the risk of an emerging technology. One thing's for sure -- the energy shortage isn't going away. The U.S. power grid is facing an alarming supply and demand imbalance. According to Scott Sitzer, an economist at the Energy Information Administration, U.S. consumption of electricity increased at a 2.2 percent annual rate between 1990 and 1999, while capacity rose just 0.8 percent a year. For the next 20 years, the agency forecasts demand growth of 1.8 percent per year, which will require at least 410,000 megawatts of additional capacity to satisfy. But only 40,000 megawatts worth of power plants have been approved for construction over the next five years, according to John Hammerschmidt, portfolio manager and energy analyst at the top-performing mutual fund company Turner Investment Partners. And supply isn't the only problem -- quality matters too. Even a one-second interruption in power can wreak havoc on data centers, which require 24/7 reliability. "The U.S. baseload power grid can only offer three nines reliability, or 99.9 percent, which means in one year you'll be down an average of eight hours," says Hammerschmidt. "The digital economy can't take blips; it needs to get up to six nines." So it's easy to see why DG could be a hot growth area. "Over the next 10 to 15 years, DG could become 10 to 20 percent of U.S. generating capacity," says Bernie Ziemianek, director of distributed resources at the Electric Power Research Institute, a Palo Alto, Calif.-based R&D firm. Hammerschmidt agrees. He launched the Turner Energy & Power Technology fund on Mar. 1. "There are 126 IPOs on the shelf in this area," he says. "This is going to be a very, very hot investable area, providing great returns over the next several years." These volatile stocks are not for the faint-hearted. Having been caught up in the tech frenzy of last year, many have crashed to sobering levels with the Nasdaq. Most are losing money. But Hammerschmidt doesn't see a dot-com-style bubble for DG. "I don't think they will get hyped to ridiculous valuation levels," he says, "because they're competing against the cost of a kilowatt-hour." One of his favorites is Active Power (ACPW, $18), which is down 77 percent from its 52-week high. Active is a leader in flywheel technology, which Hammerschmidt sees as better than batteries for backup before a generator kicks in, which can take seven or eight seconds. Unlike batteries, "which need to be replaced . . . flywheels need no maintenance and basically last forever," he says. He also likes the fact that Active has a marketing agreement with Caterpillar, the No. 1 manufacturer of diesel generators. "So when you buy a [generator] from CAT, they'll try to sell you a flywheel," he explains. "The numbers are staggering when you look at all the [generators] now hooked up to batteries." Hammerschmidt owns 750,000 shares, or about 2 percent of the company, across the Turner funds, and he expects Active to turn a profit by the third quarter of 2002. David Smith, who recently launched coverage of several power-technology stocks at Salomon Smith Barney, likes Capstone Turbine (CPST, $23.88), which is off 76 percent from its high. "They already have commercial products out in the market, so they have a first-mover advantage. They are technologically more advanced than any others out there, and the timing is right," Smith says. Indeed, Capstone just opened a subsidiary in California. Soon after, Harza Energy, a Chicago-based engineering and energy-consulting firm, announced its intention to purchase 2,000 Capstone microturbines for the Association of California Water Agencies. Quinten Nufer, the power-tech analyst at UBS Warburg, rates FuelCell Energy (FCEL, $47.50), down 56 percent from its high, a strong buy. Nufer says FuelCell's molten-carbonate cell is more efficient than competing products, and he likes the fact that the company has customers, including DaimlerChrysler and the Los Angeles Department of Water and Power. And Nufer is pleased that FuelCell has a partner in Enron, which has agreed to place a large order in exchange for warrants to purchase 9 percent of the company. "FuelCell's commercialization is upon us," Nufer says. "They'll start shipping units in May, right around the time we have power outages this summer, and you watch, we will." Performance data from 12/14/00 to 3/5/01. Source: Dow Jones Interactive COMPANIES & FINANCE UK: Scot Power eyes Enron utility Financial Times; May 1, 2001 By ANDREW TAYLOR Scottish Power is in talks with Enron, the US energy group, about buying its Oregon-based electricity utility Portland General. The Enron subsidiary supplies most of Portland's electricity. Talks are at an early stage and a deal is not thought to be imminent. Scottish Power bought PacifiCorp electricity group, which has its headquarters in Portland, in a deal worth Pounds 3.86bn in 1999. Scottish Power declined to confirm that it was in negotiations with Enron. The group's shares slipped 1 3/4p yesterday to 445p. A previous attempt by Enron to sell Portland to Sierra Pacific Resources broke down after the Nevada-based utility ran into power shortage problems on the US west coast. Andrew Taylor Copyright: The Financial Times Limited Business ScottishPower in talks to buy Portland utility 05/01/2001 The Independent - London FOREIGN 19 (Copyright 2001 Independent Newspapers (UK) Limited) SCOTTISH POWER has held talks with Enron about buying its Oregon- based power utility Portland General, which industry sources said would be a good geographic fit for the group's existing US arm, PacifiCorp. "It's an obvious one and, yes, there have been discussions," said one source, speaking after the official breakdown last week of Enron's talks to sell Portland to a Nevada-based utility, Sierra Pacific Resources. PacifiCorp operates in six US states including Oregon, and has its headquarters in Portland, the state's largest city. Sierra, a utility holding company, had been preparing to pay about $2bn (pounds 1.4bn) for Portland and assume $1bn in debt. But the deal ran into trouble as the US West Coast power crisis unfolded earlier this year, and talks were officially called off on Thursday. Reports that ScottishPower might step in for Portland's 700,000 customer base and 2,000 megawatts of generating capacity surfaced at the weekend. PacifiCorp faces its own power crisis fallout, including $1m-a-day buying- in costs resulting from the failure of one of its generators. The problems have helped depress ScottishPower's share price, and it has underperformed the sector by 5 per cent over the past two years. Yesterday, ScottishPower was tightlipped. "We do not comment on market speculation," a spokesman said. ScottishPower's shares fell 1.75p to 445p. Scottish Pwr FY00 Income Seen Dn On US, Regulatory Woes By Andrea Chipman Of DOW JONES NEWSWIRES 05/01/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -(Dow Jones)- Scottish Power Plc's (SPI) earnings for the 2000 fiscal year are expected to be significantly lower than the previous year due to punishing costs from a U.S. generator's outtage and a strict price control regime for its regulated businesses. A survey of five analysts by Dow Jones Newswires produced a consensus estimate for Scottish Power's full-year pretax profit before exceptional items, goodwill and amortization, of GBP647 million, compared with GBP736 million in fiscal 1999. Individual pretax profit forecasts for the year ended March 31 varied from GBP569 million to GBP685 million. Analysts said the wide range was due to Scottish Power's decision last year to move to a different accounting system, and consequent disagreement over how much tax the company will report. Analysts predicted the company, slated to issue results Thursday, will have adjusted earnings per share of GBP30 pence. Those interviewed said they are hoping for a progress report on the status of the Utah-based Hunter power plant, owned by Scottish Power's Pacificorp unit, which has been out of operation since November at a cost of $1 million a day. Market participants said they are eager to know the extent to which Scottish Power is recovering its costs through the regulatory process, and to learn more about the company's plans in the U.S. A British newspaper reported this week that the U.K. utility is considering bidding for Enron Corp.'s (ENE) Oregon-based utility Portland General. "Most of the focus is going to be on the States," said Bruce Bromley, a utilities analyst at Credit Lyonnais in London. "We need clarity. We haven't had very much news flow, and we want to know what's happening with Hunter." The analysts also said they are hoping for strong statements from Scottish Power on its plans for telecommunications unit Thus Plc (U.THS) - whose shares have languished recently - and Southern Water. Thus Tuesday reported a 2000 fiscal year loss before interest, taxation, depreciation and amortization of GBP21.4 million. Scottish Power has said it's considering various options for the water unit, including a sale. Company Web site: http://www.scottishpower.com -By Andrea Chipman, Dow Jones Newswires; 44-207-842-9259; andrea.chipman@dowjones.com City briefing 05/01/2001 The Guardian Copyright (C) 2001 The Guardian; Source: World Reporter (TM) Help sought from drug firms Gordon Brown is to press pharmaceuticals companies to help tackle HIV, Aids, malaria and tuberculosis by agreeing to cut prices and carry out more research on infectious diseases in poor countries. The chancellor and Clare Short, the development minister, are to meet with multilateral organisations as well as some of the world's wealthiest charitable foundations in New York today to elicit support for the fund. Details of the total raised, expected to be in the region of Dollars 3bn-Dollars 4bn, could be released as early as June at a special meeting on Aids hosted by the United Nations. 'We call upon pharmaceutical companies to respond,' said Mr Brown. Scottish Power finds US target Scottish Power has been holding talks in the US about a possible Dollars 3bn ( pounds 2bn) takeover of Portland Power. Discussions with Portland's parent, Enron, followed the collapse of negotiations last week to sell Portland to Sierra Pacific Resources. The Glasgow-based utility has made no secret of its desire to expand across the Atlantic following its successful purchase of PacifiCorp and the opportunities for post-merger cost-savings. Sources confirmed talks between Enron and Scottish Power had taken place but the British company declined to comment on what it described as 'market speculation'. Pupils learn to work with water 05/01/2001 The Northern Echo 11 Copyright (C) 2001 The Northern Echo; Source: World Reporter (TM) STUDENTS have plunged themselves into a new GNVQ science course thanks to help from Enron, on Teesside. About 60 pupils from Keldholme School, Middlesbrough, visited the Wilton International site of Enron to see water filtration in action in an industrial environment. Working in groups of ten, the students tackled a project to clean river water using standard school equipment. They visited Enron's water treatment plant, where performance manager Gordon Harris and quality control chemist Clive Gallagher demonstrated various filtration techniques. Mr Harris said: "We showed them how to filter water and analyse samples in the laboratory and then toured the site to look at the large industrial sand filter units in operation. "We also showed them how we backwash the filters to clean and reuse the sand." The students were also told about the other utilities and services provided by Enron and given an outline of the type of career opportunities available across the Wilton International site. Business Home Depot, UPS chiefs ranked among America's 50 best CEOs BUSINESS PRESS Tom Walker STAFF 05/01/2001 The Atlanta Constitution Home E.4 (Copyright, The Atlanta Journal and Constitution - 2001) James Kelly of United Parcel Service, and Robert Nardelli, who joined Home Depot in December, rank 24th and 31st, respectively, on this year's "50 best CEOs" list compiled by Worth (May) magazine. The magazine describes the top 50 as "business leaders with the foresight, judgment and competitive juice to make their investors happy." The top five are Steve Ballmer of Microsoft; Jeffrey Skilling, Enron; Philip Purcell, Morgan Stanley; James Morgan, Applied Materials; and Margaret Whitman, Ebay. The wealth effect myth The value of common stocks has plummeted, but consumers keep on spending. What gives? Not the consumer's willingness to spend, says Forbes (May 14), since most people don't worry about their stock holdings when shopping. This seems to contradict the "wealth effect," or the concept that rising stock prices buoy consumer spirits and prompt them to save less from ordinary income and spend more, even if the money is borrowed. But Forbes cites research by the New York Federal Reserve Bank showing that temporary fluctuations in stock values "have virtually no impact on consumption." The researchers say that consumers distinguish between "permanent wealth," such as bank savings, and "transitory wealth," such as stocks whose value can erode. Return of the IPOs IPO almost became a dirty word last year when investors who put their money in initial public offerings watched as their shares plunged. But Business Week (May 7) sees a revival of the IPO market. "After a long, harsh winter, signs of IPO life seem to be popping up like crocuses in spring," the magazine says. "There's the pending $5 billion Kraft Foods offering, a deal by Prudential Insurance to raise $3.9 billion, and the announcement of plans by Accenture, the former Andersen Consulting, to move ahead with a $1 billion offering." But don't be fooled, says Business Week. "This season's bloom isn't anything like the good old days, when the IPO of anything.com could be counted on to rocket upward. Now the IPO market is dominated by old-line traditional companies that, for the most part, have size, brand name recognition and most importantly, profits." The latest Barron's (April 30) also gauges the health of the IPO market. Worth mentioning ... Many strategists scoff at seasonality, or the idea that stocks perform in certain recurring patterns. But Mutual Funds (May) says this strategy would have beaten the market in the past 20 years. Example: Buy three trading days before a holiday - -- the market typically has a short-term rally right after a holiday. Inc. Magazine (May 15) says scores of companies are discovering the potential of inner-city markets. The magazine for entrepreneurs says inner cities "are hotbeds of activity for minority- and women-owned companies, with (success) rates far above the national average." Henry McKinnell - Pfizer, Roger Joslin - State Farm, Other Top CEOs to Highlight New ``Win-Win'' Corporate Strategies in Low-Income Communities 05/01/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--May 1, 2001-- Unprecedented Report from the Ford Foundation to be Released Audio Conference at 11 AM (EST) on May 8, 2001 Speak with Henry McKinnell (Pfizer) and Roger Joslin (State Farm), and business experts Michael Porter (Harvard Business School) and Carl Stern (Boston Consulting Group), just a few of the CEOs who are featured in a first-ever Ford Foundation report highlighting a new economic trend: "Win-Win: Competitive Advantage Through Community Investment," in an audio press briefing on Tuesday, May 8, 2001 at 11 AM EST. The CEOs will discuss innovative business strategies companies are using to achieve bottom-line benefits from their investments in inner-city and low-income communities. They will explain how these strategies helped them address business problems in areas such as employee recruitment and retention, the development of untapped markets, purchasing of quality goods and services, and building brands. The Ford Foundation will announce the report's findings and its impact on corporate strategies in these communities. A Question-Answer period will follow the presentation. The Ford Foundation's report, "Win-Win: Competitive Advantage Through Community Investment," chronicles a new trend: Major corporations, many of them Fortune 500, leveraging their investments in inner-city and low-income communities to impact their bottom-line while also creating economic opportunities in these communities. Companies featured in the report include Dell, DreamWorks, Enron, Sears, Target, Bank of America, and many others. The Ford Foundation, one of the largest philanthropic institutions in the world, launched the $30 million Corporate Involvement Initiative in 1996 to encourage corporate-community alliances that produce win-win scenarios. The "Win-Win" report is a product of this initiative. Media Briefing to Unveil Ford Foundation "Win-Win" Report WHO: Henry McKinnell, CEO, Pfizer Roger Joslin, Chairman, State Farm J.W. Marriott Jr., Chairman and CEO, Marriott International Bruce Nordstrom, Chairman, Nordstrom Carmen Castillo, CEO, Superior Design International Jerry Shroat, CEO, Personal Lines Property, Travelers Insurance Richard Hartnack, Vice Chairman, Union Bank of California Michael Porter, C. Roland Christensen Professor of Business Administration, Harvard Business School Carl Stern, CEO, Boston Consulting Group Melvin Oliver, Vice President, Ford Foundation Michele Kahane, Program Officer, Ford Foundation WHEN: May 8, 2001 -- 11 AM Eastern Standard Time DIAL-IN NUMBER: For dial-in number and access code, please call 310/575-9200. CONTACT: Laufer Green Isaac Judith S. Lederman, 310/575-9200 or 800/575-3263 Judy@lauferpr.com 06:02 EDT MAY 1, 2001 Arkansas Today 05/01/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. Blytheville plant to close, affecting 100 workers BLYTHEVILLE, Ark. (AP) - A plant related to the steel industry announced Monday it would close its operation in Blytheville, putting 100 employees out of work. Huntco Inc., an intermediate steel processor, said the plant would close in 60 days. The company said it has an agreement to sell the cold rolling and coil pickling plant to Houston-based Enron Industrial Markets as part of a larger transaction. "We plan to permanently suspend our cold rolling and pickling operations whether or not the transactions with Enron are ultimately consummated," said Robert Marischen, president and CEO of Huntco, based in Town & Country, Mo. He said the move would benefit Huntco and its shareholders, as well as its remaining workers. "Notwithstanding this, we regret the impact that this closure may have in the near term on our workforce in Blytheville," Marischen said. The company expects to meet open sales commitments over the next two weeks. Limited operations will be conducted thereafter until shutdown. Affected workers will be paid through the next 60 days. Huntco Inc. is an intermediate steel processor, specializing in processing flat rolled carbon steel. Indian Lenders to Enron Unit Ask Govt to Pay Bill, Paper Says 2001-05-01 00:18 (New York) New Delhi, May 1 (Bloomberg) -- Indian financial institutions that loaned money to Enron Corp.'s local unit asked the federal government to honor guarantees and pay dues owed by a provincial utility, Business Standard reported, citing a letter to the finance ministry. The Maharashtra State Electricity Board, or MSEB, has refused to pay bills of 3 billion rupees ($64 million) owed to Dabhol Power Co., saying they are too high. The $3 billion unit of the world's largest energy trader has invoked counter-guarantees, or guarantees by the federal government, against the non-payment. The lenders have demanded that the federal government pay the 1.02 billion rupee bill for December 2000 to help prevent Dabhol filing for insolvency, the paper said. Last week, Dabhol's board authorized the company to issue a termination notice to its sole customer, the MSEB. That may include a declaration of bankruptcy, the paper said. Dabhol has borrowed about $2 billion from lenders, including ABN Amro Holding NV, to build the 740-megawatt capacity plant. The rupee portion of the loan doesn't carry a repayment guarantee from the government. Dabhol is 65 percent owned by Enron. (Business Standard, 5/1, p.1) --Nabeel Mohideen in the New Delhi newsroom (91-11) 334-8807 or at nmohideen@bloomberg.net/apj INDIA: Indian state to renegotiate Enron project-paper. 05/01/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, May 1 (Reuters) - India's Maharashtra state, seeking to defuse a payments row with Enron Corp's Dabhol Power Co, has set up a group to explore restructuring the troubled power project, a financial daily said on Tuesday. The negotiating group, to be headed by former bureaucrat Madhav Godbole, will look at cutting power tariffs as well as third-party sales if the utility cannot absorb power generated by Dabhol's 740 MW plant, the Business Standard newspaper said. Dabhol Power Co - 65 percent owned by Enron - is embroiled in a bitter payments dispute with Maharashtra and faces a cash crunch as the Maharashtra State Electricity Board (MSEB) has defaulted on payments worth 2.26 billion rupees ($48.3 million). Houston-based Enron, India's single largest foreign investor, is setting up a $2.9 billion, 2,184 MW power project in the western Maharashtra state. The project's 740 MW first phase is in operation while the 1,444 MW second phase is expected to be commissioned later this year. The newspaper also said Indian term-lenders to Dabhol had written to the federal government asking it to honour its counter-guarantee and pay 1.02 billion rupees owed to Dabhol by MSEB for power bought in December. The domestic lenders, led by the Industrial Development Bank of India, want the government to step in save the banks from posting "irreparable losses" if Enron walked out of the project, the newspaper said. Last week, Enron's board of directors gave Dabhol's managing director permission to seek to end the contract at any time. Dabhol owes money for power bought in December and January. Last month, MSEB paid 1.34 billion rupees for power bought in March. The newspaper said the terms of reference for Godbole's group includes talks with Dabhol on separation of the LNG facility from the power project and whether power could be sold to federal government-owned distribution companies. The group is to submit its report within a month. ($1=46.8 rupees). INDIA: PRESS DIGEST - Indian newspapers - May 1. 05/01/2001 Reuters English News Service (C) Reuters Limited 2001. Following is a summary of major Indian business and political stories in leading newspapers prepared for REUTERS by Business Databases Pvt Ltd, New Delhi. Tel:+91-11-3312051/84/86 Fax:+91-11-3351006. Reuters has not verified these stories and does not vouch for their accuracy. Business Standard INSTITUTIONS ASK GOVERNMENT TO DEFUSE DABHOL CRISIS Indian lenders to the Enron-promoted Dabhol Power Company (DPC) have asked the government to honour its counterguarantee to end the impasse over the project. Financial institutions have asked the government to immediately step in to defuse the crisis and save them irreparable losses if Enron walks out of the project. This is possibly the first instance of onshore lenders moving the finance ministry to save a project. Enron amenable to reworking power pact with MSEB Girish Kuber 05/01/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) MUMBAI US energy major Enron has shown willingness to renegotiate the power purchase agreement with the Maharashtra State Electricity Board, accoding to state government officials. Meanwhile, the Madhav Godbole panel has been asked to negotiate with Dabhol Power Company for the separation of its LNG facility. Enron, though the state government yet to communicate to them about the renegotiating panel officially, has informally expressed its willingness for renegotiations, a senior official from the states administration informed ET on Monday. We have some informal channels of communication and they are still alive despite the public rhetoric, he said. However, when contacted, Enron officials refused to react to the proposed renegotiation. Meanwhile, the state government has asked the Godbole panel to negotiate with DPC to restructure the project including separation of LNG facility, to bring down the tariff and all other related aspects. The state government on Monday announced the formation of the renegotiating panel. The panel has been given a months time to finish its task. It will negotiate with DPC for direct sale of surplus power, not needed by MSEB, to third parties including the Government of India or their agencies. The panel will invite DPC formally for discussion very soon, say sources. As reported by ET on April 28, the Madhav Godbole committee has been entrusted the responsibility of renegotiating the Enron deal. The other members of the panel are Deepak Parikh, RK Pachauri, Dr EAS Sarma, Kirit Parikh, Central governments nominee, states energy secretary Vinay Mohan Lal, finance secretary SK Srivastav, chairman MSEB Vinay Bansal and the chairman of the central electricity authority. The Infrastructure Development Finance Company will be assisting the panel. The most important task before the panel will be to delink the LNG facility created by Enron from the DPC to bring the project cost down. The Godbole panel has blamed Enron for clubbing around $500m, the cost of LNG facility, with the project cost and recommended the separation of two. The LNG facility, which is part of the second phase (1,444 mw) of DPC, includes a receiving terminal, storage tanks and a re-gassification plant. The construction of the facility is almost complete and the first delivery of LNG is expected by the end of 01. The receiving terminal would create infrastructure to enable the supply of 130,000 cubic meters of natural gas by LNG tankers. BRIEFING - ASIA ENERGY - MAY 1, 2001 05/01/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. An executive briefing on energy for May 1, 2001, prepared by Asia Pulse (http://www.asiapulse.com), the real-time, Asia-based wire with exclusive news, commercial intelligence and business opportunities. ENRON OF THE US NOT INTERESTED IN COMPLETION OF INDIAN PROJECT MUMBAI - India's Enron-backed Dabhol Power Company (DPC) said it is "not interested" in completing the US$3 billion power project in India's western state of Maharashtra, following non-payment of dues by the state electricity board (MSEB) and the federal government's refusal to honour the Rs 1.02 billion counter-guarantee. In DPC's board meeting in London on April 25, Enron India managing director K Wade Cline and DPC president Neil McGregor made it clear that they were "not very keen to complete the project, because management felt that both the state government and the the federal government were undermining the gravity of the situation," a senior state government official who attended the meeting told PTI. CHAMBER CHIEF CALLS FOR PRIVATISATION OF INDIA'S POWER SECTOR REFORMS NEW DELHI - Confederation of Indian Industry (CII) has demanded 'depoliticisation' of power sector reforms to 'enthuse and encourage' private investment even as it said that the Enron controversy would not impact future investments in the sector. "We need to depoliticise tariff fixation and set up a strong and independent regulator without interference from state governments," Sanjeev Goenka, President, CII told PTI. (C) Asia Pulse Pte Ltd. NCS seeks strategic alliances with Indian firms Satya Prakash Singh 05/01/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) BANGALORE: A new era of technology collaboration is dawning between India and Singapore. A series of meetings between Union IT minister Pramod Mahajan and his Singaporean counterpart, Yeo Cheow Tong, has ushered in a fresh paradigm in the relationship between the two countries. "Made in India and showcased in Singapore," seems to be the new maxim. In order to take this new 'thinking' forward, National Computer Systems (NCS), a leading Singapore-headquartered systems and network integrator, is scouting for Indian partners to form strategic alliances to address the booming Asian services market. This initiative is expected to kick-start the 'Asian Ecosystem' - to steamroll the new economy. In this connection, NCS chief K.C. Lee is in India to meet prospective technology companies for such partnerships. He will be meeting a few key infotech companies located in Bangalore, New Delhi and Mumbai. ``The objective of these strategic alliances will be to leverage the technical skills of the Indian companies and then showcasing the combined offerings in Singapore,'' Lee said. He says NCS, a part of the reputed Singapore Telecom, on its part will bring in its expertise in the areas of banking, finance, infrastructure and e-governance, besides the marketing activities. The idea is to use Singapore as a test care point and roll out the offerings that are made in India. According to Lee, India has a strong brand name in IT services and Singapore offers a better marketing platform, and the proposed alliances offer a win-win situation to both. Once this model is successful in Asia, NCS plans to extend it to Europe and USA. ``Nothing stops us from going to Europe and the US.'' Lee added. In India over the last two-and-a-half years, NCS has executed a few key projects in the areas of banking, finance, large corporates and service providers. These include HDFC bank, ICICI Bank, Epson, ISPs like SpectraNet, and even an Internet Data Centre for Enron among others. Under the ambitious `Singapore 2001' project, the whole island-nation was networked with an efficent connectivity infrastructure. NCS is also keen on exceuting e-governance projects in India. Despite the sloth seen among state governments to implement e-governance initiaves, Lee says that he is patient and not giving up hope. ``With the state governments asked to apportion definite resources, we may see some e-governance-related projects being initiated,'' Lee pointed out. He feels that although most of the government departments have some elementary computerisation in place, they still need to develop strong back-end operations __ integrating several arms of the government.
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