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Future of Kyoto Protocol Minus U.S. Is Uncertain
The Wall Street Journal, 07/16/01 As the shakeout proceeds, some business-to-business marketplaces show their staying power. The New York Times, 07/16/01 Municipal power firms cleaned up / Public producers charged state far more than private The San Francisco Chronicle, 07/16/01 Enron's Lay Visit Fails To End India Dabhol Woes Dow Jones International News, 07/16/01 INDIA'S NTPC WILL NOT BUY ENRON STAKE IN DAHBOL POWER: GOVERNMENT Asia Pulse, 07/16/01 INDIA PRESS: Min Rules Out NTPC Buying Out Dabhol Power Dow Jones Asian Equities Report, 07/16/01 INDIA PRESS: Dabhol Needs $500M To Restart Construction Dow Jones Asian Equities Report, 07/16/01 ITALIAN PRESS: Montedison Seeking Help In Takeover Defense Dow Jones International News, 07/16/01 San Jose Mercury News, Calif., Stocks.comment Column KRTBN Knight-Ridder Tribune Business News: San Jose Mercury News - California, 07/16/01 Innogy's pounds 300m power-trading lift The Independent - London, 07/15/01 Finalise terms of reference for Enron probe in 8 days:Munde Press Trust of India Limited, 07/15/01 Karl Rove, President's Focus Engineer, Finds Self in Spotlight; Eyes of Bush Critics Turn to Key Adviser If the Message Blurs The Washington Post, 07/15/01 8 firms plan building vast interstate gas pipelines / But energy experts say other states could tap into supply first The San Francisco Chronicle, 07/15/01 Sale withdrawal raises Mitie hopes The Times of London, 07/15/01 Future of Kyoto Protocol Minus U.S. Is Uncertain By John J. Fialka and Geoff Winestock Staff Reporters of The Wall Street Journal 07/16/2001 The Wall Street Journal A2 (Copyright © 2001, Dow Jones & Company, Inc.) Diplomats from around the world gather in Bonn starting today to address a seminal question: Will there be a Kyoto protocol on global warming without the U.S., or none at all? The key player in answering that question appears to be Japan, whose position may well determine whether other industrialized nations move ahead despite the Bush administration's vigorous opposition. The Kyoto protocol will be the central issue at a United Nations convention, which initially was intended to complete the pact after talks in The Hague broke down in November over relatively minor differences between the European Union and the U.S. Since then, however, President Bush rejected the treaty as "fatally flawed," throwing its future into doubt. The protocol, brokered by former Vice President Al Gore in 1997 and later signed by former President Clinton, requires industrial nations to reduce their emissions of carbon dioxide and five other gases thought to be warming the planet by 5.2% below 1990 levels. The Bush administration wants an alternative that is less punishing on the energy-intense U.S. economy, and that imposes tougher requirements on China, India and other fast-developing nations. President Bush on Friday announced a series of steps to reduce the impact of heat-trapping gases, in lieu of the Kyoto protocol. The president unveiled a $120 million National Aeronautics and Space Administration project to study climate modeling, among other things. The Department of Energy, meanwhile, has signed two agreements to study carbon levels, and the White House also awarded $25 million in grants for similar studies elsewhere. Finally, the Department of Treasury started a $14 million forest-conservation program in El Salvador. Still, the U.S. turnabout on Kyoto continues to shock Europe, and European leaders vow to go it alone. "To wait for the U.S. is to wait for someone who has refused your invitation," European environment commissioner Margot Wallstrom said this week. But under the terms of the protocol, the Europeans need ratifications from industrial nations that emit 55% of the developed world's "greenhouse" gases, and European nati ons don't account for that level of reductions themselves. Reaching that amount without the U.S. isn't possible without the support of Russia and Japan. Japan's position is most up in the air, and it accounts for 8% of total emissions. Japan's environmental minister, Yoriko Kawaguchi, paid a series of last-minute calls on U.S. cabinet officials on Friday. Japanese officials want the Kyoto protocol to come into force, but they appear reluctant to take a position against the Bush administration. To push its case, the EU has spent the past two weeks trying to build a constituency around the world to put the protocol into effect, a move that would allow key provisions to acquire legal force, such as an international emissions-trading system and penalties for noncompliance. Ms. Wallstrom visited Asia and Australia last week, and British Deputy Prime Minister John Prescott was in Tokyo on Thursday. The EU strategy has been to offer to make it easier for these wavering countries to sign up. For example, the EU was previously reluctant to allow "sinks" such as forests, which soak up carbon dioxide and hence reduce net emissions of greenhouse gases, to be counted toward national targets for emission reductions. But in a bid to win support from key countries, especially Japan, it is now offering more flexibility on sinks. Paula J. Dobriansky, an undersecretary of state who will lead the U.S. delegation, said the U.S. will not block other nations that want to pursue the protocol, but it will intervene in Bonn if the talks affect other U.S. interests. "We plan to be very active and constructive in that regard." The Bush administration is still studying alternatives to the treaty. Meanwhile, U.S. companies are divided on the protocol. Eileen Claussen, head of the private nonpartisan Pew Center on Climate Change, has formed a group of 36 major companies that includes DuPont Co., Enron Corp., Weyerhaeuser Co. and Boeing Co., to argue for action on global warming. While they don't agree on every aspect of the Kyoto formula, she explains, "they all want to get this process started in a way that spreads out the pain but gets something done." Meanwhile, the Global Climate Coalition, whose membership includes the U.S. mining industry, the National Association of Manufacturers and other large industrial trade associations, supports the Bush antitreaty stance. Taking more time to discuss the protocol, says Glenn Kelly, its executive director, "will continue the Kyoto quagmire and allow diplomats to continue to collect frequent-flier miles." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business/Financial Desk; Section C E-Commerce Report As the shakeout proceeds, some business-to-business marketplaces show their staying power. By Bob Tedeschi 07/16/2001 The New York Times Page 4, Column 1 c. 2001 New York Times Company EARLIER this year, Forrester Research, the Internet consulting firm, predicted that the universe of business-to-business e-marketplaces would shrink to a mere 180 in the next two years, from 1,000 or more today. It was a bleak forecast, but one that surprised few who had watched such sites search in vain for customers in 2000. The shakeout is proceeding apace, with the rate of mergers and failures picking up where the consumer e-commerce sector left off. But just as some survivors have begun to emerge from the consumer e-commerce rubble, so, too, have some of the so-called B2B marketplaces started to show some staying power. In recent weeks, Pantellos, an online marketplace for the utilities industry, said it had handled nearly $200 million of transactions since it rolled out in January. ChemConnect, an online chemicals exchange, recently crossed the $1 billion mark in transactions handled so far this year. Intercontinental Exchange, a trading site for electric power, gas and oil, said it had handled more than $100 billion in trades in the 10 months since it opened. These companies and a handful of others, analysts said, have managed to attract buyers and sellers by broadening their service features beyond the typical marketplace site, which heretofore had focused mainly on the concerns of buyers. ''While buyers have run to this fairly quickly, suppliers haven't,'' said Matthew Sanders, a Forrester analyst. Most of the business-to-business marketplaces, Mr. Sanders said, were created with the premise that if a corps of powerful buyers in a given market gathered on one site, the suppliers would come running -- even if that meant the suppliers had to engage in auctions in which they underbid one another for the right to sell their wares. ''But attributes that go beyond price, like quality, service, the stability of the brand, warranties -- all the things suppliers build around their products -- marketplaces haven't allowed them to offer,'' Mr. Sanders said. ChemConnect, for one, has countered that trend, said Michele B. Hincks, the company's vice president for marketing. Ms. Hincks said the site had set up an online exchange floor, where 5,000 to 7,000 companies negotiate to buy and sell specialized chemical products. The site lists companies that are interested in buying or selling certain types of chemicals, and then sets them up in password-protected negotiation rooms, where they can deal with such issues as product quality, warranties, shipping and price. In exchange for enabling such negotiations, Ms. Hincks said, ChemConnect charges annual subscription fees of $300 to more than $100,000. According to a recent report by Gartner's GartnerG2, a business strategy research firm, e-marketplaces will broaden their offerings even further in the coming months, to rely on a wider spectrum of business services, like supply-chain collaboration and demand forecasting. In the case of e-Steel, such services now dominate the company's business plan. Michael S. Levin, e-Steel's chief executive, said that about a year ago, the company changed its focus from a typical e-marketplace to that of a software seller that also operates an online marketplace for heavy industries. Companies like Ford Motor and BHP, the Australian miner, Mr. Levin said, ''told us in their own way that enabling a transaction online is interesting, but insufficient, and that we had to do more than that for them to become clients.'' So e-Steel developed software that the companies now use to help integrate their manufacturing processes with those of their suppliers, using the Web. Among other things, the software permits Ford to track and manage the manufacturing steps that begin when it orders steel from a supplier. The software helps Ford move the steel to plants for processing, while accounting for the different specifications for rolling the steel, stamping it, and moving it to various processors and assembly plants. Mr. Levin would not say how many clients e-Steel had for the software, which costs each customer millions of dollars a year and requires multiyear contracts. Nor would he disclose revenue figures for the company, which is privately held. But he said the company had ''two years' worth of money in the bank, and way before that, probably within 15 months, we'll be cash-flow positive.'' As for the site's marketplace, Mr. Levin said it still had value, ''but only as part of a much more powerful set of tools'' and for serving as a place for attracting prospective software clients. Analysts and executives also pointed to the role of experienced -- and independent -- management for whatever success some e-marketplaces had experienced so far. Lauren Jones Shu, research director at GartnerG2, said those were not advantages shared by many of the so-called industry consortium marketplaces, which are owned by a collection of the major participants in a given industry. E-marketplaces like Covisint and Exostar, which are owned by some of the biggest companies in the automotive and aerospace industries, respectively, are examples of consortium-owned sites. But Ms. Shu declined to say whether she thought the ownership structure of those particular sites was a handicap. Still, Ms. Shu said, ''a lot of them have agendas that are too large, and are trying to cater to the various needs of different members.'' Apparently, at least one e-marketplace owned by an industry group, Pantellos, has avoided paralyzing its management. Pantellos, an online exchange that is owned by 21 large utility companies, was cited by Mr. Sanders, the Forrester analyst, as one of the few e-marketplaces to find success this year. The site caters to utility companies and energy service companies like General Electric, helping utilities and power companies build and manage power plants, for example, and offering a forum for suppliers of those services to compete for business. The business is growing quickly, said Graham Collins, the company's chief executive. ''Virtually all of our operating metrics are doubling every two weeks,'' he said. Mr. Collins attributed that growth, in large part, to the fact that the 21 companies with ownership stakes in Pantellos did not have a direct say in how it operated. ''That's allowed us to stay focused on the interests of our memberships, not the parochial interests of the shareholders,'' he said. ''There's nothing more mind-numbing than to attend meetings where you have to vote on whether or not you should vote.'' Luck, of course, has played a role in the early success of some online exchanges -- perhaps most notably in the success of Intercontinental Exchange, which in April announced it would buy Europe's largest offline energy exchange, the International Petroleum Exchange. Jeffrey Sprecher, chief executive of Intercontinental Exchange, based in Atlanta, said the core of the site's technology was refined between 1994 and 1997. But at that time, Mr. Sprecher said, ''absolutely no one'' in the electric power, gas and oil markets wanted to trade in the forward and futures markets online. ''Everybody thought they were already getting the best prices,'' he said, and they feared that posting prices on the Web would destroy that competitive advantage. Then in October 1999, Enron started buying and selling these products online, ''and the whole argument about pricing went away,'' Mr. Sprecher said. Shortly thereafter, he offered equity in his site to 13 market makers, like BP and Goldman Sachs, in exchange for commitments to use the site for trading. ''I got lucky in that I built this before the Internet revolution,'' Mr. Sprecher said. ''The last year's been amazing, compared to the early years, which involved a lot of sitting around.'' Photo: The Dofasco steel company is an investor in e-Steel and one of its ''strategic customers.'' Employees at the Dofasco operations in Hamilton, Ontario, bind a roll of automotive steel in preparation for shipping. (Taras Kovaliv) Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS Municipal power firms cleaned up / Public producers charged state far more than private Mark Martin, Lynda Gledhill Chronicle Staff Writers 07/16/2001 The San Francisco Chronicle FINAL A.1 (Copyright 2001) From the start of the state's energy meltdown, Gov. Gray Davis and many lawmakers have cast private out-of-state energy companies -- especially those in Texas -- as pirates plundering California's economy. But a Chronicle analysis found that some of the most expensive megawatts California bought during the bleak winter months actually came from what many would consider to be sympathetic traders -- publicly owned power producers. The Chronicle study of spot market purchases shows that as a whole, public agencies in California and elsewhere charged an average of about $344 per megawatt hour during the first three months of the year, while private companies charged less than $250. More than 80 percent of the power sold by public agencies was above the $269 per megawatt hour average that California paid all power providers. Less than a third of the power from private companies exceeded that average. "I think anybody who ripped off the state ought to be investigated," said Harvey Rosenfield, head of the consumer group Foundation for Taxpayer and Consumer Rights. "A publicly owned utility shouldn't be prospering from this crisis. And those munis that did ought to immediately forfeit any excessive profits." Yet, like with everything in the power crisis, not everything is always as it appears, and public utility officials say they're hardly to blame for the sky-high electricity prices. Interviews with operators of publicly owned power providers paint a picture of state Department of Water Resources electricity buyers sometimes so desperate to avert rolling blackouts that they didn't haggle over price. "DWR called us and said we're looking for power at $500 a megawatt hour for a seven-hour period," said Kate Hora, a spokeswoman for the Modesto Irrigation District, which delivers power to 95,000 customers in the Central Valley. "There was no negotiation. We just helped them out at the price they named." Pete Garris, chief of operations for the DWR department in charge of buying and selling power, said something like that would not have been typical. MUNIS PROVIDE 'RELIABLE ENERGY' "I could see offering $500 per megawatt hour when the market was trading at $650," he said. "One thing munis do for the most part is provide reliable energy. If they say they are going to deliver so many megawatts, they are going to deliver." But that reliability can be expensive. Much of the public power was hydroelectric from the Pacific Northwest, usually delivered at expensive peak demand hours. And municipal agencies say they were forced to press into operation old, inefficient generators. "(State officials) would call and say, 'We need the energy,' " said Ignacio Troncoso, director of public service for Glendale Water and Power. "We didn't really want to give it to them because it meant using some very inefficient turbines, but they said they needed it. Sometimes, it cost $1,000 or $2,000 per megawatt hour, but they paid it." S. David Freeman, Davis' top energy adviser, said the state bought a relatively small percentage of its power from municipal utilities, and it was at a time when the state was getting nearly all of its electricity in the volatile spot market. 20% FROM PUBLIC AGENCIES About 20 percent of the power purchased by California in the first quarter of 2001 came from publicly owned agencies in the United States, Canada or Mexico. "You have to consider the volume," said Freeman, whose hiring in April was controversial because he headed the Los Angeles Department of Water and Power. Los Angeles charged California on average $292 per megawatt hour for power. Before he joined the state in April, Freeman said Los Angeles' rates were based on cost plus 15 percent. "I don't say we're angels, but we're being neighborly," he said then. "We're not giving you a cup of sugar, we're selling it, but not at exorbitant prices." Like Los Angeles, Canada's publicly owned BC Hydro sold more than 800,000 megawatts to the state in the first three months of the year at above-average costs. Spokeswoman Elisha Odowichuk said the utility's rates to California were higher because of delivery costs. But the utility made enough money to give their Canadian customers a $130 rebate. DAVIS WANTS $8.9 BILLION BACK Davis has demanded $8.9 billion in refunds for electricity prices the state says were excessive. The state estimates that it is owed about $600 million from the municipals, Michael Kahn, chairman of the board of the Independent System Operator, said last week. The state is hoping that the Federal Energy Regulatory Commission will order private providers to issue refunds. But the commission has no jurisdiction over municipal utilities. At least one offer was put on the table by municipal utilities and is under consideration, said Steve Maviglio, spokesman for Davis. If no deal is reached, the state is prepared to go to court, he said. "Anybody who is on the list of price gougers, we intend to seek refunds from," he said. WHY PUBLIC POWER COST MORE Energy experts suggested several reasons why public power may have cost the state more than electricity offered by Enron, Duke and other private companies. The state probably bought most public power during peak usage hours in the evening or during days when rolling blackouts loomed, said Severin Borenstein, a professor with the University of California's Energy Institute in Berkeley. That's how the Modesto Irrigation District briefly got into the business of selling power to the state. The district sold 175 megawatts to California on Feb. 13 for $500 per megawatt hour. The district bought power from an Oregon utility for $375 per megawatt hour and delivered it to the state from 1 to 7 p.m. during a Stage 3 power alert. The state avoided blackouts that day. Seattle City Light earned on average the most per megawatt hour of any public utility, getting a price of $634. But an official there also said there were no negotiations with the state. The utility had a contract to deliver electricity to 35 Nordstrom stores in California. State power grid officials determined that the stores weren't using all the power and then snapped up the excess for what is referred to as the clearing price: the highest price paid for electricity during that hour. SEATTLE'S CHARGES DEFENDED But Seattle isn't rolling in money because of its dealings with California. The utility has raised rates three times this year, spokesman Dan Williams said. Modesto's and Seattle's experiences are probably similar to other public utilities, said Michael Shames of the Utilities Consumer Action Network, based in San Diego. "The munis did make a profit," he said. "But there's no evidence that Los Angeles or any other city made the same kind of sky-high profits that the Dukes of the world did. We haven't seen any municipal utility officials taking expensive vacations because of the crisis." Shames suggested that public utilities' high rates may not have been as high as private companies' offers. "When they (state energy officials) got really tight, the private companies were probably offering to sell at exorbitant prices," he said. STATE WAS NO CHARITY CASE Still, several publicly owned agencies acknowledge that they didn't treat the state Department of Water Resources as a charity case. When the state was desperate for megawatts, Burbank officials would look for power on the open market and sell it to the state if they could make a 10 percent profit to cover such things as administrative expenses, said Fred Fletcher, assistant general manager of the utility. Sacramento Municipal Utility District did the same, a spokesman said. Fletcher scoffed at any charge that municipal utilities owe California a refund. "It's insulting to ask for any money back. We weren't part of the problem, and we helped the state in a crisis," he said. "And it's not like we're doing well." Glendale residents face a 10 percent increase in electricity rates beginning this month, and Burbank ratepayers will see their power bills rise 17 percent beginning this month. ----------------------------------------------------------- CHART: The cost of power for California Some of the most expensive megawatts that California purchased on behalf of financially troubled utilities at the height of the energy crisis came from publicly owned power generators. The average price paid during the first three months of the year exceeded the prices paid to private power companies. Name MWh Average price City of Seattle, City Light Department 3,870 $634.17 Modesto Irrigation District 175 $500.00 Powerex (trading arm of BC Hydro) 804,302 $497.87 Tacoma Power 5,889 $475.43 Eugene Water & Electric Board 151,850 $432.37 Grant County PUD (Washington) 91,209 $348.18 Sacramento Municipal Utility District 47,555 $330.34 City of Glendale 27,325 $326.99 Bonneville Power Administration 461,144 $304.64 Los Angeles Dept. of Water & Power 805,479 $292.28 Silicon Valley Power (City of Santa Clara) 400 $290.00 City of Burbank 28,940 $273.13 MSR Public Power Agency (Modesto) 65 $255.00 Turlock Irrigation District 10,675 $237.31 California Dept. of Water Resources 287,454 $205.25 Commission de Federale Electricidad(x) 50,752 $192.91 City of Riverside 330 $190.00 Northern California Power Agency 27,172 $186.87 East Bay Municipal Utility District 1,424 $173.00 Salt River Project (Arizona) 80,076 $169.17 City of Vernon 22,145 $161.67 City of Anaheim 33,532 $152.60 Megawatts used from public agencies 2,941,763 $343.67 MWh Average price Total megawatts used from private sources 9,943,224 $246.79 Total megawatts purchased from all sources 12,884,987 $268.90 (x) Mexico Source: California Department of Water Resources, Chronicle research Chronicle Graphic PHOTO, CHART: SEE END OF TEXT Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron's Lay Visit Fails To End India Dabhol Woes By Himendra Kumar Of DOW JONES NEWSWIRES 07/16/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- U.S energy major Enron Corp. (ENE) Chairman Kenneth Lay met with India's leadership last week in an effort to resume operations of the company's local power plant, saying the project's future looked good. Yet, to analysts and the project's lenders, there is still no end in sight to the problems of Dabhol Power Co., Enron's India subsidiary. Dumped by its sole buyer, the Maharashtra State Electricity Board over unaffordable tariffs, the 740 megawatt Dabhol power plant in the western Indian state of Maharashtra remains shut since May 29. Work on an 85% complete 1,444 MW Dabhol phase II project - due to start operations later this year - has also stopped as funds from lenders dried up. Enron has so far, turned down a government proposal for lower tariffs which analysts say could end the stalemate. "The lenders feel the DPC should start renegotiating the power purchase agreement so that phase I can be restarted at the earliest," said R.S. Agarwal, executive director of Industrial Development Bank of India (P.IDB), one of the main lenders to the Dabhol project. The Indians have lent $1.4 billion out of the project's $2.9 billion total projected cost. IDBI's own exposure is in the excess of 20 billion rupees ($1=INR47.16) and the bank runs the risk of going deep into the red if the project goes bust. Dabhol is India's single largest foreign investment to date. R.K. Pachauri, director of an independent think tank Tata Energy Research Institute said: "Enron has to go ahead and just renegotiate its power purchase agreement with MSEB and cut tariffs, as far as the project's phase I is concerned. As regards phase II, it needs to talk to interested parties like power deficit states and keep tariffs at competitive levels. Delays are not going to help anyone. Action needs to be taken quickly." Lay indicated that the Houston-based energy major was considering easing its stance. "I did not want to leave the country this time without reaffirming my interest in, and support for India, and my strong belief that there is a great potential in this country," he said before flying back to the U.S. "I hope that we will be able to find a resolution to this (Dabhol) problem that allows us all to move forward and realize that potential," he added. The Indian government on its part, says, it thinks the dispute is between a seller and buyer of electricity. The project is guaranteed by the federal government. "Dabhol needs to sort out its differences over payments with MSEB before the government can settle any claims of Enron," said a senior Indian Power Ministry official. Dabhol has come under fire because of the relatively high cost of its power. Critics object to Dabhol charging 7.1 Indian rupees a kilowatt-hour for its power, compared with INR1.5/kwh charged by other domestic suppliers. The project has been in trouble since December when the government of Maharahtra state said the company charged exorbitant prices for electricity, and demanded a new price agreement. Enron did not bow on the call, the situation deteriorated and phase I eventually ceased operations in late May. Enron has a controlling 65% stake in DPC. Other shareholders include the MSEB with 15% and General Electric Co.(GE) with Bechtel Corp.(X.BTL) with 10% each. DPC sent MSEB a preliminary termination notice in May and if no common ground is reached, phase I could close down for good within six months from the notice. A London arbitration court would then rule which of the two sides defaulted on the contract for compensation purposes. -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA'S NTPC WILL NOT BUY ENRON STAKE IN DAHBOL POWER: GOVERNMENT 07/16/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, July 16 Asia Pulse - The federal government has ruled out the possibility of the National Thermal Power Corporation (NTPC) buying out US energy giant Enron's stake in the controversial Dabhol Power Company (DPC). Federal Power Minister Suresh Prabhu said this during the meeting with Enron Chairman Kenneth Lay, who was here last week to discuss the fate of the US$3 billionr project, which is embroiled in a payment controversy with Maharashtra State Electricity Board (MSEB), government sources said. The Enron team, led by Lay, discussed several options, including an exit route in which the government takes over the beleaguered US$3 billion Dabhol power project. Though exact details of the meeting were not forthcoming, sources familiar with the discussions said that the government takeover could possibly be done through NTPC or a Special Purpose Vehicle (SPV) involving NTPC taking over the plant and selling power to the national grid. Enron, which holds 65 per cent interest in DPC, is scouting for Indian companies who can take over its equity worth over US$800 million. Ruling out the option, Prabhu had pointed out that there was no question of NTPC buying Enron's stake in DPC saying, "The NTPC was not in the business of taking over sick companies." Enron's Indian unit, Dabhol Power Co., and state utility Maharashtra State Electricity Board, have been locked in a wrangle for more than six months over payments. In May, Enron issued a preliminary termination notice after MSEB defaulted on payments, and the utility, Dabhol's lone buyer, stopped taking power from the embattled US$2.9 billion plant. (PTI) 16-07 1851 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA PRESS: Min Rules Out NTPC Buying Out Dabhol Power 07/16/2001 Dow Jones Asian Equities Report (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Indian Power Minister Suresh Prabhu has ruled out the possibility of the state-owned power utility National Thermal Power Corp. (P.NTP) buying out Dabhol Power Co., the controversial Enron-controlled $2.9 billion power project in the western Indian state of Maharashtra, reports The Financial Express. The newspaper report says Prabhu communicated this to Enron Corp. (ENE) Chairman Kenneth Lay during their meeting last week in New Delhi. Enron owns a 65% stake in DPC. The Dabhol project is the largest single foreign investment in India to date. Phase 1 is capable of producing 740 megawatt electricity. However the power plant isn't in operation because its sole buyer, the Maharashtra State Electricity Board, stopped drawing power since May 29 over what it called "unaffordable tariffs." Work on 1,444 MW Dabhol Phase 2 was suspended June 17 following nonpayment of its bills by DPC to its contractors. Website: http//www.financialexpress.com -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA PRESS: Dabhol Needs $500M To Restart Construction 07/16/2001 Dow Jones Asian Equities Report (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Dabhol Power Co., an Indian unit of U.S. energy major Enron Corp. (ENE), will need to raise $500 million to restart construction on the 1,444 megawatt Dabhol plant phase II, reports the Financial Express. DPC is incurring a loss of at least half a million dollars a day after the construction work on Dabhol phase II was suspended June 17 following nonpayment of its bills by DPC to its contractors, the report says. At $2.9 billion, Dabhol is the largest single foreign investment into India to date. Enron owns a controlling 65% stake in DPC located in the western Indian state of Maharashtra. Dabhol Phase I is capable of producing 740 megawatt electricity. However the power plant is currently not in operation because its sole buyer, the Maharashtra State Electricity Board, stopped drawing power since May 29 over what it called "unaffordable tariffs." Newspaper Web site: http//www.financialexpress.com -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com -0- 16/07/01 04-00G Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. ITALIAN PRESS: Montedison Seeking Help In Takeover Defense 07/16/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) MILAN -(Dow Jones)- Montedison SpA (I.MNT) is preparing its defense of a Fiat SpA (FIA)-led takeover bid and is planning on calling on the Benetton family or Luxottica SpA (LUX) as partners, Il Sole 24 Ore reported at the weekend. A U.S. industrial partner, such as AEP (AEPI), Enron (ENE), Entergy (ETR), Aes (AES) or Mirant (MIR) could also aid in a defense strategy, the paper says. Newspaper Web site: http://www.ilsole24ore.com -Milan Bureau, Dow Jones Newswires; 39 02 7601 5386 -0- 16/07/01 07-51G Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. San Jose Mercury News, Calif., Stocks.comment Column Scott Herhold 07/16/2001 KRTBN Knight-Ridder Tribune Business News: San Jose Mercury News - California Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) When Calpine (CPN) was selling for around $37 last fall, I suggested it might be worth considering because it had been unfairly battered by political winds. It's since gone up, back down, and back up again, finishing Friday at $44.53. So now might be the time to take a look at its longer-term prospects. Looking several years out, it's worth listening to the skeptics -- and to how Calpine responds to them. The gentle breezes of doubt -- and it has to do with an England acquisition, of all things -- come from an organization called CreditSights (www.creditsights.com), which analyzes companies with bondholders in mind. Because Calpine has issued so many bonds to finance its expansion, what the bondholders think makes a difference. No other company in Silicon Valley -- not even Cisco, not anymore -- has quite the scope of ambition of Calpine (CPN), the independent power generator with offices in downtown San Jose. If you live in the valley, you may know the company best for its gritty -- and now apparently successful -- fight to establish a power plant off Metcalf Road in San Jose. If you live in California, you may know about its intricate dance with PG&E over whether they would be paid for $266 million of unpaid bills. But these are only a few glimmers in the klieg lights of its ambitions. Not everyone is singing hosannahs. A recent report by CreditSights analyst Dot Matthews was a good-news, bad-news review of Calpine. First, in a development she said was "probably most important," she hailed the recent agreement with PG&E that would allow Calpine to collect the $266 million owed to it. The market has greeted this news with acclaim, sending up Calpine's stock by about $7 a share -- or about 20 percent -- since the news of the agreement broke early this month. But in CreditSights' view, another piece of news from Calpine was unsettling: The announcement that the company was paying $800 million to acquire the new 1,200-megawatt Saltend power plant near Hull, England, its first overseas acquisition. "This is disappointing for two reasons," Matthews wrote. "First, the plant is in Englandwhich is a difficult place for American companies to make money in power production distribution. Second, we are starting to see a pattern develop where Calpine appears to be buying plants that other savvy players don't seem to want. We are concerned that Calpine may be expanding at any price so it can keep up the earnings growth that fuels its stock quote." The CreditSights report went on to note that both Enron and Entergy (ETR), which built the Saltend plant, are selling generation facilities -- and that there is no shortage of power in England. So what is Calpine's response? I talked with Calpine senior vice-president Ron Walter, who says the acquisition of Saltend -- a state-of-the-art gas-fired plant -- is part of a long-term plan to expand outside the continental United States and Canada. (Calpine has said it's also looking at possibly expanding in Italy and Spain). "The growth (in England) is certainly not what the growth is in this country," Walter said. "But because of the unique nature of this plant, we feel it's going to do extremely well in this marketplace." Walter points out that Enron, a heavy trader of energy, has a very different business plan than Calpine, which has stayed a manufacturer. And he says that Entergy wanted cash out of its Saltend plant. And to the charge of expanding too fast? Walter insists -- with justification -- that Calpine has demonstrated nimbleness today in building 29 power plants at once. "We spend all our time looking at each market, at the age of plants, and what the competition is doing," he said. "We pick the targets that make sense." It's a good response, and investors who have stayed with Calpine have been amply rewarded. The stock has gone up 22-fold since its IPO nearly five years ago. But it's hard to dismiss all doubt. History teaches that an empire inevitably gets harder to manage the more far-flung it is. Remember, the Romans ultimately had trouble doing business in England, too. Scott Herhold's Stocks.comment appears every Monday and Thursday. Write him at the San Jose Mercury News, 750 Ridder Park Drive, San Jose, Calif. 95190; e-mail sherhold@sjmercury.com; phone (408) 920-5877.To read the columns online, see www.siliconvalley.com/opinion/herhold/b Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business Innogy's pounds 300m power-trading lift BEN ROSIER 07/15/2001 The Independent - London FINAL 1 (Copyright 2001 Independent Newspapers (UK) Limited) Innogy, the domestic electricity business which demerged from International Power, can expect a boost of up to 500 million euros (about pounds 300m) over the next three years by exploiting the emerging power-trading business. The figure is based on calculations by analysts at Schroder Salomon Smith Barney (SSSB), who say utility businesses such as Enron have used the practice in the US market. They say European firms such as Innogy and PowerGen, which is in the process of being bought by E.ON of Germany, could follow Enron's lead. Power trading is the sale of electricity as a commodity - a market that has developed over the past decade and was given greater impetus in the UK when the New Electricity Trading Arrangements (NETAs) were introduced in March this year. The NETA system is a wholesale market which allows companies to balance their books when they trade power. Electricity can be bought and sold according to a variety of factors, such as how it is generated and when it is used. Utility companies can use power trading to better manage their price risks, for example by buying gas-generated electricity on the market if the costs of generating their own energy from other sources is too high. As well as speculating on future prices, companies can generate additional revenues by selling risk-management services to smaller utilities and other firms. SSSB believes traded volumes of electricity in the UK will eventually be five times the actual consumption of the country. It says Innogy, which owns the retail business npower, is slightly ahead of PowerGen in the power-trading market. "Companies can use [power trading] as a clever way to add value to their existing assets," said Daniel Martin, a utilities analyst at SSSB. "If they are successful, I can see 500 million euros, potentially more, added to their value." But he said the utility firms will have to be more transparent in telling the City how much they raise from power-trading activities if they want to see the benefits on their stock prices. Brian Senior, director of trading and asset management at Innogy, said: "[Power trading] is helping us extract maximum value from our asset base, and is also a source of extra revenues. "We are looking at the possibility of moving into continental Europe." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Finalise terms of reference for Enron probe in 8 days:Munde 07/15/2001 Press Trust of India Limited © 2001 PTI Ltd. Mumbai, Jul 15 (PTI) Bharatiya Janata Party (BJP) national vice-president Gopinath Munde Sunday demanded that the terms of reference for the judicial inquiry appointed by the government of western state of Maharashtra into the Enron controversy should be finalised within eight days instead of one month. Addressing a press conference here, Munde demanded that the government announce the terms of reference during the monsoon session of the state legislature. Demanding that the final report of the judicial probe be submitted within three months, he urged the ruling Congress and the NCP not to "politicise" the issue. The leader of the oppostion in the state assembly, Narayan Rane, alleged that by merely instituting a judicial probe without declaring the terms of reference, Chief Minister Vilasrao Deshmukh was "taking his allies for a ride". Deshmukh had announced a judicial probe into various aspects of the power purchase agreement signed between US energy major's Dabhol Power Company and state electricity board (MSEB) on July 11. The terms and reference of the probe would be decided by co-ordination committee of the Democratic Front government within a month, he had announced. (THROUGH ASIA PULSE) 15-07 2001 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. A Section Karl Rove, President's Focus Engineer, Finds Self in Spotlight; Eyes of Bush Critics Turn to Key Adviser If the Message Blurs Dana Milbank Washington Post Staff Writer 07/15/2001 The Washington Post FINAL A04 Copyright 2001, The Washington Post Co. All Rights Reserved Karl Rove, the political brain who brought President Bush to the White House, is all about focus. "You really have to focus," he would say during the presidential campaign. Now, as Bush's senior adviser, he says his biggest worry for the administration is "losing focus." So why is it that Rove's name is often the one mentioned these days when the White House message is blurry? Last week, Rove popped up in the context of an arrangement between the White House and the Salvation Army over a regulation the charity sought to exempt it from workplace bias laws based on sexual orientation. Before that, Rove attracted attention for his role in the Bush decision to suspend Navy practice bombing on the Puerto Rican island of Vieques in what was seen as a bid to appeal to Hispanic voters. Then there was the episode in which Rove participated in policy discussions that could have affected Enron Corp. and Intel Corp., two companies in which he has substantial holdings. Rove has become a lightning rod for critics of the administration, turning up when there's a controversial matter the White House would rather avoid. When Sen. James M. Jeffords (Vt.) quit the Republican Party, Rove's pressure tactics came into question. In discussions over stem cell research, Rove has been present, voicing worries that federally funded research using human embryos would cost Bush antiabortion Roman Catholic voters. In everything from judicial appointments to policy toward Sudan, Rove has made his presence known. Why the bull's-eye on Rove's forehead? Partly, it's because Rove, by choice, is involved in most everything the White House does. It's also because he's a political adviser rather than a seasoned government official, so his actions, regardless of motive, seem tainted to some outsiders. Liberals are eager to demonize him because he is the White House's principal liaison to conservative interests. And Rove, for his part, enjoys a larger-than-life reputation and seems to relish combat. The embarrassments that have come from Rove's actions demonstrate the pitfalls of having a political strategist in a dominant position in a White House. But Rove's omnipresence also gives the president assets that, Bush allies say, have made the Bush presidency successful. Rove ensures that the president keeps the crucial backing of his conservative base. "He's the one conservatives feel comfortable in calling and feel that when they air their concerns they're speaking to a guy who understands their language," said Ken Connor of the conservative Family Research Council. Rove's White House colleagues say the senior adviser is merely doing his job by working with constituencies. "It's a completely bogus rap," Bush's deputy counselor, Daniel Bartlett, said of the Rove criticisms. "It's part of Karl's core responsibility to speak with these outside groups." Some former Clinton administration hands said Rove, 50, is making matters worse by involving himself so visibly in so many issues. "When you're in the middle of a new administration and come to town, you have a big blue-dot target painted on your back," said James Carville, Bill Clinton's top strategist in 1992. "It seems Karl has tried to paint his orange. He seems to sort of welcome the fire." Former Clinton staff chief John D. Podesta said that while Carville did not take a job in the Clinton White House, Rove is applying the anything-goes rules of politics to governing. "You've got a White House political director who seems to have enormous influence on issues of life and death, like stem cells," Podesta said. "His range of authority is over things normally done by the chief of staff or the national security adviser." But Bush's outside strategists said keeping a political animal in his inner circle is the president's source of strength. GOP operative Ralph Reed said Clinton would have been better off putting Carville in the White House. "When the senior political strategist to an incoming administration is pushed to the periphery, it often has devastating consequences," Reed said. "Had Lee Atwater lived and had the role in the first Bush White House that Karl Rove has in this administration, I personally believe that administration would have had a better shot at reelection." Last week's Salvation Army flap shows the pitfalls of having a top political adviser like Rove so heavily involved in policymaking, but it also shows how Rove has been able to secure for Bush the crucial support of the GOP right during his first six months. Congressional staffers said they heard two different messages coming from the White House over the faith-based initiative. John J. DiIulio Jr. and his White House Office of Faith-Based and Community Initiatives, they said, was seeking to build a consensus among lawmakers, including Democrats. The legislation retained the 1996 "charitable choice" law's prohibition on proselytizing, while requiring groups to make any religious activity "voluntary" and "separate from the program funded." That change impressed Rep. Barney Frank (D-Mass.). "They did write it in very strong language that says you cannot use this money to do anything religious," he said. But some conservatives balked at the change, arguing that charities would be even more restricted than under the 1996 law. "What's sad about it is Bush is laying out the principles very well, but the details belie the principles," said Marvin Olasky, an original architect of Bush's proposal who has become an opponent. "This makes it worse, makes it more difficult for any evangelical or conservative Catholic or Jewish group to be involved." While DiIulio irked some conservatives, another group of White House officials, including Rove, sought to please the right by pushing the measure through the House even as it stalled in the Senate. This infuriated Democrats. "It's been very clear that on the one hand John DiIulio and his staff want to get a bill done and are reaching out to Democrats to reach consensus," a Democratic aide said. "On the other hand, the White House legislative strategy does not seem to reflect that kind of cooperative spirit." But conservatives were soothed. Michael Horowitz, a scholar with the conservative Hudson Institute who opposes the faith-based initiative because he says it would dilute churches' spirituality, said DiIulio's office has "the worst strategic judgment." But Rove has compensated for that. "What the White House badly needed was somebody to keep in touch with its conservative base," Horowitz said. "Karl Rove anchors them to his base and he's superb at that. His sympathy for the conservative base is extraordinary." The Salvation Army sought to benefit from that sympathy when a lobbyist it hired who was friendly with Rove asked the senior adviser for help. Rove asked the Office of Management and Budget to look into the request. The White House rejected the proposal last week when the request, and claims from the Salvation Army of a "firm commitment" to act on it, became public. As it turns out, House Republicans, working with several White House officials, had already made changes to the House legislation two weeks ago that gave the Salvation Army most of what it wanted: protection from cities' domestic partnership benefit requirements. This protection comes in a provision allowing all grant programs covered under the faith bill to be turned into vouchers. "Indirect assistance through vouchers rather than a city contract would spare the [Salvation] Army and other religious groups the burden of the domestic partner benefits," said Ira Lupu, a George Washington University law professor. House Democrats also argue that the law indirectly allows gay hiring discrimination in a provision that says a religious organization will be free from state and local interference in the "definition, development, practice, and expression of its religious belief." Democrats have been muted in their complaints about such provisions. But there was no such restraint when it came to Rove's involvement in the initiative, particularly over the Salvation Army flap. Terence McAuliffe, the Democratic National Committee chairman, fired off a statement demanding Rove "come clean." Wrote McAuliffe: "The White House is arrogantly evading questions about its backroom deals, and hiding the part played by Bush's top aides." Mary Matalin, a senior Bush aide, said McAuliffe cannot argue with the legislation on the merits so is using Rove as a target. "It's his inability to engage on issues," she said. "For Terry to succeed, they need to create villains. They had Newt Gingrich, Ken Starr and Tom DeLay, and now they're trying Karl -- and it's not going to work." http://www.washingtonpost.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS 8 firms plan building vast interstate gas pipelines / But energy experts say other states could tap into supply first Bernadette Tansey Chronicle Staff Writer 07/15/2001 The San Francisco Chronicle FINAL A.1 (Copyright 2001) Six months after Californians were stunned to find their winter heating bills soaring by hundreds of dollars, energy companies are moving ahead with plans to build pipelines into the state that could lead to a flood of cheaper natural gas and give consumers a break. At least eight companies have proposals in the works to build interstate pipelines, running thousands of miles, from gas fields in Canada, the Rocky Mountains and the Southwestern United States to California. "The California economy is very strong, and it's going to continue to grow and expand," said Jim Macias of Calpine Corp., which is developing plans for a pipeline that would run from the Southwest to a terminal in Antioch. "We have adequate pipeline capacity for today, but we have to build capacity for the future." The prospect of vastly increased pipeline space for natural gas, coupled with a building boom in California of gas-powered electricity plants, could head off crises such as the one that beset the state last winter. As the weather turned cold, tight space on gas pipelines meant big heating bills for customers and huge debts for utilities and the state that had to buy electricity produced by gas-fired plants. INSURANCE AGAINST BLACKOUTS Gov. Gray Davis has touted the brace of new plants as California's insurance against blackout threats and price increases. Just in the past month, Davis has thrown the ceremonial switches on three new power plants in California, all of which run on natural gas. "California is building its way to total energy self- sufficiency," Davis said Monday at opening ceremonies for Calpine's Los Medanos Energy Center in Pittsburg. But there's a risk to putting so many eggs in one basket, say some industry experts. California's rush to construct the new gas turbines -- at least 16 will come online by 2004 -- is being repeated across the nation by states equally attracted by the environmental benefits and potential cost savings of gas. Those states will want to tap into pipelines being built across their territory for their own needs, said Joe Benneche, a forecasting expert with the U.S. Energy Department. Coastal states such as California and Florida might not get their fill from the leftovers. "They are at the end of the line," Benneche said. "It does make them more vulnerable." And even as they welcome the added megawatts from new power plants, some California officials are wary of hitching the state's energy future to market players that have interests in both natural gas and electricity. "These are horizontally integrated companies that are deciding every day based on arbitrage spreads whether they are going to sell a megawatt or a molecule of gas," said Loretta Lynch, president of the state Public Utilities Commission. STUDYING GAS PRICE HISTORY At the state's urging, federal officials are looking into why gas prices at the California border leaped last winter to levels as much as 10 times the national average. State regulators have accused El Paso Corp., a Texas energy firm, of restricting gas shipments through its pipeline into the state to raise prices -- something El Paso denies. Generators said the price run-ups for gas justified equally huge increases in the price of electricity they sold to the utilities and, later, the state. And even as blackouts loomed, some firms like El Paso upheld their right to divert fuel from generators and sell the gas instead if the price was right. Lynch said the state needs to come up with better ways to prevent companies from manipulating the price of gas, to increase inventories and to promote competition so prices stay under control. Even some industry officials are urging caution over the rush to natural gas as the fuel source for as much as 90 percent of the country's new generation. "It makes sense to maintain a balanced portfolio," said Neil Brown, a spokesman for PSEG Power, a Newark, N.J., firm investing in both natural gas- and coal-powered plants. "One of the reasons California did experience problems was its reliance on gas and hydroelectric power. Disruptions in both those sources contributed to supply problems." Although geological research indicates that North American gas reserves should be adequate for 50 to 70 years, that doesn't protect individual regions from temporary shortages that can cause devastating price spikes, said Benneche, the Energy Department forecaster. The key to preventing those shortages is to build enough pipelines on time to meet the need, he said. WAIT-AND-SEE ATTITUDE Although energy firms, including Enron, El Paso and Sempra Energy, are talking about a range of projects to supplement the five major interstate lines into California, only two pipelines so far have received final approval or have been completed, said Bill Wood, a gas expert for the state Energy Commission. Some companies will wait and see what demand looks like before making a final decision on whether to build, he said. "They don't want to overbuild," Wood said. "You only get paid for what you use." But maintaining extra capacity for use by competing gas marketers is essential to hold down prices, Wood said. Otherwise, he said, a limited number of marketers holding pipeline space can jack up rates. Taking a cautious approach, Pacific Gas and Electric Corp.'s gas transmission affiliate pipeline has applied to expand its capacity from Canadian gas fields to the Oregon border by about 10 percent. Most of that will probably be siphoned off by new gas-fired plants in Washington and Oregon, Wood said. But the rising demand is attracting new players aside from traditional pipeline companies operating in California. San Jose's Calpine sees a robust-enough market to invest in its own pipeline project, if only to fuel the 12,000 megawatts of gas-fired generating capacity the company plans to build in California by 2005. "We're making a big investment in gas-fired plants in California," Macias said. "So we better be darned sure there's going to be an adequate supply that can be transported at a reasonable price." CHART; Caption: Chronicle Graphic Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business Sale withdrawal raises Mitie hopes Nick Hasell 07/14/2001 The Times of London News International Final 2 45 (Copyright Times Newspapers Ltd, 2001) THE sudden withdrawal of a large sell order stoked hopes that Mitie Group will emerge with an upbeat trading statement when it reports full-year figures on July 23. Shares in the maintenance and building services group have fallen from 190p last December, despite optimism that the company will benefit from pledges of increased Government spending on schools and hospitals, some of its biggest clients. Mitie also has a strong record of earnings growth, and gave a positive presentation to analysts in its recent year-end briefing. That meant Mitie followers were relieved yesterday after an unnamed broker unexpectedly pulled an overhanging sell order. The shares rallied 8 1/2p in response to close at 142 1/2p. The FTSE 250 faded 5.1 points at 6,163.8. Tour operators suffered on a first-half profit warning from Switzerland's Kuoni, which complained of problems in Scandinavia. Airtours, the biggest player in the region, lost 25 1/2p at 240p. First Choice Holidays fell 6p to 140p. Incepta, the public relations agency that issued a cautious annual meeting statement last week, gave up 2 1/2p to 51p as UBS Warburg moved from "buy" to "hold". Richard Nichols, finance director, has bought 20,000 shares at 53p. Hopes of a bullish update from SIG lifted shares in the building materials distributor a further 4p to 224 1/2p. However, some dealers are sceptical, suggesting that the company may have suffered from a slowdown in UK commercial property and a weak German construction market. Half-year figures are due on September 3. Miller Fisher, the loss adjuster that terminated talks on a possible offer in April, tumbled 2 1/4p to 7 1/2p. Numis Securities has a sell recommendation on the shares with an 8p price target, and expresses concern at a recent client defection. Mettoni Group, the AIM-listed provider of call centre technology, recovered 5 1/2p at 40 1/2p as the company reassured that first-half pre-tax profits would be in line with expectations. The shares fell sharply on Thursday on what dealers described as a badly-executed sell order. Paladin Resources was the most active small-cap market after HSBC Securities placed the 20 per cent stake held by Enron, the US energy group. Enron bought into the independent oil producer at 27p in 1998, and sold its 41 million shares yesterday at 44p. With the overhang out of the way, Paladin improved 4 1/2p at 49p. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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