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NORWAY: INTERVIEW-Danish wind firm Vestas to expand into Europe, US.
Reuters English News Service, 04/18/01 USA: Bandwidth trade struggles to gain footing. Reuters English News Service, 04/18/01 BRAZIL: INTERVIEW-BG claims Brazil pipeline war victory. Reuters English News Service, 04/18/01 Enron India Sends Arbitration Notices To State Govt Dow Jones International News, 04/18/01 Enron may sell some Brazil assets - SAmerica chairman AFX News, 04/18/01 NORWAY: INTERVIEW-Danish wind firm Vestas to expand into Europe, US. By Birgitte Dyrekilde 04/18/2001 Reuters English News Service (C) Reuters Limited 2001. RINGKOEBING, West Denmark, April 18 (Reuters) - Danish wind turbine maker Vestas Wind Systems said on Wednesday it was heading for expansion in Europe and the U.S and expects to regain lost terrain in the world`s largest wind power market Germany. "We see our market share in Germany rising to 16-20 percent this year after last year`s drop by three percentage points to 13 percent," Vestas Chief Executive Johannes Poulsen told Reuters in an interview at the company`s headquarters in Ringkoebing, West Denmark. Last year Vestas - including its associated company Spanish Gamesa Eolica - increased its market share to 32 percent of the world market from 29 percent in 1999, cementing its position as the world`s leading wind turbine maker ahead of German Enercon and Danish NEG Micon . According to Danish windpower consultancy BTM Germany installed 1,665 megawatts of wind capacity in 2000 followed by Spain`s 1,024 MW while installed capacity worldwide rose 15 percent to 4,495 MW. "We regard growth in the German market as stable in coming years and expect growth to continue in Spain," Poulsen said. To meet the German wind turbine demand Vestas said it would build a turbine blade factory in either Germany, Poland or Hungary, with a final decision on which country to be announced at the company`s general meeting on May 3, Poulsen said.. Today the company has seven factories in Denmark and one in Germany, Italy and India. In Spain, Vestas indirectly owns 10 plants through its 40 percent owned wind turbine firm Gamesa Eolica, part of Spanish Gamesa Group . Vestas will also soon build an tower construction and assembly plant in Scotland, Poulsen said. Vestas expected wind power installations worldwide to leap 30 percent annually over the next three years and with the company`s expectations of annually sales growth at 40 percent, Vestas is set to gain market share. FOCUS ON THE U.S. Following Germany and Spain, the U.S. is seen as the third-largest wind turbine market in 2001, but new orders have come to a halt as windpark developers await an extension of the favourable production tax credit agreement (PTC), which expires by the end of 2001. Last week U.S. President George W. Bush in his fiscal 2002 budget proposed expanding the 1.5-cent tax credit for each kilowatt-hour of electricity produced from wind for three more years to 2004. "It`s positive the Bush Administation favours PTC. Now it seems more certain an extension will happen," Johannes Polusen said. BTM predicted in a recent report the U.S. would install 1,350 MW this year, falling to 800 MW next year and 1000 MW in 2003, assuming that the U.S. did not extend the PTC agreement. The figures would be significantly higher if the tax credit was extended, a BTM analyst said. According to the monthly magazine Renewable Energy World, the American Wind Energy Association forecasts 2,000 MW of new wind turbine installations in the U.S. this year. "We do not expect more huge orders from the U.S. until late this year as customers are awaiting an approval of the tax proposal, but we might get a few small orders," Poulsen said. Vestas has plans of a blade and assembly plant in the U.S. ready in case the tax credit deal is extended, he said. Poulsen rejected the idea of acquiring U.S. energy group Enron`s wind turbine arm Enron Wind Corp. with a world market share of six percent, which according to market sources has been put up for sale. "To control the massive market growth we have to grow organically," Poulsen said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Bandwidth trade struggles to gain footing. By David Howard Sinkman 04/18/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, April 18 (Reuters) - Hailed as a new frontier for financial markets, bandwidth trading is struggling to get a footing as capacity piles up, prices fall and expectations float back to earth. A supply glut, especially on long distance routes between large cities, is dragging down prices and investment on new capacity has slowed considerably as demand flags. But trading will pick up in two to three years as the market matures, say analysts. "There is nothing going on out there. The business is viable, but we are ahead of the curve," said Merrill Lynch analyst Donato Eassey. Bandwidth is the transmission capacity of an electronic line used to send data from one point to another, as on the Internet. The trading of bandwidth helps facilitates deals and hedges against risk. While the bandwidth market was all the rage the previous three years, this year has seen a fallout in the industry. Enron Corp., billed as the biggest bandwidth trader, said April 6 it would cut 20 percent of the jobs at its broadband unit because of slow demand for streaming media products to personal computers. "There will be some shake-out in demand, growth and pricing, but long-term demand and growth will be there," said Seth Libby, analyst at consulting firm The Yankee Group. MARKET FAILURES Market inefficiencies, such as unresolved issues like credit and market enforcement, have retarded trading. What is needed, according to San Francisco-based online exchange RateXchange Corp. , is a standardized contract that would provide the framework for commodity-like trading. Without such agreement, buyers and sellers of bandwidth need to agree on new terms for each transaction, said Michael Rose, RateXchange's director of business development. "We do not yet have a fully functioning market," said Rose. However, analysts liken today's trading market to the power market, which took more 10 years to get off the ground. "Today's market problems are just growing pains," said Rod Kuckro, managing editor of the Bandwidth Market Report, which is published by McGraw Hill Co. Kuckro sees growth picking up over the next three years. FALLOUT Market inefficiencies are not the only problem bandwidth trading faces. A supply glut has dragged down prices. Exact numbers are hard to come by in the bandwidth trading market. But industry experts say only about 10 percent, or even less, of existing fiber optic capacity for bandwidth is lit, or in use in the United States. "Obviously there is some capacity problems out there. And there will be funding problems going forward," said Credit Lyonnais Securities analyst Gordon Howald. It is now cheaper to buy or lease lines than to take the risk of digging in the ground and laying new lines. As a result companies are not investing as much in construction. For example, Enron slashed its capital spending on its fiber optic network to about $250 million this year from an earlier estimated budget of $750 million. Demand for capacity has also fallen short of expectations. "The traditional bandwidth business plan read 'just build it and they will come,' but this did not pan out," said Libby. Consequently, today's market has more sellers than buyers. And as new players enter the market, like Global Crossing Ltd. and energy companies Dominion Resources and Dynegy Inc. , competition has heated up. But this might just be what the doctor ordered. As prices keep falling, carriers, who were reluctant to embrace bandwidth trading, are taking a long-look because of the increased efficiencies offered by trading. "Somewhat perversely, this fallout might hasten trading as companies are forced to compete more fiercely with new players," said Kuckro. LAST MILE HURDLE Think of driving from New York to Washington. The highway is mostly free of congestion, but traffic jams abound in the cities. The same holds true for bandwidth connections. Bottlenecks in the last mile have kept prices high, despite a glut in long-haul capacity and unused dark-fibers Bandwidth trading, which does not always provide a loop-to-loop service, suffers as a result. "Nobody want to buy long-haul capacity and then haggle and worry about the local loop," warns Seth Libby, who said he is unaware of any bandwidth trades that included the final link. However, analyst see the last mile problem as just another hurdle bandwidth trading will get around to deal with. "Somebody is going to step up to plate," said Libby. While analysts expect the majority of bandwidth deals to remain carrier-to-carrier, the trading market is expected to blossom as the kinks in the system get ironed out. "Everyone is dressed for a party, but there is no party to go to yet," said Donato Eassey. "But once we get the paths and the customers down the party starts." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BRAZIL: INTERVIEW-BG claims Brazil pipeline war victory. By Andrei Khalip 04/18/2001 Reuters English News Service (C) Reuters Limited 2001. RIO DE JANEIRO, April 18 (Reuters) - Britain's BG Group Plc claims to have won a "litmus test" battle in Brazil by gaining access to a key natural gas pipeline, which marks a big step to a free market and a defeat for ex-monopoly Petrobras. BG's director for corporate affairs in southern South America, Francois Moreau, said the final decision earlier this week by the energy regulatory body ANP to allow BG to use the Bolivia-Brazil pipeline in 2001-2003 was an important victory, although not all of BG's demands were met. BG has big expansion plans for its Brazilian distribution affiliate Comgas and the long-awaited access to the line that brings natural gas from BG's own production fields in Bolivia is crucial for the realization of those plans. "The ANP has confirmed that it wants the private initiative to have a greater role in the energy sector, that it stands for a competitive market and is ready to fight Petrobras. We view it as a test case for an open market in Brazil," Moreau said. The ANP already authorized U.S.-based Enron Corp. to use the pipeline, but only when it had idle capacity. Analysts now expect Enron and other companies to follow BG's suit and demand uninterrupted use of the pipeline. Under the present deal, BG is allowed to import 24.5 million cubic feet (700,000 cubic meters) of gas per day from April to August, and from September until the end of 2002 it can import 73.5 million cubic feet (2.1 million cubic meters). The ANP's decision initially came out last month, but TBG, the gas transportation unit of Brazil's state-owned oil company Petrobras which operates the line, rushed to challenge it, insisting that it had no free capacity. "Petrobras sees the transportation as means to protect its monopoly. Even the ANP admits that there are elements of anti-competition actions in what they are doing," Moreau claimed. Petrobras officials said they had no comment on the issue. ANP said Petrobras could appeal to a court, but there was no way the ANP would review its decision. ANP president David Zylbersztajn told reporters on Wednesday that he saw the issue as closed and the parties involved would have to sign a contract in a week's time. He did not rule out fresh resistance from Petrobras, but warned that his agency was determined to tame the state energy giant that officially lost its monopoly rights in oil and gas production and distribution in 1997. "ANP's game is to crush this resistance," he said. Despite the important victory, BG has lost its own latest appeal with the ANP. The company had wanted a firm deliveries regime to last until end-2003, but the agency ruled that after 2002, TBG may interrupt deliveries on ANP's permission. However, Moreau said that he was now pinning his hopes on a new set of rules for gas transportation that the ANP is preparing and should release in May. Those were expected to limit Petrobras' role in the future expansion of the gas transportation system, provide more transparency in striking contracts for delivery and, in general, bring more healthy competition to the market. He said that in his view, demand for natural gas in Brazil was likely to rise with time, requiring a 50 percent expansion of the Bolivia-Brazil pipeline that now can carry 1.1 billion cubic feet (30 million cubic meters) of gas per day. Brazil aims to boost the share of natural gas in its energy market to 10-12 percent by 2010 from the present fledgling 3 percent by encouraging the construction of gas-fired electric energy plants to alleviate the country's heavy dependence on hydroelectric plants and by greater industrial use of gas. Moreau said BG was interested in taking part in any expansion projects, both of the pipeline and of the network inside Brazil, as well as signing more long-term transportation contracts "if the environment is competitive." BG is already building a pipeline to transport gas from Argentina to southern Brazil, where it will be linked to an existing pipeline and carry gas to Comgas' base of Sao Paulo - Brazil's main industrial hub and richest state. Moreau said the group, which bought Comgas two years ago for nearly $1 billion, planned to triple Comgas' sales of 6 million cubic meters of gas per day three years from now and boost them 10-fold by 2011. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron India Sends Arbitration Notices To State Govt 04/18/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- In the ongoing tussle between the Dabhol Power Co., India's Maharashtra state government, the Maharashtra State Electricity Board and the government of India, DPC Wednesday served two notices of arbitration on the Maharashtra government, its spokesman said. A subsidiary of U.S. energy major Enron Corp. (ENE), DPC has a controlling 65% stake in the controversial $2.4 billion joint-venture 2,184-megawatt electric power project in the western Indian state of Maharashtra, which supplies power to the MSEB. The project is India's biggest foreign investment. In a faxed company statement, Enron India spokesman Jimmy Mogul said the notices were served because the Maharashtra government had failed "to honor its obligations under the government of Maharashtra State Support Agreement and Supplemental State Support Agreement," signed in 1994 and 1996, respectively. DPC said that in the agreements, GoM had pledged to "support and encourage the further development and completion of the Dabhol project." It added that "without justification" the GoM has gone back on these agreements, which has "adversely and materially impacted DPC's ability to perform under its contractual agreements." The statement added that as part of the arbitration process, an independent three-person panel will be set up to determine whether GoM has "failed to comply with its obligations." Under a 1996 counter guarantee agreement, the federal government is obliged to pay Enron when MSEB defaults. Enron invoked that guarantee in February, marking the first time in India's history that a company has invoked a federal guarantee, when the state utility said it couldn't afford to pay DPC. The state government finally paid $17 million in outstanding bills. DPC and the federal government recently started a conciliation process, to be governed by the provisions of the U.N. Commission on International Trade Law, with the aim of resolving DPC's latest dispute with MSEB. DPC says MSEB owes it 1.02 billion rupees ($1=INR46.8550) for power supplied in December 2000. For its part, the MSEB said it wanted the power bill offset against a INR4 billion fine it levied on DPC for what it said was the non-supply of power for intermittent periods between October 2000 and the end of January. Dabhol, India's largest private power plant currently under construction, was scheduled for commissioning in two phases. The project's first phase, a 740-megawatt power plant, has already been commissioned and phase two is due to be completed later this year. Critics object to Dabhol charging INR7.1 a kilowatt-hour for its power, compared with INR1.5/KWh charged by other suppliers. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron may sell some Brazil assets - SAmerica chairman 04/18/2001 AFX News © 2001 by AFP-Extel News Ltd SAO PAULO (AFX) - Enron Corp is considering the sale of some energy distribution and gas assets in Brazil but continues firmly interested in the domestic energy sales market, financial daily Valor Economico quoted Enron South America chairman Orlando Gonzales as saying. "We are always revaluating assets. They are always up for sale if the offer is good. Our strategy is to maximise the return to shareholders and for that reason, we are always revaluating our positions in assets, markets and investments," the paper cited Gonzales as saying. mg/as For more information and to contact AFX: www.afxnews.com and www.afxpress.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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