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Bush Task Force on Energy Worked in Mysterious Ways
The New York Times, 05/16/01 Texaco May Build a Facility to Regassify Liquefied Natural Gas Offshore Louisiana The Wall Street Journal, 05/16/01 Enron to drop suit against NGX Houston Chronicle, 05/16/01 Plots & Ploys The Wall Street Journal, 05/16/01 THE AMERICAS: Energy worries throw the spotlight on Chilean policy Financial Times; May 16, 2001 Enron urges more electric power reform The Yomiuri Shimbun / Daily Yomiuri, 05/16/01 Enron lawsuit deal to broaden indexes The Globe and Mail, 05/16/01 Saudi Gas Proj MOUs Expected To Be Signed Jun 6 - Sources Dow Jones Energy Service, 05/16/01 INDIA: Lenders to vote Wed on cancelling Enron India deal-paper. Reuters English News Service, 05/16/01 India: 2 units of Sharavathy Project commissioned The Hindu, 05/16/01 India: Dabhol power project Business Line (The Hindu), 05/16/01 Three members of Godbole committee quit The Economic Times, 05/16/01 Panel to brief Gokak on Godbole plans on Wed The Economic Times, 05/16/01 Settle Enron issue amiably: Munde The Times of India, 05/16/01 Sharavathi power units inaugurated The Times of India, 05/16/01 Dunham, Lay, Raymond Among Few to Meet With Cheney on Energy Bloomberg, 05/16/01 National Desk; Section A Bush Task Force on Energy Worked in Mysterious Ways By KATHARINE Q. SEELYE 05/16/2001 The New York Times Page 1, Column 4 c. 2001 New York Times Company WASHINGTON, May 15 -- The tiny staff of the Bush administration's Energy Development Task Force is led by two former aides to Senator Frank H. Murkowski, the Alaska Republican who is the chairman of the Senate Energy Committee. The aides jokingly call themselves the Alaska jihad. But Mr. Murkowksi, when asked recently about the role his former aides, Andrew Lundquist and Karen Knutson, have played in the task force's much-anticipated report, which will be released on Thursday, replied, ''They don't tell me anything.'' On the eve of the release of the 170-page report, the broad outlines are fairly well known. The plan encourages the production of oil, gas, coal and nuclear power and calls for some tax credits for renewable energy resources and a push for conservation. But since the task force's work began in February, most of Washington has remained in the dark about how it operated, which arguments it embraced and how it reached decisions on some of the nation's thorniest energy issues. Individuals from the task force have met with more than 400 people from more than 150 groups over the last three months. Mr. Lundquist said today that he could not provide a list of all the groups he had spoken with. ''I can't really tell you who, because there are hundreds I've met with,'' he said. Administration officials also said that they wanted to keep private the list of those they met with to encourage the free flow of ideas. Still, they said that they had talked with a broad range of interested parties. In a recent interview, Vice President Dick Cheney said: ''The staff of our energy task force has spent time with folks from various pieces, parts, of the industry. We've also spent time with the environmentalists. I spent a lot of time with members of Congress, listening to them, both parties, on energy. So the idea that somehow only the energy industry has access just simply isn't true.'' But last month, two Democrats on Capitol Hill challenged the secrecy of the process surrounding the task force, which has met eight times in the last 90 days. David S. Addington, counsel to the vice president, responded that it did not have to provide information about the process because all of the staff members are federal employees. In addition, environmental groups have requested documentation about task force meetings under the Freedom of Information Act, but so far those have been denied. Democrats and environmentalists say the process was tilted heavily toward the coal, gas and oil industries and point out that the energy industry is one of the biggest contributors to political campaigns, giving $64 million last year, three-fourths of it to Republicans. Among those who said they felt shut out was the Consumer Federation of America, the nation's largest consumer-advocacy group. Howard Metzenbaum, a Democrat and former senator from Ohio who is now chairman of the group, said, ''The energy crisis is first and foremost a price crisis affecting consumers. ''It's an incredible insult to the consumers of this country that, to the best of my knowledge, none of the consumer organizations were invited to the meetings or otherwise participated,'' he said. Juleanna Glover Weiss, Mr. Cheney's spokeswoman, said no invitations were issued and groups had to request meetings. ''We didn't invite anybody to meet with us,'' she said. The leaders of about two dozen environmental groups had asked to see Mr. Cheney, whose office turned down their requests. Instead, midlevel staff members from the groups met with Mr. Lundquist and Ms. Knutson. Alys Campaigne, legislative director of the National Resources Defense Council, said that that meeting lasted about 40 minutes but that the size of the group inhibited substantive policy discussion. ''We asked who the deputies were on different issues so we could have more in-depth conversations, and they wouldn't tell us,'' she said. ''They said, 'Just send us paper, we'll take a look at it.' The meeting felt like window dressing for us, but they got to check off the box that they consulted with stake-holders.'' Mr. Lundquist said he viewed his meeting with the environmental groups as ''a good conversation.'' Some of the industry representatives who did get audiences with the vice president said the task force's deliberations seemed a mystery to them, too. John Grasser, a spokesman for the National Mining Association, said: ''We've probably had as much input as anybody else in town.'' But, he added, ''All we know is what we read in the paper. This is a tight-lipped process. I have to take my hats off to them -- they've been able to keep a lid on it.'' Richard S. Shapiro, senior vice president of the Enron Corporation, a major Republican contributor and the nation's largest trader of wholesale electricity and natural gas, said top executives from his firm spent half an hour with Mr. Cheney, but he could not tell how much this may have influenced the final report. ''Energy issues are a very high priority, and we've had the opportunity to provide some input into the process,'' Mr. Shapiro said. ''But it's been difficult to get input in the task force. Other consumer groups have been weighing in with perspectives. It's not an open-hearing setting.'' Tom Kuhn, head of the Edison Electric Institute, the utility lobbying group, and a friend of the president's since they were classmates at Yale, saw the process as relatively open. ''The task force put out the word they were open to input,'' he said in an interview. He said that his group sent them reports and that some executives met briefly with Mr. Cheney. Given all of their interaction with so many groups, Mr. Lundquist denied that the process had been secretive. ''I don't think that's fair,'' he said. ''There's been no attempt to make it a secret process. All it's been is an effort to work on and put out good policy.'' Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Texaco May Build a Facility to Regassify Liquefied Natural Gas Offshore Louisiana By Alexei Barrionuevo Staff Reporter of The Wall Street Journal 05/16/2001 The Wall Street Journal B4 (Copyright © 2001, Dow Jones & Company, Inc.) Texaco Inc., joining a growing list of companies looking at ways to import more natural gas, said it is considering building a terminal in the Gulf of Mexico that would regassify liquefied natural gas. While other companies have looked at building land-based LNG terminals, Texaco, based in White Plains, N.Y., is considering going offshore. The facility would be constructed in shallow waters off Louisiana and make use of Texaco's extensive offshore pipeline system. The system's spare capacity has grown in recent years as the Gulf of Mexico's natural-gas production has declined. Cooling natural gas to a point where it liquefies greatly condenses the gas and allows it to be shipped by tanker over long distances. Currently, the U.S. only has four LNG receiving terminals, two of which have been mothballed for more than 15 years. Until this year, LNG was considered too expensive for the U.S. market, which relies on LNG for less than 2% of total natural gas supply. But with natural-gas prices averaging about twice what they were in 1999, the owners of the mothballed terminals are bringing them back and a flurry of companies have announced plans to build new terminals on both the East and West coasts. The companies include El Paso Corp., Enron Corp., Phillips Petroleum Co. and Chevron Corp., which has agreed to buy Texaco in a pending deal. Texaco is initially considering a terminal designed to process about one billion cubic feet of gas per day. The facility's capacity could later be doubled, depending on natural-gas demand in the U.S. "The U.S. demand for natural gas continues to increase at a significant pace, demonstrating the need for clean burning fuels for power generation, industrial fuels and residential markets," said Robert A. Solberg, president of Texaco's commercial development business unit. From the proposed Louisiana terminal the natural gas would be fed into several interstate pipeline systems, as well as the Henry Hub futures pricing point in south Louisiana, which is operated by Sabine Pipeline Co., a Texaco subsidiary. Texaco said the proposed terminal could be up and running in four to five years. While the company said it is still evaluating the terminal's cost, other companies have said land-based facilities would each cost about $300 million to $400 million. Texaco expects its feasibility study to be done within six months. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. May 16, 2001 Houston Chronicle Briefs: Houston & state Enron to drop suit against NGX Enron Corp. agreed to provide natural-gas pricing information to NGX Canada and drop a $64.6 million suit against the Canadian gas exchange. Houston-based Enron sued NGX in November after the Internet exchange, a unit of the company that owns the Stockholm Stock Exchange, changed providers of its gas-pricing data and didn't include trades on EnronOnline, Enron's Internet exchange, when calculating gas-price indexes. Calgary-based NGX agreed to include EnronOnline trades in its calculation of its Alberta Gas Price Indices by August, Enron spokesman Eric Thode said. The Property Report Plots & Ploys By Peter Grant 05/16/2001 The Wall Street Journal B12 (Copyright © 2001, Dow Jones & Company, Inc.) [What's Brewing in the Real Estate Market] Bright Spot FUELED BY A STRONG energy sector, the Houston office market is outperforming the rest of the country. While many cities saw office vacancy rise in the first quarter, the downtown vacancy rate in Houston dropped to 6.26% from 6.65% at the end of last year, according to CB Richard Ellis. Expanding companies include Enron Corp., Reliant Resources Inc., Dynegy Inc. and other energy companies that have been profiting from the deregulation of the electricity business. Houston also has been benefiting from consolidation in the oil and gas industry. Giants like Exxon Mobil Corp. and Anadarko Petroleum Corp., which acquired Union Pacific Resources last year, have relocated divisions to the city. Rents in the hottest submarkets are continuing to increase, according to Will Penland, head of CB's Houston office. "We're at levels we haven't seen since the late 1970s," he says. All this is good news for the three developers that have projects underway downtown. Indeed, Crescent Real Estate Equities has leased over 70% of the space in 5 Houston Center, a 27-story building that's still more than one year away from opening. "It's a very good time to be in Houston," says Crescent chief executive John Goff. To Sell or Not to Sell THE SALES MARKET is continuing to slow as the gap widens between asking prices and what buyers are willing to pay. In the first quarter, about $11.6 billion of property traded hands, down 11% from the same period in 2000, according to Granite Partners. Many sellers are choosing to refinance, an option made especially attractive by declining interest rates. For example, a group led by Emmes & Co. just refinanced the 21-building Meadows Business Park outside of Baltimore for $40 million after failing to get its price of about $55 million. The three-year floating rate loan with CDC Mortgage Capital Inc. was brokered by Insignia/ESG Capital Advisors. S. Lawrence Davis, an Emmes partner, notes that the $40 million is well in excess of the $35 million the group invested into the property. "We recognize at the moment it's not the appropriate time to sell," he says. Hoop Dreams IN THE MID-1980s, city officials in Springfield Mass., convinced the Naismith Basketball Hall of Fame to move to a forlorn riverfront urban renewal site. But the stores, restaurants and hotels that city officials said would follow never materialized. "Not a darn thing happened," says Michael Downey, president of the O'Connell Group, a consultant to the museum. Despite this history, the Hall is giving Springfield a second chance. Now rising a short distance from the existing facility is a new, larger Hall of Fame that's scheduled to open next year. Once again government officials are promising that numerous other projects will follow. But this time the museum has reason to be confident. The city and state agreed to put up $70 million of the project's $109 million cost, after the museum threatened to move to Orlando, Fla. A new tourist center already is being built on the site and the Picknelly family, which owns Peter Pan Bus Lines, is set to break ground soon on a Hilton Garden Inn and Pizzeria Uno Chicago Bar & Grill. There's even talk of converting the shuttered 110-year-old county jail on the site into an aquarium or some other tourist attraction to complement the Hall. One possibility the locals are joking about: using it as a Hall of Shame where lousy referees could be incarcerated. "I'm sure there would be a number of players who would support that," says Thomas McColgan, the city's economic development director. Price Reduction AFTER MONTHS of negotiations, Philadelphia's Berwind Property Group has signed a binding contract to acquire the Barbizon Hotel from Ian Schrager. But the price of $96 million is about $4 million less than what was being discussed at the end of last year, a reflection of the softening sales market, people with knowledge of the deal say. Berwind plans to add the 306-room property to its Melrose chain of high-end hotels. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. THE AMERICAS: Energy worries throw the spotlight on Chilean policy Financial Times; May 16, 2001 By RAYMOND COLITT and MARK MULLIGAN An energy crisis in Brazil and the threat of a capacity shortfall in Chile has thrown the spotlight on government policy on tariffs and competition, and drawn pressure from the multinational groups that control private-sector generation in South America. Both cases also highlight the dangers of over-reliance on hydroelectric generation in countries where rainfall can vary widely year to year. Low rainfall in Chile in 1998, for example, deprived the hydraulic plants that serve the country's populous southern half of melted snow from the Andes, plunging Santiago and other urban centres into darkness during four months of rationing. The crisis exacerbated a recession in 1999, when growth dropped into negative territory for the first time in 16 years. Industry leaders warn of a repeat in 2003, unless generators are encouraged to invest in new thermal plants with tariffs - or node prices - which reflect the increased costs of natural gas and other combustibles. "What we need is more thermal capacity," says Andres Gluski, chief executive of AES-owned Gener, Chile's second-largest generator and the third-biggest in the region. "If we simply build more hydro plants we end up with the same problem that Brazil is experiencing at the moment," he said. In Brazil, the government is preparing a rationing programme that could force a 15-20 per cent reduction in consumption over the next few months, and shave a percentage point from gross domestic product for the year. Although drought in the country - which relies on water for 90 per cent of generation - is blamed for the crisis, industry leaders and experts say lack of investment by the state, which still controls 80 per cent of capacity, and the slow pace of privatisation are the main underlying problems. "Of course the crisis could have been avoided - it has been in the making for years," said Mauricio Tolmasquim, energy expert at Federal University in Rio de Janeiro. He says that while consumption has grown 50 per cent in the past decade, generating capacity has increased only 35 per cent. The government estimates that Brazil needs 25,000MW of new capacity over the next five years, but companies are holding back on investment because current tariffs makes new projects unprofitable. Enron, the US energy group, has put two of its three energy projects on hold. "We're in a capital-intensive business, in which the recovery of investment requires a long period of time," said Alfredo Llorente, president of Enersis, the Latin American holding company for Endesa of Spain, the region's largest electricity investor. "Therefore it is essential to know what rules are going to apply over the long term." Despite growth in electricity demand in Chile averaging about 7 per cent since 1996, there has been little new capacity installed since then. Part of the problem stems from heavy investment in cheaper, gas-fired plants in the mid-1990s by the dominant three generators, encouraged by a new pipeline from Argentina. This created a surplus of generating capacity, which contributed to a 40 per cent decline in node prices between 1996 and 1999. At the same time, an international credit squeeze began depriving the Chilean operators of funds for fresh investment, leading eventually to their sale to the large foreign groups. These companies now say that even after a recovery of prices in the last year, investment in new capacity remains unprofitable. One solution is the interconnection of the main Chilean and Argentine grids, but this will take four to five years. Another is the connection of Chile's over-supplied northern grid, fuelled by two gas pipelines from Argentina, to the more populous southern grid. But this would not be feasible, said Andres Gluski. Copyright: The Financial Times Limited Enron urges more electric power reform 05/16/2001 The Yomiuri Shimbun / Daily Yomiuri Copyright (C) 2001 The Yomiuri Shimbun; Source: World Reporter (TM) - Asia Intelligence Wire Enron Japan Corp., a Japanese subsidiary of United States energy giant Enron Corp., published a reform proposal for the Japanese electricity market Tuesday. The proposal urged the government to implement the suggested reforms over a two-year period beginning at the start of 2002, following deregulation of the Japanese retail electric power market, which began in March this year. Japan has allowed nonutility companies to supply power to industrial and commercial users since March. Enron is seeking to enter the Japanese energy market on a large-scale basis following the deregulation efforts. In the reform proposal, Enron Japan argued that the present liberalization of the electricity market was insufficient by presenting original data showing that Japanese electricity charges were 46 percent higher than average when compared with those of other member countries in the Organization of Economic Cooperation and Development. Enron's reform proposal includes 10 measures to promote competitiveness in the Japanese market, such as a separation of conventional power companies' supply operations from the generation, transmission and distribution of electricity. The proposal also contends that conventional power companies are monopolies that should be prohibited from constructing new electricity-generating facilities within the areas they currently supply. It also urges the privatizing of operations for the development of power sources. These measure are meant to make it easier for those newly entering the business to gain a competitive foothold. In March Enron applied for approval from Aomori Prefecture to build a large thermal power plant in Rokkashomura. Copyright 2001 The Daily Yomiuri Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Report on Business: Canadian Enron lawsuit deal to broaden indexes DAVID PARKINSON 05/16/2001 The Globe and Mail Metro B10 "All material Copyright © Bell Globemedia Publishing Inc. and its licensors. All rights reserved." CALGARY -- Enron Canada Corp. has dropped its $101-million lawsuit against on-line natural gas trader NGX Canada Inc. and energy newsletter publisher Canadian Enerdata Ltd., after reaching an agreement to have Enron's on-line trading data included in key Alberta gas pricing indexes published by NGX and Enerdata. The deal, announced yesterday, will significantly broaden NGX's indexes by adding trades from North America's biggest on-line trading system, EnronOnline, to the calculations. It also opens the door for the development of a "superindex," a single price index using combined trading data from key on-line trading systems. "This can be seen as the first step toward that," said Peter Krenkel, president of Calgary-based NGX, adding that other on-line trading services have already inquired about having their data included in NGX's indexes. Enron filed its suit in November, alleging that it suffered "irreparable harm" when Enerdata sold the rights to its natural gas price indexes to NGX, which operates the on-line Natural Gas Exchange. NGX changed the method of calculating the indexes, basing them solely on trades over the Natural Gas Exchange rather than Enerdata's old survey of a wide variety of market participants. Enron, a unit of Enron Corp. of Houston, had argued that the new calculation method was less neutral and reliable than the old method. The indexes are used by many natural gas market participants as the basis for prices in gas hedging contracts. Rob Milnthorp, president and chief executive officer of Enron Canada, said the agreement to include EnronOnline's data in the NGX indexes "will provide industry participants with a more comprehensive source of data and a better opportunity to manage risk around these price indexes." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Saudi Gas Proj MOUs Expected To Be Signed Jun 6 - Sources 05/16/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) DUBAI -(Dow Jones)- Memoranda of understanding between international oil companies and Saudi Arabia on three gas ventures on offer in the kingdom are expected to be signed June 6, industry sources told Dow Jones Newswires Wednesday. Saudi Arabia's Supreme Petroleum Council met Tuesday and endorsed a final selection of international oil companies for each of the three projects, which have been estimated at a combined investment value of $25 billion, the sources said. The companies concerned are expected to be notified any time on whether they have been selected and given about 10 days to respond. The 11 companies being considered are Royal Dutch/Shell Group (RD), BP PLC (BP), Exxon Mobil Corp. (XOM), Chevron Corp. (CHV), Total Fina Elf S.A. (TOT), ENI SpA (E), Enron Corp. (ENE) and Occidental Petroleum Corp. (OXY), who are bidding jointly, Marathon Oil Canada Inc. (T.M), Conoco Inc. (COCA) and Phillips Petroleum (P). Saudi Arabia invited international oil companies in October 1998 to participate in proposals for downstream gas projects and upstream gas enhancement. -By Dyala Sabbagh; Dow Jones Newswires; 9714 3314260; dyala.sabbagh@dowjones.com -0- 16/05/01 07-07G Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Lenders to vote Wed on cancelling Enron India deal-paper. 05/16/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, May 16 (Reuters) - Lenders to U.S.-based Enron Corp's troubled Dabhol Power Company (DPC) will vote on Wednesday on whether the company should issue a notice to cancel its contract to sell electricity to India's Maharashtra state, a business daily said. The Business Standard said the 25 lenders to DPC will most probably back the proposal to terminate the agreement, which has spoiled relations between India and its largest foreign investor and cast a shadow over future foreign investment in India's power sector. "It is almost a foregone conclusion that DPC will be asked to issue its termination notice," the paper said in an unsourced report. It said that foreign institutions which lent 30 percent of the $2 billion in debt back such a move. But Indian lenders, whose loans are not backed by a federal government guarantee, are likely to vote against the proposal, the newspaper said. The Industrial Development Bank of India , State Bank of India , Industrial Finance Corporation of India , Canara Bank and ICICI are the major Indian lenders. Enron and India have been sparring for six months over payment defaults by the Maharashtra State Electricity Board (MSEB) for power purchased from DPC. DPC, owned 65 percent by Houston-based Enron, is building the world's largest natural gas-fired power plant on India's western coast. The 740 MW first phase of the facility began operating in 1999. The plant's generation capacity will more than triple to 2,184 MW when phase two is completed next month. MSEB had agreed in 1995 to buy all the power produced by the plant but has now reneged on that commitment, sparking concern over the fate of the project. Last month the DPC board authorised its management to terminate the contract to sell power and the lenders' decision on Wednesday could add weight to that decision. ($1=46.93 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: 2 units of Sharavathy Project commissioned Our Staff Correspondent 05/16/2001 The Hindu Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire GERUSOPPA (Uttara Kannada Dist), MAY 15. The Chief Minister, Mr. S. M. Krishna, said here on Tuesday that the Karnataka Power Corporation (KPC), of which he is the Chairman, had prepared an ambitious plan to add an additional power of 2000 MW with a total investment of Rs. 10,000 crores in the next five years to the State Power Grid to meet the increasing demand for power. Addressing a gathering after dedicating the first two units of the Sharavathy Tail Race Project with an installed capacity of 60 MW each at Gerusoppa to the nation, he said the third unit of the project, which formed the final phase of the power projects in the Sharavathy Valley, was planned to be commissioned in October and the fourth by the end of March next. He said the seventh unit of the Raichur Thermal Power Project with an installed capacity of 210 MW was scheduled to be completed by March 2003. Similarly, Alamatti Dam Power Project would be ready for commissioning by the end of 2003. He said the Vijaynagar Power Project with a capacity of 500 MW, which was being implemented in the joint sector, would be dedicated to the nation by 2005. The Union and the State governments had given clearance to this project. Mr. Krishna said that the Bidadi Gas-based 700 MW Power Project would be ready for commissioning by the end of 2005. In addition, a barge-mounted power project in the private sector with an installed capacity of 220 MW, and the power projects by the Tatas and the Jindal company with capacities of 80 MW and 100 MW respectively were in the offing. Emphasising the need for working out cost effectiveness of new power projects before they were taken up to make power affordable for the common people, the Chief Minister explained the reasons why the previous Congress Government in which he was the Minister for Power, cancelled the agreement with the Cogentrix company on a power project. He said there was criticism when the project was dropped after it was debated for nearly 14 years. He said the cost effectiveness (of the project) was the only reason for dropping the proposal which was planned to be handed over to the Cogentrix company. Mr. Krishna referred to the predicament of the Maharashtra Government which now found itself trapped in an agreement on a power project with the Enron company and said that State (Maharashtra) had found itself in such a situation that even the Centre could not bail it out. "We are lucky that we did not get trapped in a similar project with the Cogentrix. It is difficult to imagine what could have been the position of the KPC, if we had gone ahead with the agreement with the Cogentrix," he said. Mr. Krishna said that it was for the reason of cost effectiveness that the proposed Alamatti Dam Power Project was handed over to the KPC when the offer made by TAPCO for its implementation was found to be "extremely costly." He said that after the TAPCO offered to complete the 290 MW project at a cost of Rs.1400 crores, the KPC was asked to prepare the plan which it did with an estimated cost of Rs.700 crores. Immediately after that, the KPC was given the green signal to prepare the pre-survey of the project. "If the project (Alamatti Dam Power Project) was handed over to TAPCO, it could have been profitable" (which he said needed no elaboration), "but it is the protection of the interest of common people which is of paramount interest to us. TAPCO may approach the court for the breach of agreement but we will fight it out there (court) also," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Dabhol power project 05/16/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire This refers to the article 'DPC-MSEB slugfest: Needed, a conciliatory approach' (Business Line, May 11). The author has tried to defend the Dabhol project. Unfortunately his claims hold no water for the following reasons: DPC is not the only IPP among the fast-track projects. The 208 MW Jagrapadu in Andhra Pradesh (GVK Power) was the first and is doubling capacity. Spectrum (208 MW) was the second. Enron is the third. ST-CMS in Tamil Nadu is almost complete. The other fast-track projects - Cogentrix, Hinduja Power and Bhadravati Power (L. N. Mittal) - are languishing. However, in terms of project cost, fixed-charge payments and the total tariff, DPC stands tall. Several IPPs have come up successfully without counter-guarantees: GMR, PPN, Balaji and South India Viscose in Tamil Nadu; and Paguthan and GIPCO in Gujarat. Some are under development and their problems are not FDI, equity or debt, but the non-availability of the escrow - a result of bad management by the States. Similarly, a number of LNG projects is in the pipeline. If permitted, they could go on-stream in good time. Let us remember that Enron LNG has a sovereign guarantee and a very high return on equity and is protected by a power purchase agreement (PPA) that will use only half its capacity. However, Enron will recover its entire cost in that 50 per cent utilisation. Enron's LNG terminal will perhaps make the highest profits in the world. LNG projects are feasible all along the coast and the Enron project could even be sold to an outsider. The cancellation of the Enron PPA will result in a huge liabilities to be paid by the people of Maharashtra as a result of the follies of their political leaders. The project can be sold to international buyers at a reasonable price and the loss, if any, absorbed by the people of Maharashtra who might be ready to pay an Enron Cess over the next 20 years. Now let us come to the number-crunching. At Rs 87.50 a month fixed cost, the net present value of the fixed cost of DPC- I over 15 years works out to (at 15 per cent per annum) Rs 6,252 crore. For 740 MW, this works out to Rs 8.45 crore per MW. At Rs 292 crore, the net present value for the 2,150 MW DPC I and II is (at 15 per cent pa for 15 years) Rs 20,863 crore - Rs 9.70 crore per MW. When DPC I was 740 MW, the NPV per MW was Rs 8.45 crore. To achieve scales of economy when the project was expanded to 2,150 MW with an LNG project, the NPV rose to Rs 9.70 crore. Is there any power project in the country, or the world, at this cost? Be it naphtha or LNG, the MSEB is paying for the actual cost of the fuel. Here too, Enron is making a huge profit - burning naphtha at 1,700 kcal per unit and claiming reimbursement at 2,000 kcal per unit. When the fuel cost is reimbursed at actuals the expansion of DPC should have reduced the fixed cost. On the other hand, it has increased it to over 13 per cent. Perhaps, the DPC project should be referred to the Guinness Book - for the highest cost per MW of power. Certainly, nobody would dare beat its record. S. Padmanabhan Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Three members of Godbole committee quit Our Bureau 05/16/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) MUMBAI EVEN as efforts to renegotiate the Enron power deal get underway, three members of the nine-member Madhav Godbole committee have decided to quit. Former Union energy secretary and Andhra Pradesh Electricity Board member E A S Sarma, Tata Energy Research Institute director Rajendra Pachauri, and Indira Gandhi Institute of Developmental Research professor emeritus Kirit Parikh have -- in separate communications -- informed the government that they do not have the time to attend the committee's meetings. The trio was absent from the committee's first meeting with DPC officials held last week. The Godbole committee was set up by the Maharashtra government to renegotiate the deal with Enron. Pachauri recently had said the state government had not consulted him before he was named on the renegotiations panel. The Maharashtra government set up the nine-member committee headed by former bureaucrat Madhav Godbole on April 30 to renegotiate the controversial power purchase agreement with the Enron-promoted Dabhol Power Company. The committee has submitted an interim report and a final one is expected by May 31. The members now on the committee -- apart from Madhav Godbole -- are HDFC chairman Deepak Parekh, state's energy secretary V M Lal, fertiliser secretary and a representative of the Centre Anil Gokak, state finance secretary S K Shrivastava and Maharashtra State Electricity Board chairman Vinay Bansal. The government said it had chosen Godbole to head the renegotiation team since he had dealt with every detail of the 2,184-mw Dabhol Power Project. Godbole was head of the Maharashtra state energy review committee which recently submitted a report on the Enron project to the state government in which he had strongly criticised the way the deal was conducted and had recommended the renegotiation of the power purchase agreement with MSEB. The state government employee said: "There is no point in reading too many things in the development. These three members really don't have time. The committee work will not hamper due to their decision to dissociate." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Panel to brief Gokak on Godbole plans on Wed Our Bureau 05/16/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) NEW DELHI THE COMMITTEE of joint secretaries, which is working in close co-ordination with the Enron negotiation committee, will be holding a meeting on Wednesday to brief the central representative A V Gokak on the Centres views on the Godbole Committe recommendations. The group of joint secretaries from concerned ministries like power, petroleum, finance etc was formed to coordinate and form a consensus on the Centres view vis-a-vis the recommendations of the Godbole committee and the renegotiations that have now been initiated between Dabhol Power Corporation and MSEB. Gokak was appointed as the Centres representative on the renegotiation committee. Since the recommendations of the Godbole committee have been taken as some of the basic requirements and changes that could bring down tariffs, the Centres stand on this issue will be viewed significantly. Among the main things to be discussed would be to explore the possibility of delinking the LNG facility from the power plant. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Settle Enron issue amiably: Munde The Times of India News Service 05/16/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) PUNE: Former deputy chief minister Gopinath Munde has said that the US power major Enron's exit from the Dabhol power project could have a negative impact on investment prospects of the state. Speaking to reporters here on Monday, Mr Munde said it was imperative to have an amicable solution on the current impasse on the cost of power supplied by the Dabhol Power Company. "A confrontation on the power purchase agreement at such an advanced stage may send wrong signals to investors," he added. Asked about the growing financial burden on the state exchequer due to hefty Enron bills, Mr Munde evaded a concrete reply on the pretext that his party was not in power in the state at present. The senior BJP leader minced no words in saying that his party would strongly oppose any move by the state government to delink the 38 fringe villages from the Pune Municipal Corporation limits. All the merged villages should stay within the corporation, he emphasised. Speaking on the drubbing his party received in the just concluded assembly elections, Mr Munde said the party leadership had never expected miracles in Tamil Nadu, West Bengal, Kerala and Pondicherry. "The BJP did have high hopes in Assam, but unfortunately the popular verdict was not in its favour. The party would analyse the reasons behind the debacle," he added. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Sharavathi power units inaugurated The Times of India News Service 05/16/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) KARWAR: Chief Minister S.M. Krishna appealed to the courts of law on Tuesday to ``speedily dispose of development-related litigation'' as such delays led to huge cost escalation of infrastructure projects. Speaking after switching on the 60 MW Units 1 and 2 of the Sharavathi Tailrace Hydel Power Project at Jyothinagar, Gerusoppa (near Honnavar), Krishna said that this particular project itself had been delayed by five years because of the case filed against it in the Supreme Court by environmentalists. ``The courts heard arguments in the Cogentrix case also about an year ago, but there has been no judgement. Such delays lead to cost escalations,'' he contended. Krishna said plans to add about 200 MW of power every year were on the anvil. ``Gerusoppa units 3 and 4 will produce 60 MW by March 2002 along with the 210 MW Raichur Thermal Power Station (RTPS) unit 7. Almatti project 70 MW unit 1 and 220 MW unit 2 will be commissioned by December 2003. The 500 MW Vijayanagara thermal power project will be operational by 2005, while the Bidadi project will produce 700 MW by 2006,'' he outlined. In the private sector, Krishna said the Tannir Bhavi barge-mounted plant would produce 220 MW, while Jindal Tractible would supply 100 MW and Tata Electric 80 MW. ``All these projects will involve an investment of over Rs 10,000 crdore and even after this the state will need more power,'' he maintained. Stressing on the need for low cost power, Krishna said the Cogentrix agreement fell through only because of the ``exhorbitant'' purchase price quoted by the American company. ``Maharashtra is in the python grip of Enron. We have avoided this even in the case of the Almatti project, for which the company, TAPCO had given a cost estimate of Rs 1,400 crore while the Karnataka Power Corporation quoted only Rs 700 crore,'' he added. Legislative Assembly and Council Opposition leaders Jagadish Shettar and K.H. Sreenivas praised the KPC on its pro-active role in providing power to the state. Karwar MP Margaret Alva and Industries Minister R.V. Deshpande stressed on the need for improving the living conditions of the project displaced people. Meanwhile, Magsasay Awardee K.V. Subbanna of Heggodu rued that the agitation against the project by environmentalists led by Shivaram Karanth and the Pejawar Math pontiff had not borne fruit. ``One MW of Gerusoppa power has eaten away a minimum of 10 hectares of fertile, evergreen forest of the Sharavathi valley which was once full of medicinal plants and rich bio-diversity. The KPC should at least take up an afforestation programme to ensure that sufficient rains fall to fill up the dam and produce power,'' he added. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Dunham, Lay, Raymond Among Few to Meet With Cheney on Energy 2001-05-16 00:01 (New York) Washington, May 16 (Bloomberg) -- Archie Dunham, chief executive of Conoco Inc., told Vice President Dick Cheney that it was time to stop using unilateral sanctions as a diplomatic weapon against fuel-rich countries like Libya. Enron Corp. Chairman Kenneth Lay said he used his time with the vice president to talk about how to open power markets. And Exxon Mobil Corp. CEO Lee Raymond made the case to Cheney for reducing federal regulations. The three chief executives, all big contributors to President George W. Bush, were able to make their case to a White House energy task force at the highest level: Cheney is in charge of it. And when the task force releases its report tomorrow, many of their recommendations will be in it. No such access to Cheney was available for many others. Leaders of environmental groups, including the Sierra Club and the Natural Resources Defense Council, didn't make it onto Cheney's calendar. Neither did California Governor Gray Davis, a Democrat, who was told to submit a one-page memo. ``They bumped us to staff level,'' said Alys Campaigne, NRDC's legislative director. ``That there was no outreach to the CEOs of environmental groups is striking.'' The task force is recommending a broad basket of ideas to encourage domestic fuel production, including regulatory changes that will make it easier to build more refineries, pipelines and transmission lines; plans to promote more oil and gas exploration; and tax credits to promote renewable energy sources like wind and solar power. `All Sides' Heard Juleanna Glover Weiss, Cheney's press secretary, says the idea that the energy task force had a two-tiered system for getting input is ``nonsense.'' She said Cheney had only about a half dozen private meetings. ``The vice president has listened carefully to all sides of the debate,'' she said. The administration has spurned congressional and administrative inquires into whom top officials such as Cheney, Energy Secretary Spencer Abraham and economic adviser Lawrence Lindsey met with. To some, the meetings are simply further evidence of the energy industry ties that both Bush and Cheney brought to the job, and the support they have received from that industry during the campaign -- roughly $2.9 million in contributions, according to the Center for Responsive Politics, which tracks campaign finance. ``Bush came in with goals and assumptions about energy that played right into the business community,'' said Stu Rothenberg, editor of the non-partisan Rothenberg Political Report. Supply-Side Arguments Those who were willing to talk about their meetings with Cheney described businesslike, formal sessions. Lay said that he discussed ``the whole issue of making wholesale markets work better,'' a mantra for Enron, the country's top wholesale power marketer. Cheney made no commitments, Lay said, but he was sympathetic. ``He fully understood,'' Lay said. Lay raised more than $100,000 for Bush during the campaign. Enron contributed nearly $2.4 million to candidates, with 72 percent going to Republicans. The company was Bush's tenth-largest contributor, at $113,800. Conoco's Dunham, who also raised more than $100,000 for Bush, declined to discuss his March 21 talk with Cheney except to say he expects the vice president will remain opposed to unilateral sanctions. The issue is a big one for Conoco and other oil and gas companies unable to tap large holdings abroad because of U.S. sanctions in places like Libya and Iran. Exxon, Vice President Jim Rouse said that he and other officials met for 30 minutes with Cheney Feb. 8 and 45 minutes with the task force staff a week later. ``We don't want to wear out our welcome,'' he said. ``We had a story to tell, we told it, that was it.'' Exxon contributed nearly $1.4 million in campaign contributions, with about 89 percent going to Republicans. Complaints From Those Left Out For those denied access to the highest ranking members of the task force, the process confirmed fears of being shut out. ``The energy industry is in the White House,'' said Anna Aurilio, legislative director at the U.S. Public Interest Research Group. Steve Maviglio, a spokesman for Davis, said California's Democratic governor hasn't been allowed any more input than the other 49 governors. Though the administration has contacted California Republicans, Maviglio said ``There hasn't been a very strong link engaging us in terms of the problems.'' A coalition of environmental leaders from 32 organizations known as the Green Group requested a meeting with Cheney to no avail, though they did meet April 18 with Environmental Protection Agency Administrator Christine Whitman. Later, the NRDC, a member of the group, filed formal requests to learn whom task force members saw. It was denied and the group is now appealing. Democratic representatives Henry Waxman of California and John Dingell of Michigan, both members of the House Energy and Commerce Committee, requested similar information. They received a reply May 4 that Laura Sheehan, the committee's Democratic spokeswoman, described as ``inadequate.'' ``We just want to find out who's influencing them,'' said NRDC lawyer Sharon Buccino, ``because it isn't us, the environmental community.''
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