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Enron Mail |
Enron Would Accept Less Money in a Calif. Settlement (Update1)
Bloomberg, 06/06/01 Business World: California's Ship of Fools The Wall Street Journal, 06/06/01 Commentary 'Hi, My Name Isn't Justice, Honey,' and Shame on Lockyer Los Angeles Times, 06/06/01 California Squeaks By The Wall Street Journal, 06/06/01 Top Bush Adviser Moves to Sell Stocks The Washington Post, 06/06/01 What Really Counts? EPS. Merrill Lynch Report, 06/06/01 India: MSEB unruffled amid power talk Business Line (The Hindu), 06/06/01 OMAN LNG STRIKES DEALS WITH INT'L ENERGY COS ON SPOT SALES Asia Pulse, 06/06/01 AES looks to recover Rs 209 cr Gridco dues Business Standard, 06/06/01 MSEB refuses DPC power at 90% PLF Business Standard, 06/06/01 MEXICO: Enron Corp. to sell energy in Mexico in 2002. Reuters English News Service, 06/05/01 US Democrats Seek Hearing On Cheney Energy Task Force Dow Jones Energy Service, 06/05/01 Enron Would Accept Less Money in a Calif. Settlement (Update1) 2001-06-06 01:57 (New York) Enron Would Accept Less Money in a Calif. Settlement (Update1) (Adds spokesman's comment in fourth to sixth paragraphs.) Houston, June 6 (Bloomberg) -- Enron Corp. Chairman Kenneth Lay said the world's largest energy trader would accept less than 100 percent of the money it's owed for power sold to California if it could reach a settlement with the state. Lay, who spoke on PBS's ``Frontline'' television program, which aired nationwide this evening, refused to say how much of a ``haircut'' the company would accept. ``I'm not going to negotiate with the governor through you,'' Lay said on the program. Enron is currently owed $400 million to $500 million by California power purchasers, he said. Most of that money is owed by PG&E Corp.'s Pacific Gas & Electric utility, which declared bankruptcy April 6, so it wouldn't be covered in a settlement with the state, spokesman Mark Palmer said after the broadcast, adding that there are currently no settlement talks going on between Enron and the state. Palmer said a settlement to the California power crisis would have to include issues beyond prices, such as long-term power contracts and retail electricity choice. ``There would have to be a settlement of all the issues in the market before anyone would agree to take a `haircut,''' he said. ``For anyone to even talk settlement, we have to talk about structural issues.'' The ``Frontline'' broadcast also said Duke Energy Corp. has been in secret settlement negotiations with the state for six or seven weeks, which would require that all pending litigation against the company be dropped. The program, a joint production of PBS and the New York Times, said that Duke pledged political and public support for California Governor Gray Davis as part of the settlement. ``I will not do anything that is unseemly or anything that will bleed California dry,'' Davis said, adding that he won't give up legal avenues. He said he gave Duke ``high marks,'' though, for proposing a settlement in the first place. Davis has accused California's major generators and Enron - a state power marketer, but not a generator - of price gouging California consumers. Duke, which produces about 5 percent of the power used in California, recently admitted it charged $3,800 a megawatt-hour for power sold to the state in January and February. That's 15 times above average levels in January. Shares of Houston-based Enron fell 79 cents to $53.75. Shares of Charlotte-based Duke, the top U.S. utility owner, fell $1.70 to $42.50. Business World: California's Ship of Fools By Holman W. Jenkins Jr. 06/06/2001 The Wall Street Journal A27 (Copyright © 2001, Dow Jones & Company, Inc.) Lamenting the politician's lot in "Profiles in Courage," John F. Kennedy wrote that "In no other occupation is it expected that a man will sacrifice honors, prestige and his chosen career on a single issue." Of course, no politician would last long if he didn't blow with the wind nine times out of 10. But on the tenth occasion even California has the right to expect some courage. We don't know what happens when an advanced economy like California's suffers day after day of blackouts. We may be about to find out. Modern office architecture becomes uninhabitable without air-conditioning and elevators. Old people and asthmatics may die in the heat. So may drivers at unlit traffic crossings. Steps could still be taken to lessen the blackouts, but voters wouldn't know the difference, and it's so much easier to cast blame. Gov. Gray Davis prates about a "war with Texas." And who knows what secret failures as a human being led Bill Lockyer, the attorney general, to threaten Enron's Ken Lay with homosexual rape in the California prison system. California has found itself singularly lacking in heroes in its hour of crisis. Mr. Lockyer and Mr. Davis harp on price, but the true problem is the unavailability of power at any price to meet the demand that exists under the current structure of retail rates. Both must know the solution they noisily advocate, federal price controls slapped across Western electricity markets, wouldn't bring power into existence to close the gap. Their proposal would simply saddle the feds with the dirty job of apportioning blackouts from California's mistakes across half a dozen other states. In California itself, municipal utilities in Santa Clara, Palo Alto and other towns have already announced they won't participate in rolling blackouts. The Los Angeles Department of Water and Power certainly isn't volunteering. Why should voters in other states? Why not just cut the lines and let California monopolize the darkness? A state review board in Washington has already vetoed a proposed plant rather than suffer local pollution for power destined for California. Mr. Davis knows this; he knows price controls would create a new problem without solving the shortages. Meanwhile, the specter nobody wants to talk about is the state of California itself headed for bankruptcy if it continues to be willing to pay any price to satisfy the demand of consumers shielded from the true cost of power. Mr. Davis's version of the Big Lie is that Texas is to blame. Texas companies account for just 12% of California's supply, having bought 7,000 of the 20,000 megawatts that local utilities were forced to sell under "deregulation." Being in the right place at the right time has always been profitable, but any windfall has been spread widely among suppliers of gas, pipeline capacity, storage and ancillary services. Take Enron: Its revenues quadrupled in the past year, but so did its costs, and profits are up only 31%. A leaked California memo names as two of the biggest "gougers" BC Hydro, owned by Canadian taxpayers, and the U.S. Bonneville Power Administration. Their sin was letting their reservoirs fill up overnight while meeting local needs with spot-market power, so they could sell their own production for higher prices to California during the day. These are precisely efforts that might stop if price controls were imposed across the West, making the shortages worse, probably much worse. Northwestern smelters might be better off reclaiming the cheap hydro they've been passing on to California -- 3,000 megawatts, enough for two million homes. Farmers could resume irrigating. Seattle, Tacoma, Boise and other neighbors have all done what California has failed yet to do, hiking rates to curb demand. Rather than emulate them, Gov. Davis's peacock of an energy czar, David Freeman, babbles about "public power," the answer to a question nobody asked, the solution to a nonexistent problem. Prices of electricity and natural gas for future delivery are already falling as investors race to build new plants and pipelines to meet the state's future needs. Markets foresee the crisis ending without Mr. Freeman's antique New Deal schemes. What's been missing while folks like him ride their hobby horses, though, is the courage to take steps necessary to minimize the suffering this summer. One large source of untapped power is California's own small generators, known as qualifying facilities. Their fee scale is set by the state, but California couldn't even summon the political competence to keep them in business, so 3,000 megawatts sit idle. People have tried to attach all kinds of ideological baggage to the California mess, but we wouldn't be here if water flows in the Columbia River system weren't down 54% from normal. Last summer, California's fossil-fuel generators increased their output by a whopping 62% to make up the shortfall, mostly by running existing plants harder. Yes, there have been flaky prices, partly because, mysteriously, California continues to use a discredited computer program to book a large chunk of its power one hour in advance. But the flaky prices also represent a system pulling out all stops to save California from itself. We said back in December there's only one solution: Jack up rates to stop consumers trying to burn more power than the state can beg, borrow or steal. The only question was when Gov. Davis would find the courage. Hard to believe, but the price hikes his regulators approved in March are still on the drawing board and busily being watered down. Someone should point out to Gov. Davis that the author of "Profiles in Courage" wasn't endorsing career suicide but suggesting that politicians must husband their leadership for times when it really counts. Not a few people in public life understand this. Al Gore openly yearned for the day when he could justify the compromises and trimming he's done in his life. But Mr. Davis is perhaps too lost in the dark to understand he is blowing the whole reason to have a political career. What borders on the stupefying, though, is the failure of any other Californian of prominence to step forward and speak truth about the power crisis. By all rights Gov. Davis should be a political leper, yet he actually stands a microscopic chance of being re-elected because of the sheer poverty, in a state of 34 million people, of the Republican opposition. Arnold Schwarzenegger is looking better all the time. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. California; Opinion Desk Commentary 'Hi, My Name Isn't Justice, Honey,' and Shame on Lockyer TOM G. PALMER Tom G. Palmer is a senior fellow at the Cato Institute in Washington. E-mail: palmert@cato.org 06/06/2001 Los Angeles Times Home Edition B-11 Copyright 2001 / The Times Mirror Company Here's what California Atty. Gen. Bill Lockyer said at a press conference about Enron Corp. Chairman Kenneth Lay: "I would love to personally escort Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey."' Here's why Lockyer should be removed from his office of public trust: First, because as the chief law enforcement officer of the largest state in the nation, he not only has admitted that rape is a regular feature of the state's prison system, but also that he considers rape a part of the punishment he can inflict on others. Second, because he has publicly stated that he would like to personally arrange the rape of a Texas businessman who has not even been charged with any illegal behavior. Lockyer's remarks reveal him to be an authoritarian thug, someone wholly unsuited to holding an office of public trust. But his remarks do have one positive merit: They tell us what criminal penalties really entail. Contrary to some depictions of prisons as country clubs, they are violent and terrible places. More and more politicians propose criminal sanctions for more and more alleged misdeeds, and as a result ever more kinds of behavior are sanctioned by criminal penalties, perhaps now even selling electricity. Those found guilty of such crimes are put into cages, where they are deprived of their liberty and dignity and, as Lockyer so clearly acknowledged, raped and brutalized. What's worse, Lockyer has indicated that he believes that rape is an appropriate part of the system of punishments he administers. Should it matter that Lay is a businessman? Imagine the outcry if the head of Enron were female. What would Lockyer's fellow Democrats have said to that? Should it matter that Lay is chairman of an electricity generator? Does the nature of his business justify threats to escort him to his own rape? Lockyer told the Los Angeles Times that he had singled out Enron's chairman because the Houston-based company is the world's largest energy trader. So apparently singling out a man for a heinous threat is OK because he's the chairman of the world's largest energy trading company. That's according to the man who, as a state senator, sponsored California's 1984 hate-crimes law. Evidently the crusader against intimidation on the basis of race, religion and sexual orientation feels no hesitation at all about intimidating someone and threatening him with the brutal use of physical force simply because he heads the world's largest energy trading company. Lockyer and Gov. Gray Davis seem to think that the best way to keep the lights on is to threaten electricity producers with brute force, rather than to offer to pay competitive rates in competitive markets. Are energy producers to blame for California's energy problems? No. Bad policies, including rigid controls on retail prices of electricity, are the cause of the problem, not the people who generate energy. Scapegoating producers and threatening them with violence is an old ploy of authoritarians. Californians should not stand for it. An Enron spokesman said that Lockyer's chilling stated desire to arrange the rape of Lay does not merit a response. The spokesman is wrong. Lockyer's remarks merit public disgrace and removal from office. After all, rape is not a form of legal justice in America--is it? GRAPHIC-DRAWING: "Is being raped part of my sentence?", Paul Conrad; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. REVIEW & OUTLOOK (Editorial) California Squeaks By 06/06/2001 The Wall Street Journal A26 (Copyright © 2001, Dow Jones & Company, Inc.) The California energy crisis is now more than a year old and Governor Gray Davis has done nothing but squeak at it. At first, he attacked out-of-state power generators for being pirates and marauders. But lately he has focused on FERC and President Bush, demanding that the federal government place price caps on the sale of wholesale power. He's even rustled up 10 economists -- including the dad of deregulation, Alfred Kahn -- to support him. Well, as most everybody knows -- including the economists who have come out in favor of them -- price caps don't work. If caps are set too low, (as politics often dictate), existing supply will shrink and demand will grow, making the situation worse. Even "correctly" set price caps will discourage additional supply and do nothing to moderate demand. The usual result is an aggravation of shortages and rationing. Indeed, the history of price caps, particularly during the energy crisis in the early 1970s -- when oil prices were capped and lines at gasoline stations were long -- bears this out. The pro-price-caps argument however is a clever one. It rests on the notion that there is no "effective competition" in the California energy market. According to one of the 10 pro-price-cap economists, Paul Joskow at MIT, the energy market in California is characterized by inelastic demand and very, very tight supplies, which conspire to produce, at certain times, prices above those that would have obtained under competitive conditions. Mr. Joskow examined the California energy market during the summer of 2000, looking at market fundamentals (the broad forces determining supply and demand); he found that 25% to 30% of the wholesale prices of electricity during June, July and August cannot be explained by market fundamentals and should be attributed to market imperfections. As an argument for price caps, this is hardly overwhelming. Especially since there are several perfectly respectable and compelling reasons to look no further than market fundamentals. Such as the fact that the price of the most important input for almost half the electricity generated in California, natural gas, has been rising over the past year. Such as the fact that natural gas pipelines are filled to capacity, thus bidding up the price to transmit. Such as the fact that the worst drought in the Northwest in 60 years has reduced the amount of hydroelectric power in the market, putting even more demands on natural gas generation. Such as the fact that imports into the state, which were running 20% and up to 25% during peak usage, have declined. And the fact that the price of tradable permits for NOx emissions -- which must be held by plants generating electricity -- has skyrocketed. Not least the fact that demand in California during the past several years, unfettered by rate increases, has zoomed dramatically. At any rate, electric power is increasingly expensive all over the country; indeed, California's neighbors, the states of Washington, Idaho, Wyoming, Arizona, Nevada, Oregon, Utah and Montana, have had to bump up utility rates 30% to 50%. So where is the tablet of stone saying that California, with its especially restrictive environmental regulations, should be any different? The bad news for California is that, poor dears, it can't be different. Market fundamentals, like supply and demand, rule. But that's also the good news. High wholesale prices (and necessary profits) have done their job; they have brought forth a number of suppliers, in the form of more than a dozen plans for significant new generating plants; in fact, plans have even been announced to build more natural gas transmission pipelines. Too, demand has started to abate; peak demand on a monthly basis has fallen 4% to 9% from last year, doubtless a response to a "temporary" 10% rate hike in January and the California Public Utilities Commission's decision in March to finally really, really raise rates by as much as 50% on average. (The details of that plan were announced in May and rate increases will show up on this month's bills.) So California's blame-shifting pols can point fingers til the state freezes over. The market is working, and imposing price caps would not only interrupt that process, but would be unnecessary. Of course, there is a painful lag between the market signals of high prices due to shortages and the market remedies of increased supply and lower demand. And California will probably feel lots of that pain this summer in the form of continued high prices and blackouts. But, in the long run, the market will be successful in creating new supply and lower prices. Unfortunately California's energy glut will probably come too late to avoid a siege of political spinning and demagoguery. Ultimately we have to hope Californians will understand it is their politics that has served them poorly. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. A Section Top Bush Adviser Moves to Sell Stocks Mike Allen Washington Post Staff Writer 06/06/2001 The Washington Post FINAL A10 Copyright 2001, The Washington Post Co. All Rights Reserved Karl Rove, President Bush's senior adviser, acted yesterday to sell his stocks in energy, defense and pharmaceutical companies with stakes in administration policies. An administration official said Rove has long planned to sell his stocks, and made a final decision at an April 24 meeting with White House lawyers, but has been unable to complete the process because of the complex paperwork and legal issues. A financial disclosure form released by the White House on Friday showed Rove owned holdings worth more than $100,000 each in Boeing Co., one of the nation's three largest defense contractors; Enron Corp., a Houston energy conglomerate; General Electric Co., a supplier for nuclear and fossil fuel power generators; and Pfizer Inc., a pharmaceutical manufacturer. A notation dated May 18 said, "All individual stock holdings to be sold." Rove yesterday sought a certificate of divestiture from the Office of Government Ethics, which allows deferral of capital gains taxes on sales that are made to avoid conflicts. The holdings would be rolled into government securities or diversified accounts. Bloomberg News reported Monday that Rove had not yet sought the certificate. An administration official said yesterday that Rove had submitted a draft request. Democratic Senate aides said they would determine if a hearing might be warranted, since Rove had retained his holdings throughout the administration's deliberation on its energy policy, which Bush announced May 17. The administration official said Rove has "intended to sell all of his stock from the very beginning, and was told not to proceed" by the White House counsel's office until his situation was thoroughly examined. At the April 24 meeting, lawyers outlined several options and Rove chose divestiture. "Mr. Rove has followed the instructions of the White House counsel's office and has avoided discussions that could specifically or materially affect his holdings while consultations regarding his financial situation were ongoing," the official said. http://www.washingtonpost.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. What Really Counts? EPS. 2001-06-06 07:49 (New York) M E R R I L L L Y N C H Research Comment Natural Gas - Diversified Reference Number 30215707 United States Jun/06/2001 07:49 Donato J. Eassey (1) 713 759-2591 Reason for Report: Take Advantage of CA-Related Market Weakness in Energy Merchant Conglomerates Who Let The Bears Out? CA Every once in a while issues and allegations become larger than life. That seems to be the case in California. While many issues beyond CA are negatively impacting the Energy Merchant Conglomerates (EMCs), in our opinion it is the CA issues themselves which appear to be at the very root of the problems. These issues include the uncertainty at the FERC, the threat of CA legislated Windfall Profit Taxes (WPT), Congressional examination of price caps and, to a lesser extent, the turnover of Senate control to the Democrats. As for the allegations of market manipulation and abuse, ultimately such charges may have to be settled in the courts. Unfortunately, the legal system is rarely swift, and consequently our EMCs may remain under near term pressure as media examinations and political rhetoric heat up with summer temperatures. In short, public discussions have already taken a large toll, with Enron, Dynegy, El Paso and Williams down a combined $36 billion in market cap value or 21% since the beginning of the year. Yet at worse, we assess the CA exposure for these players to be only a bit over $1.6 billion! Bottom line, however, is that with EPS growth rates remaining strongly intact, it is exactly during these periods of weakness that we would be aggressively building positions. We think we are there. Case in point, Table 1 below illustrates valuations for our EMCs relative to the S&P500 over the last 10 years; the EMCs are now trading below their 10-year average to the S&P, while we believe their growth prospects are the strongest they have ever been during this time. Maintain Perspective At the risk of flogging Economics 101 once again, high prices begin as a function of supply relative to demand. When there are overwhelming forces at work for a commodity with no readily available substitution, the situation can get out of hand as is the case in California. While demand was rapidly increasing the past 10 years and consumer prices were either frozen or reduced since '97 (few discuss the fact that California consumers benefited for several years without a rate increase) the CA environment virtually prohibited any new supplies from being built. At the same time, end users (including the utilities) were forced to buy primarily on the spot market, exacerbating market volatility. While hindsight is 20/20, it should be no surprise that given zero price feedback from consumers and a flawed bidding process, it was only a matter of time before this quasi-regulated market became unraveled. Laws generally do not prohibit people from making money in the U.S. in a tight supply/high demand marketplace, particularly in volatile markets such as commodities on the Nymex or stocks on the NYSE. This is key because anyone willing to except trading risks and that have the financial and risk management wherewithal can and do participate in these markets - freely. It should be no different in the secondary energy commodity OTC market. To suggest price caps or a WPT are the answer is to suggest that we put a cap on stock prices and place a WPT on stock trading profits if they are higher than one's liking, despite the risks involved! In our view many parties have participated in creating California's energy deficiency problems. A dysfunctional market that is inefficient due to ignorance of market realities is hardly against the law - as painful as it might be to correct. Obviously, if any direct, collusive or illicit form of market manipulation is involved that would be a different story. And once the facts are allowed to unfold, we are likely to see just who was responsible for the current situation - hopefully before CA takes an even greater toll on the nation's energy infrastructure, or worse, on the national economy. As the lightning rod to the California Troubles - our four EMCs as a group have lost a combined $36 billion in market cap value or 21% since the beginning of the year. Yet at worse, we assess the CA exposure for these players to be only a bit over $1.6 billion in gross receivables (and likely only half this on a net basis)! Despite the challenges, however, it is exactly during these periods of weakness that we are reiterating our ratings. Our EMCs are now trading below the S&P 500's relative P/E, off from their recent high of 199% and more notably their 104% 10-yr average. Unfortunately, with further noise and political uncertainty likely to remain in vogue, more collateral damage is likely. Bottom line, however, is that EPS growth prospects not only remain intact, they are the strongest the EMCs have experienced in their history; ultimately, we believe this will be the last dynamic left standing. Those seasoned energy investors that recognize reality over rhetoric should, in our view, realize gains for stepping up at today's levels. India: MSEB unruffled amid power talk 06/06/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, June 5. EVEN as officials from various financial institutions and banks split hairs in Singapore on whether to sink or sail with the Dabhol power project, the Maharashtra State Electricity Board (MSEB) is cool about the entire affair. Unlike previous instances when the odds were stacked against it, this time MSEB knows pretty well that whatever happens, it will remain unscathed. If someone has to take a hit, it has to be the financiers and maybe the Governments. At the hearing before the Maharashtra Electricity Regulatory Authority (MERC), the Advocate-General, Mr Goolam Vahanvati, had said on behalf of the board that MSEB was being kind towards Enron when it rescinded the contract for "material misrepresentation". One more step, and it's fraud, he had told MERC. Knowing this fully well, MSEB has kept its cool throughout the altercation. It firmly believes that if nothing else, it can pin down the company on just this one point at any forum. Enron too has not said at any point of time that it can actually perform as per the "cold-start graph" in the power purchase agreement. In fact, it has said such performance - making available full power in 180 minutes - is "not possible" by any such plant in the world. In a way, it was MSEB's defiant posturing coupled with the Maharashtra Government's passing the buck up that got the Central Government to act. One thing evident throughout the crisis is that all the players are trying to save their own skin. In spite of the developments, Enron has played its cards close to its chest, and hinted to institutions at taking a hit on its returns only a few days ago. Even that, Mr Wade Cline, Managing Director, Enron India Pvt Ltd, is reported to have told Indian lenders, would hinge on substantial give and take. Indian lenders have a genuine case in that they are the ones without any assurances apart from the plant itself.They cannot do much except try get the players to somehow shake hands. They had tried to convince the Government some time ago to get MSEB to activate the escrow and increase the letter of credit amount. But they were told off by MSEB which was in no mood to relent. Tomorrow, Enron will make presentations at Singapore on what it feels can be done to move ahead. Whatever the outcome of the meeting, MSEB is unlikely to let anything queer its pitch. - Dinesh Narayanan Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. OMAN LNG STRIKES DEALS WITH INT'L ENERGY COS ON SPOT SALES 06/06/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUSCAT, June 6 Asia Pulse - Oman LNG has signed agreements with a several major international energy companies for future short term sales of liquefied natural gas to the United States and Europe. The company has also clinched a deal with Enron Corporation to sell a shipload of LNG to the US market in August this year. This is in addition to six LNG cargoes that the US-based energy giant will be lifting from Oman LNG's Qalhat plant between March and December this year, using its own vessel, the Hoegh Galleon. The deals, according to a senior marketing official of the company, mark a significant breakthrough in Oman LNG's efforts to consolidate its presence in the fiercely competitive transatlantic energy market. Master Agreements, which broadly set out terms governing transactions between two entities, have now been signed with TotalfinaEif (France), Sempra Energy (US), and Cabot LNG (US), said Adnan J Rajab, OmanLNG's Gas Marketing Negotiator. Similar agreements are also being finalised with CMS Energy of the US, British Petroleum, GAz de France and Shell North America, he added. We are very encouraged by these agreements because Western markets have traditionally been the stronghold of more established LNG producers. By signing Master Agreements with most of the biggest players in the US and European energy markets, Oman LNG stands a far better chance of exporting some of its surplus volumes in remarks to the Observer. Until exports to India commence early next year, Oman LNG will have some excess capacity on its hands, which it is aggressively looking to sell in short term and spot sales. The trasatlantic market appears to be the most prospective at present. Meanwhile, Enron Corporation has signed a contract to lift 135,000 tonnes of LNG to the US market in August this year. It is the second such spot deal signed with Enron, which lifted a similar quantity of gas from Oman LNG's Qalhat facility in August last year, Rajab said. Enron's Dabhol Power project in India is also committed to buying 1.6 million tonnes per annum (mtpa) of Omani LNG over a 20-year period. The first shipment to Dabhol is due early next year. According to Rajab, the successful export of spot cargoes to the US through Coral Energy and Enron led to Master Agreements being signed with a number of International energy firms, with discussions under way with several other majors. Exports to the European and American markets, Rajab explained, largely hinge on the availability of LNG carriers, which are invariably in short supply throughout the year. Without carriers of its own, Oman LNG has to depend on chartered vessels. (ONA)l 06-06 1009 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. AES looks to recover Rs 209 cr Gridco dues Santosh Tiwary NEW DELHI 06/06/2001 Business Standard 2 Copyright © Business Standard After Enron-promoted Dabhol Power Company in Maharas-htra, it is now AES' turn to explore various options for recovering the Rs 209 crore dues from the state-run Grid Corporation of Orissa (Gridco). AES is the 49 per cent stake holder in Orissa Power Generation Company (OPGC) owning two units of 210 mw each in the Ib valley complex. It supplies power through Gridco, the transmission company. "We are currently considering various options, keeping OPGC's best interest in mind," a company spokesman told Business Standard. The company gave an ultimatum to Gridco last month by not reopening one unit for a week after the scheduled outage. AES spokesman said that after verbal assurance by the Orissa energy minister and energy secretary on taking concrete steps to pay the outstanding dues, the unit was restarted. With no such steps in sight, AES is forced to explore the options available under the power purchase agreement (PPA), he added. Incidentally, the PPA between the two parties, also provides for arbitration in India. AES acquired 49 per cent stake in OPGC in December 1998 by paying $145 million on the basis of secured payments from Gridco and full control of the day-to-day management. In the absence of timely payments from Gridco to OPGC, AES decided to curtail generation to around 68.5 per cent annual PLF against 90 per cent as demanded by Orissa, said the spokesman. The decision was taken to prevent further increase in the receivables and protect cash flow, he added. He added that linking distribution company Cesco's default to Gridco with the whole issue was not justified. "We acquired OPGC on secured payment backed escrow arrangement for 100 per cent of OPCG's dues. Our subsequent acquisition of Cesco in no way dilutes Gridco's payment obligations in terms of our PPA, escrow and other contractual arrangements," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. MSEB refuses DPC power at 90% PLF Renni Abraham MUMBAI 06/06/2001 Business Standard 1 Copyright © Business Standard The Maharashtra government will not buy power from the first phase of the Dabhol Power Company's (DPC) project at a 90 per cent plant load factor (PLF), a senior state government official said here today. The statement represents a hardening of Maharashtra's position on talks with DPC and virtually kills the latter's proposal to split tariffs for the Centre and Maharashtra. The Maharashtra State Electri- city Board (MSEB) is now required to buy 90 per cent of the power generated by the first phase (740 mw) of the project. But during negotiations with the Godbole Committee, it has been demanding that the requirement be cut to 35 per cent. At the last Godbole Committee meeting, DPC had put forward a plan to split tariffs for the Centre and Maharashtra, with the Centre paying Rs 3.30 per unit of power and MSEB paying Rs 3.50. The Centre, DPC suggested, could buy two-thirds of the power it generated, once the second phase (1,444 mw, taking the total capacity to 2,184 mw) was completed. Maharashtra's latest position undermines DPC's proposal since the Enron -promoted company's tariff hinges on MSEB absorbing 90 per cent of the power it generates in the first phase. A senior state government official said: "The Centre has been talking a lot about playing the role of a facilitator. What we need is a buyer for the second phase." Despite recent central government pronouncements, state government officials privately argue that the Centre is not playing an active role in resolving the problems that have plagued the DPC project. At the very first Godbole Committee meeting he attended, the Centre's nominee, AV Gokak, adopted a non-committal stand. The Maharashtra government official added: "Gokak said he was merely attending the meeting in the capacity of a messenger and would communicate to the Centre any solution worked out by the renegotiation committee. The Union power ministry has stated that a solution worked out by the renegotiation committee would be acceptable to it. Unless the Centre takes an active part and assures the offtake of the second phase, no solution can be worked out." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. MEXICO: Enron Corp. to sell energy in Mexico in 2002. 06/05/2001 Reuters English News Service (C) Reuters Limited 2001. MONTERREY, Mexico, June 5 (Reuters) - U.S. energy giant Enron Corp. said on Tuesday its Mexican subsidiary would begin selling electrical power in Mexico late next year, after construction of its Nuevo Leon plant is completed. Enron Mexico President Jaime Alatorre said the unit began building the co-generation plant in May to supply energy to supply Mexican glassmaker Vitro SA , industrial conglomerate Grupo IMSA and No. 2 Mexican cement maker Apasco . He said the $200 million project would eventually generate 245 megawatts and supply varying amounts of energy to each of the Mexican industrial giants. "Vitro will consume 110 megawatts, IMSA 90 and Apasco the remaining 45 megawatts," Alatorre said at a forum for Mexican business executives in the northern city of Monterrey. According to Vitro, the new plant will provide energy to at least 12 of its production units in Mexico and will save it some $10 million in annual energy costs. IMSA President Eugenio Clariond Reyes told Reuters the new plant will cut annual energy costs at the industrial conglomerate by about 13 percent. Alatorre said Enron is looking at other co-generation projects but would not provide further details. Mexican law reserves the sale and distribution of electricity to the state, and only allows private investment in projects meant for co-generation, or for co-generation of energy meant for personal consumption. Alatorre said that would have to change if Mexico is to continue providing for its energy needs into the near future. "Congress must be made conscious of the fact that the issue of sector reform can wait no longer," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. US Democrats Seek Hearing On Cheney Energy Task Force 06/05/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) WASHINGTON (AP)--Democrats on a House committee urged Rep. Dan Burton, R-Ind., to look into U.S. Vice President Dick Cheney's energy task force, which met privately with major Republican donors in formulating the Bush administration's energy policy. California Rep. Henry Waxman, the ranking Democrat on the Government Reform Committee, asked chairman Burton to conduct a congressional hearing on what took place at the Cheney group's secret meetings and the identities of all participants. "The Cheney task force has conducted its meetings in private, and reportedly has obtained input from private citizens and groups, including political contributors," Waxman wrote Burton. The Associated Press reported last month that GOP contributors, including executives from power wholesaler Enron Corp. (ENE) and the Edison Electric Institute, the utility industry lobbying group, had met with Cheney to discuss energy policy. Committee spokesman Mark Corallo said the Republican staff hasn't had a chance to discuss the letter with Burton. Democrats criticized Burton's aggressive congressional investigations of the Clinton administration, especially the campaign fund-raising scandal surrounding the 1996 presidential election. Waxman and other Democrats said Burton's fund-raising probe was conducted in a highly partisan fashion that ignored Republican fund-raising excesses. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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