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Enron Mail |
COMMODITIES & AGRICULTURE - Soft commodity traders find the going hard.
Financial Times, 07/03/01 GLOBAL INVESTING - Enron looks to make power play in continental Europe. Financial Times, 07/03/01 COMPANY BUYS SOME ASSETS FROM ENRON FOR $120 MILLION The New York Times, 07/03/01 Crude Oil Transport Buys Plant, Pipelines from Houston-Based Energy Firm KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas, 07/03/01 Ads Brawl in a Never-Ending Political Season The New York Times, 07/03/01 JAPAN: S.Korea SAROK buys 10,000 tns of western aluminium. Reuters English News Service, 07/03/01 India: FIs, banks favour AES taking over Dabhol Business Line (The Hindu), 07/03/01 India: MSEB asked to prove confidentiality of Enron papers Business Line (The Hindu), 07/03/01 India: New power Bill set to free captive generation Business Line (The Hindu), 07/03/01 India Inc steps up social works, but ... The Economic Times, 07/03/01 Cheney raised Dabhol issue with Sonia The Times of India, 07/03/01 CM, Pawar flayed for contradicting views on Enron The Times of India, 07/03/01 INDIAN FIs READY TO TAKEOVER DABHOL POWER, BUT WILL NOT RUN IT Asia Pulse, 07/03/01 Three US firms in talks with Indian lenders to take over DPC Business Standard, 07/03/01 Selected details from state's unedited power contracts, at-a-glance Associated Press Newswires, 07/02/01 SMARTMONEY.COM: What Will the Second Half Bring? Dow Jones News Service, 07/02/01 USA: Duke denies using plant to sway Calif. power prices. Reuters English News Service, 07/02/01 State controller releases unedited power contracts Associated Press Newswires, 07/02/01 Oregon Lawmakers Pass Bill To Delay Elec Dereg 5 Months Dow Jones Energy Service, 07/02/01 COMMODITIES & AGRICULTURE - Soft commodity traders find the going hard. By ADRIENNE ROBERTS. 07/03/2001 Financial Times © 2001 Financial Times Limited . All Rights Reserved Soft commodity traders find the going hard - Barriers to entry are daunting and the big incumbents are facing months of adaptation and belt tightening, says Adrienne Roberts. Profit margins in soft commodities trading are wafer-thin. "The margins are to be found between the wallpaper and the wall," said the head of a European trading business. "We are barely making a profit in cocoa, and we are one of the biggest participants in the market," said an executive at a leading London futures brokerage. Enron, the largest natural gas and electricity trading house in the US, announced recently that it is closing its London-based cocoa, sugar and coffee brokerage business following an internal company review. Members of the industry think the brokerage, Rudolf Wolff, was failing to generate enough cash. "US companies tend to be much more aggressive on the kind of returns they want from each desk. I'm not surprised Enron decided to pack it in," said a US trader. Enron says it is continuing to look into other opportunities in the softs industry. Part of the problem is depressed markets, with low prices and thin volumes. "Coffee is at a 30-year low, cocoa is flat at this time of year - I would say it's extremely challenging unless you have critical mass," said the head of a London softs desk. "Merchants are the source of our income. If they're squeezed, they squeeze everyone." Business conditions have been particularly difficult, for merchants sourcing from Cote d'Ivoire, a major coffee producer and the world's largest cocoa grower. Political upheaval and industry restructuring have reduced the volumes of stock coming on to the physical market. "The only answer is greater efficiency; lower costs," said a manager at a leading soft commodities merchant. Customers found a way of cutting their brokerage costs late last year when the London International Financial Futures and Options Exchange took its commodity products electronic. Customers can now ask their brokers to provide them with trading screens, with uncomfortable effects on brokers' execution fees. A year ago, a client who wanted to buy 10 lots of coffee might telephone his broker, get some advice, hear the latest on the weather in Brazil or politics in Cote d'Ivoire, and have his trade executed by the broker. Now the client might connect directly to Liffe, put through his own trade electronically and receive the documentation via the web. He may not speak to his broker at all. Brokers earn a fee for providing the screens, but not as much as they would from execution. "Margins are under tremendous pressure in the futures business because of the move to electronic trading," said an executive at a London bank. "You're seeing the tip of the iceberg now. If electronic trading is having such a major effect on brokers in the softs market, what does it mean when metals and energy go electronic?" The execution and advice functions, once part of the same package, have been separated. The question of where these clients will go for advice and what they are prepared to pay for it has not yet been answered. "The key to this business is volume," said Brian de Clare at ABN Amro. "Your incremental cost is negligible - putting through 100,000 lots costs pretty much the same as 500,000 lots. High volumes, in conjunction with good service, will determine who's going to get the lion's share of the business and who won't." ABN Amro is one of the few participants in the industry that is expanding its softs business and recruiting. Brokers think more people will begin dropping out of the market and there will be consolidation among those in the industry. There are rumours that Truxo, which belongs to the Neumann group, is thinking of withdrawing from clearing customer business. Head counts have come down since the demise of the open outcry trading pit, but some businesses are looking to streamline further. Commodities brokers that trade on the floor might have from four to seven support staff to each trader. In the softs business "we're now starting to see that people who were in the office are not needed to the same degree because people have got their own screens", said one. There is not much relief in sight. For smaller brokers, the barriers to entry are increasingly daunting. For the big incumbents there may be many months of adaptation and belt tightening ahead. © Copyright Financial Times Ltd. All rights reserved. http://www.ft.com. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. GLOBAL INVESTING - Enron looks to make power play in continental Europe. By JULIE EARLE. 07/03/2001 Financial Times © 2001 Financial Times Limited . All Rights Reserved Ten years ago Enron, the US energy giant, derived its profit purely from its home market and from a few projects in the UK. It operated pipelines and produced power. Today, the Houston-based company has recreated itself as a global energy merchant, selling and delivering gas and electricity, and its profits are increasingly produced offshore. Having consolidated its position in the UK, Enron is making a big push into continental Europe to capture the growth potential in deregulating energy markets. The company moved into the energy selling business with the deregulation in the US of gas in 1994 and electricity in 1996. It now has projects in more than 40 countries. The change in strategy, away from owning infrastructure and towards energy selling, has seen its earnings drift away from pipelines in the US towards a rapidly growing wholesale gas and power business. Enron does not release its revenue breakdown but it is clear from its volumes that the wholesale unit - which involves energy trading and marketing and risk management services - generates about 85 per cent of the company's profits. A third of the company's wholesale business comes from Europe, including the UK, and Enron is focused on growing in France and Europe as a whole. Its pipeline business in the US, once the engine of its growth, now comprises four interstate natural gas pipelines and represents less than 10 per cent of earnings. Enron uses its assets to supply customer power needs. It also has power stations in the US, UK, Italy, Poland, Turkey and Spain. Enron is aggressively eyeing Germany, France, the UK and the Nordic region for opportunities offered by deregulation. The company has seen growth quadruple in its wholesale business in Europe in the past year alone. Enron does not reveal a geographical breakdown of its revenue but its physical volumes of gas traded in Europe leapt from 2,469bn btu (British thermal units) of gas a day in the first quarter of 1999 to 8,699bn btu in the same period a year later. Growth in electricity traded was even stronger, jumping from 7,844 megawatt hours in 1999 to 36,339 in the first quarter of last year. Those figures also include small gas and electricity volumes for Australia and Japan, which are relatively new markets for Enron. Ray Niles, an analyst for Salomon Smith Barney in New York, says that while the UK was important, continental Europe was the key prize. The total gas power market in the US is worth $300bn in revenue while Europe is worth $250bn. Analysts will be looking to Enron's second quarter results, due on July 12, after the company posted $406m in first-quarter profits, a 20 per cent increase. Key areas of interest are likely to centre on its wholesale business in Europe. © Copyright Financial Times Ltd. All rights reserved. http://www.ft.com. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business/Financial Desk; Section C COMPANY NEWS COMPANY BUYS SOME ASSETS FROM ENRON FOR $120 MILLION Reuters 07/03/2001 The New York Times Page 4, Column 1 c. 2001 New York Times Company EOTT Energy Partners said yesterday that it paid $120 million for energy assets from affiliates of the energy marketer and trader, Enron. EOTT, based in Houston, has bought a hydrocarbon processing complex in Morgan's Point, Tex., and a liquids pipeline grid system, as well as a natural gas liquids storage facility. EOTT also entered into a 10-year agreement for production from the hydrocarbon processing complex, and arranged a 10-year storage and transportation agreement for use of the pipeline and storage systems. Dana Gibbs, president of EOTT Energy Corporation, a general partner of EOTT Energy Partners, said that the acquisition would add to earnings. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Crude Oil Transport Buys Plant, Pipelines from Houston-Based Energy Firm Nelson Antosh 07/03/2001 KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) EOTT Energy Partners said Monday that it is paying Enron Corp. approximately $120 million for an MTBE plant in Morgan's Point, a natural gas liquids storage facility in Mont Belvieu and a pipeline grid for carrying the liquids. The processing facility, which averages 14,000 to 15,000 barrels per day of the gasoline additive, properly known as methyl tertiary butyl ether, is one of the largest plants of its type in the United States. It also produces a smaller quantity of isobutylene. The pipeline grid, which totals 240 miles of pipe, connects the storage facility in Mont Belvieu to the MTBE plant, and to similar plants along the Houston Ship Channel. The natural gas liquids storage facility has 10 million barrels of capacity. Simultaneously with the purchase, EOTT signed a 10-year agreement to sell the production from the MTBE plant to Enron, plus a 10-year storage and transportation agreement for the use of the storage facility and pipelines. This agreement has Enron providing the feedstock and taking the plant's output, paying EOTT a fee for producing the fuel additive. The acquisition provides greater diversity for EOTT Energy Partners, which is a major marketer and transporter of crude, said spokeswoman Gina Taylor. The deal will boost earnings and provide stable cash flows without exposure to commodity markets and prices, said Dana Gibbs, the president of EOTT Energy, its general partner. The partnership's common units, which are traded on the New York Stock Exchange, gained 15 cents to close Monday at $18.55. EOTT Energy Partners is a publicly traded company whose general partner is a 100 percent-owned subsidiary of Enron. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. National Desk; Section A Ads Brawl in a Never-Ending Political Season By ALISON MITCHELL 07/03/2001 The New York Times Page 13, Column 4 c. 2001 New York Times Company WASHINGTON, July 1 -- With jittery House Republicans complaining that President Bush is losing the important opening skirmishes over energy policy, a political rescue squad has hit the California airwaves. A new group, the American Taxpayers Alliance, led by Scott Reed, the campaign manager for Bob Dole's 1996 presidential race, began running 30-second commercials in California a few weeks ago blaming the state's Democratic governor for the state's power problems. ''Grayouts from Gray Davis,'' the tagline of the television advertisements says. Mr. Reed said his group, whose donors he would not name, had spent $2 million on the commercials. Another new coalition is also preparing advertisements on the energy front, taking on environmentalists for standing in the way of energy production. The coalition, the 21st Century Energy Project, was assembled by Ed Gillespie, a former campaign strategist for President Bush. And supporters and opponents of patients' rights legislation before Congress are taking to the airwaves in the Congressional recess. The barrage of commercials shows that the permanent campaign that was the hallmark of the Clinton years is here to stay. Mr. Bush may have promised to change the tone in Washington and end the divisive mentality of constant confrontation, but the year-round media battle over issues and ideas has never stopped. And some of his former campaign advisers and strategists are in the fray. The volume of advertisements was even intense during the first 100 days of the Bush presidency, usually a time of relative peace in politics. ''There was significantly more television advertising in the first six months of this administration than there was in the past,'' said Ken Goldstein, a professor of political science at the University of Wisconsin, who studies such trends. The Democratic National Committee is unabashedly on a war footing, although the size of its advertising purchases -- several hundred thousand dollars' worth this year -- has not matched the volume of its oratory. The Democrats marked Mr. Bush's first 100 days with a commercial featuring a winsome blond tyke holding up a glass and cooing, ''May I please have some more arsenic in my water, Mommy?'' Last week, the Democratic National Committee broadcast a new spot, saying, ''Insurance companies. H.M.O.'s. Big corporations. They've contributed $51 million to Bush and the Republicans. And now Bush says he'll veto a real patients' bill of rights.'' Terry McAuliffe, chairman of the Democratic National Committee, is boastful about such early advertising. ''It's never been done before,'' he said, promising ''a very aggressive full-time campaign.'' The Republican National Committee has so far resisted going on the air so early before the midterm elections. ''It's a judgment call you have to make -- whether paid media is best to spend now, next year or whenever,'' said Trent Duffy, a party spokesman. ''You might think it's corny,'' Mr. Duffy added, ''but it's a part of the president changing the tone.'' One White House official said Mr. Bush's political team did not believe that commercials this early in a political cycle had any lasting effect. And he said the fact that an array of industries and Bush allies were on the air also made it easy for the Republican National Committee to stay quiet. ''If other parties are out there making the same point,'' the official said, ''why spend your own money?'' Federal laws leave issue advertisements largely unregulated unless there is coordination between a group and a candidate or party. But the standard for proving coordination is high. ''There are so many reliable allies out there, you don't need to coordinate,'' said Ken Gross, an expert in election law. ''The party committee can put up on its Web site what its agenda is and the outside groups can go to town.'' And so they have, from the earliest days of the Bush presidency. The Sierra Club went on radio and television in January to fight the nomination of Gale A. Norton as interior secretary. One advertisement called Ms. Norton ''an anti-environmental extremist who could divide us, who is out of step with the majority of Americans.'' The Republican Majority Issues Committee, using mirror-image language, defended the nomination of John Ashcroft for attorney general with television advertisements that proclaimed, ''Party partisan extremists won't give our new president a new chance.'' Some groups choose to give their allies in the White House or Congress a heads-up when they take to the airwaves. Mark Lampkin, a former aide in the Bush campaign, informed the White House when a coalition he worked with, Americans for Better Education, ran two rounds of radio advertisements to promote Mr. Bush's education program. ''To protect both sides of the equation,'' Mr. Lampkin said, ''we were very conscious of not discussing these things or having a lot of interaction.'' Stephen Moore, whose Club for Growth ran television advertisements promoting the president's tax cut, said he deliberately did not have contact with either the White House or Republican leaders in Congress. ''We want to give them plausible deniability so they can say we have no idea they are going to attack Specter,'' Mr. Moore said, referring to Senator Arlen Specter, Republican of Pennsylvania. One round of the advertisements lampooned, as friends of the Internal Revenue Service, Republican Senate moderates who were skeptical of the tax cut, including Mr. Specter, Lincoln Chafee of Rhode Island and James M. Jeffords of Vermont, before he became an independent. While the Democrats' positions are often amplified by groups like the environmental and labor movements, Congressional Republicans have made clear in recent years that they expect industry allies to be on the air creating public support for votes in their favor. A Republican strategist said Representative Tom DeLay of Texas, the majority whip, had recently told officials of the energy industry that Republicans were not here to defend them and that they needed to defend themselves. Mr. DeLay, the strategist said, warned the officials that they were in danger of losing the public relations war. Asked about those warnings, Emily Miller, a spokeswoman for Mr. DeLay, said energy officials were ''one group of many'' that Mr. DeLay had talked to as energy-policy point man in the Republican leadership. ''Congressman DeLay has been telling everyone about the need for us to do a better job in communicating our energy message and the need for a comprehensive national energy policy,'' Ms. Miller said. Sometimes because of the web of relationships in Washington and minimal disclosure requirements, it is difficult to tell when an issue advocacy effort is actually an industry effort. Mr. Reed says his American Taxpayers Alliance has more than 10,000 donors and is on a political mission: to shield vulnerable Congressional Republicans from any blame for how Washington responds to California's energy crisis and to put the focus on Mr. Davis. ''We could single-handedly lose the House if California gets blown away,'' Mr. Reed said. Yet it is also the case, several Republicans said, that energy interests have contributed to Mr. Reed's advertising campaign. Alex Castellanos, the maker of the advertisements, is the head of National Media, a firm that also produced a radio and television spot this spring for Arctic Power, a group pushing Mr. Bush's call for drilling in the Arctic National Wildlife Refuge. Mr. Castellanos, who produced the Republican National Committee's advertisements in the last presidential campaign, said in a brief interview that he did not discuss his clients. Mr. Gillespie, whose 21st Century Energy Project is planning a television campaign, also represents the Enron Corporation, the nation's biggest electricity trader. He said the two accounts were separate. He said his group was reacting because it believed that the environmental groups had been on the air unchallenged. ''There has been a vacuum in the energy debate,'' he said, ''and the liberal groups like the Sierra Club and the Natural Resources Defense Council, who are not sufficiently understood to be pawns of the Democratic National Committee, have had a free ride in this debate.'' Phil Clapp, president of the National Environmental Trust, said environmentalists started advertising because they had watched industry pour millions of dollars into such campaigns before. ''We fully expect that on a variety of environmental issues ranging from energy to the Clean Air Act,'' Mr. Clapp said, ''that we will see these kinds of industry campaigns, and we felt it was best to be there first.'' Photo: Political contests have long been settled, but commercials on political issues, like this one attacking patients' rights legislation, continue. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. JAPAN: S.Korea SAROK buys 10,000 tns of western aluminium. 07/03/2001 Reuters English News Service (C) Reuters Limited 2001. TOKYO, July 3 (Reuters) - South Korea's Supply Administration (SAROK) bought 10,000 tonnes of western primary aluminium ingots late last week from Samsung Corp and Enron Corp , traders said on Tuesday. The government procurement body bought 5,000 tonnes from Enron last Thursday at $1,509 a tonne on a cost-insurance-freight basis to the southeastern port of Pusan, a trade source in Seoul said. The administration had bought another 5,000 tonnes from Samsung at $1,501.89 a tonne, CIF, to the western port of Inchon, he said. Premiums were estimated at about $47-$55 a tonne over the London Metal Exchange (LME) cash prices, another source said. Shipment was set for within two months after the suppliers received a letter of credit from SAROK, he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: FIs, banks favour AES taking over Dabhol 07/03/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire BANGALORE, July 2. FINANCIAL institutions (FIs) and banks have indicated that they would be favourably inclined to a takeover of the Dabhol Power Company's (DPC) equity by another American energy major, AES. AES has already indicated that it could takeover Enron's equity and run the power plant. FI sources said here that this takeover would be in the best interests of all the parties involved in the project, including consumers. This was in view of AES's experiences in Orissa. AES operates the Orissa Power Generation Corporation Ltd in which it has a 49 per cent stake. AES also runs a distribution company - Centco, in that State. The sources said that takeover by AES could also help DPC reduce some of the debt financing costs - both in phase one and phase two. The debt portion in phase one (826 MW) is about $644 million. In phase two (1,624 MW) the debt financing component is about $1.414 billion. All these loans have been raised at interest rates in the region of 250-350 basis points over the LIBOR. In the second phase especially, the debt financing costs were high since it came close on the heels of the Pokhran nuclear test. The sources said that if these loans could be refinanced, then the interest burden on the project could be brought down substantially. The sources estimated that given the credit rating of AES in international financial markets, the DPC loans could be refinanced at spreads of just 100 basis points over LIBOR. Besides, rates for external commercial borrowings have considerably softened in the last few months. In fact, the last few loans that have been raised in the international markets by top Indian corporates without sovereign guarantees have all been at spreads of under 100 basis points. The sources said that the AES takeover could also stave off invocation of the deferred payment guarantees (DPG). In both phases, the guarantee obligations of the domestic FIs and public sector banks are close to $800 million. Technically, foreign creditors could invoke these guarantees in the event of payment defaults by DPC. In addition, FIs and banks have direct exposure of about $429 million in both phases. The sources said that invocation of the guarantees and a simultaneous classification of loans into non-performing assets, would hurt the balance sheets of the FIs as well as the banks. The banks likely to be impacted include the State Bank of India and Canara Bank which have participated in both the foreign currency as well as the rupee loan syndications of DPC. The sources said that the only alternative to prevent any drastic impact on the FIs was to either find a resolution to the current stand-off between MSEB and Enron or allow other companies, acceptable to lending institutions to buy out the DPC equity from Enron. The sources said that taking over the management of DPC could be considered only as a last resort by the FIs. This can be technically done, since the FIs have a physical asset cover on the fixed assets of DPC on both phase one and phase two as part of loan and guarantee covenants. C. Shivkumar Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: MSEB asked to prove confidentiality of Enron papers 07/03/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, July 2. THE Maharashtra Electricity Regulatory Commission (MERC) has given the State electricity board two weeks to prove the confidentiality of documents related to Enron's Dabhol power project, at the hearing of a petition filed by Prayas, a Pune- based non-government organisation. The commission has also asked MSEB to clarify its stand on MERC making the documents public. Prayas had filed a petition asking for the status and copies of various power purchase agreements signed by the board with independent power producers, including Dabhol Power Company. MSEB, in turn, had said that DPC had claimed contractual confidentiality over several documents which could not be made public. MERC had given the board four weeks to submit the relevant documents. The commission has now given the board an additional two weeks to submit the documents. Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: New power Bill set to free captive generation 07/03/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, July 2. THE Union Power Ministry is thinking of completely freeing captive power generation. Mr Ajay Shankar, Joint Secretary, Union Power Ministry, said here that the Electricity Bill, which is likely to be introduced in Parliament "soon", would liberalise captive generation. "To ensure this, the Centre is in the process of giving guidelines to the State Governments under the present laws and will provide for it under the new law," Mr Shankar said. Mr Shankar urged industry to invest in transmission and distribution to boost power sector reforms. Speaking to newspersons after an interactive session with industry representatives organised by the Indian Merchants' Chamber here on Monday, Mr Shankar said the Government would push for privatisation of distribution in the Electricity Bill. Speaking at the function, the State Energy Secretary, Mr V.M. Lal, said the Maharashtra State Electricity Board was still the best in the country "minus Enron". "All the problems created by that project (Dabhol) are coming in the way of reforming the power sector in the State," Mr Lal said. Mr Adi Engineer, Managing Director, Tata Power, said the most important thing in reforming the sector was speed. "Debate alone is not enough. What we need is speed. And, instead of difficult ones, the Government should start with easier propositions in transmission and distribution. For example, islands of industrial activity such as Nagpur could be privatised first. Besides, the Government should also de-politicise new projects," he added. Mr Shankar said the second part of the Montek Singh Ahluwalia report on power sector restructuring is expected shortly, while an "empowered committee", including Mr Suresh Prabhu, Union Power Minister, is looking into the implementation of the first part of the report, he said. The Secretary declined comment on the "active role of facilitator" being played by the Centre in the Enron renegotiation process. He also said that the metering of 11 KV stations across the country would be completed by March 2002 while metering of other customers would be completed within two years. Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India Inc steps up social works, but ... Shalini Singh 07/03/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) AT A recent investor meet, Tata Steel MD J J Irani asked his investors if they felt the company should reconsider its social work profile. The unanimous response was to step up investments in the area. The rationale: a social return on capital with a clear impact on the bottomline. ``You cant be an island of prosperity in a sea of poverty, says Tisco spokesperson Shakti Sharma. ``It creates a social pressure on the company, she adds. A fortnight ago, on June 22, the day after the Kaduldi Express crashed into the river in remote Kadalundi in Kerala, among the people who rushed to the site of the disaster were two teams from the Kozhikode operations of the cellular phone company, Escotel. And in the dead of night, they set up an antenna on a coconut tree. By midnight, survivors, rescue workers, medics, policemen and even railway minister Nitish Kumar were using the jerry-rigged mobile phone infrastructure to call friends, relatives and colleagues all for free. On January 26, when Gujarat was flattened in 90 seconds by the earthquake, a free phone facility set up by Care India, Bharti BT and Cisco for domestic and overseas calls provided the most immediate emotional relief for relatives anxious for news about their families. Increasingly, Corporate India is becoming conscious of being a good citizen. And its discovering, to its surprise, that this image makeover effort actually makes a mark on people from all walks of life. This has driven industry chambers to take time out from lobbying ministers and hosting cocktail lunches to demonstrate interest in social development. CII has committed Rs 100 crore to help 26 quake-hit villages in Gujarat. It has also set up a `disaster management committee this year. And Ficci partners CARE to rebuild at least 10,000 homes in the state. With greater corporate involvement in socially helpful activity, CARE has raised $28 million for the rehabilitation of 30 villages in the worst affected areas of Gujarat. Of this, Care India director Tom Alcedo says, Ficci mobilised about 15 to 20 per cent from its members. This human face of India Inc appears to be confined largely to emergency relief, though. In Gujarat, for instance, Alcedo says the corporate sector displayed more compassion initially, but dropped out in the rehabilitation stage. But NGOs say firms have realised that long-term social development could boost bottomlines as well. The Tata Group understood this long ago the social cell at Tata Steel has an annual budget of Rs 38 crore, says Mrs Sharma. Alcedo says, ``Enron got involved in community development in Maharashtra and Gujarat because it realised that overlooking social development issues in Dabhol had caused a lot of strife. Today, corporate compassion is motivated largely by tax breaks and publicity mileage rather than in sustained community development work which doesnt attract as much media attention. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Cheney raised Dabhol issue with Sonia The Times of India News Service 07/03/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) NEW DELHI: US vice-president Dick Cheney expressed concern over the ongoing dispute between the Maharashtra government and US power giant Enron, promoter of the Dabhol Power Project, during his meeting with Congress president Sonia Gandhi in Washington, DC, last week. Senior Congress leader Manmohan Singh, who had accompanied Sonia on her US visit, briefed presspersons Monday about Sonia's first foreign trip as the leader of the Opposition. Singh said the reference to Enron came up when Cheney spoke of the growing Indo-US economic relations and mentioned that America wanted strong investments in India. Singh sought to play down the fact that Cheney had evinced such inordinate interest in the Enron case. ``He brought it up and we explained our position and the matter was allowed to rest there,'' Singh said. What Singh left unsaid was that the Enron project being mentioned by an official as senior as the US vice-president indicates the level of concern in the US about the viability of India as an attractive foreign investment destination. Questions about the Enron project were also asked during Sonia's meeting at the Asia Society, Singh said. ``I explained that one could not wish away the problems which have arisen. The demand projections have gone haywire while the cost of tariff has turned out to be much too high, partly because of the rise in the prices of feedstock and partly due to the depreciation of the exchange rate,'' Singh recounted. He said he had also clarified that the real problem was the high cost of tariff and that a mutually satisfactory way of reducing it had to be found. Singh said the Congress president's meetings with Cheney and US National Security Advisor Condoleeza Rice also dwelt on the National Missile Defence (NMD) programme. Sonia expressed fears it could lead to an arms race in the region. The Indian side also said that the programme still contains several uncertain elements which need to be explained. The Congress delegation pointed out the Chinese, Russians and the Europeans too have their differences on the issue. The American officials, said Singh, explained that they were in the process of engaging their allies and the Russians on this issue. On the country's economy, Singh said it had slowed down substantially and, yet, the finance minister had presented a budget pegging the GDP growth rate at 6.1 per cent while the real figures show a sharp deceleration to 5.2 per cent. Singh said the last three years of BJP rule had seen a progressive deceleration in the GDP growth rate, adding even more worrying was the poor performance in sectors ranging from agriculture to construction, manufacturing and services. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. CM, Pawar flayed for contradicting views on Enron The Times of India News Service 07/03/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) PUNE: Criticising chief minister Vilasrao Deshmukh and NCP president Sharad Pawar for adopting extreme stands on the Enron imbroglio, former deputy chief minister and senior BJP leader Gopinath Munde has said his party did not have any objection to a thorough probe into the entire power supply deal. Addressing a press conference here, Munde said Deshmukh and Pawar had complicated the Enron issue by constantly airing their views despite the fact that the Godbole committee was in the middle of negotiations with the U.S. power major to reduce the tariff. "While Deshmukh says that he will not tolerate the arm-twisting tactics of the power company, Pawar threatens to agitate if the project is scrapped. Such extreme stands will hamper the efforts of the Godbole committee while it holds deliberations with Dabhol Power Company," Munde said. To a question, Munde said he did not anticipate the NCP withdrawing support to the Congress-led coalition government in the state over the Enron issue. "Although Pawar did mention the possibility of his party pulling out from the government initially, he himself made statements to the contrary some days later," quipped Munde. Speaking on the furore created in the Pune Municipal Corporation due to the ruling party's proposal to remove the portrait of Rashtriya Swayamsevak Sangh founder Hedgewar, he said the Congress was behaving in a vindictive manner. Given the fact that Hedgewar's portrait was put up after a resolution to this effect by the general body of the corporation, the Congress did not have the power to arbitrarily order its removal, he added. Munde refuted allegations that former minister and scion of the royal family, Udayan Raje Bhosale, indicted in the Sharad Leve murder case, was let off due to a weak case filed by the home ministry during his regime. "The case and the charge-sheet against Bhosale were filed by the Democratic Front government when Chhagan Bhujbal was home minister," he clarified. Asked to comment on the arrest of all BJP corporators in the Nagpur Municipal Corporation in the infamous sports goods scam, Mr Munde said the Democratic Front government was misusing the Nand Lal committee report with a political agenda in mind. "As many as 13 corporators not named in the report have also been arrested. The technical mistakes on the part of the corporators have been brought out as unfair practices," he said. Similar probes should then be conducted in civic bodies in Pune and Pimpri-Chinchwad also, where the Congress and NCP have the majority, he demanded. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIAN FIs READY TO TAKEOVER DABHOL POWER, BUT WILL NOT RUN IT 07/03/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, July 3 Asia Pulse - Industrial Development Bank of India (IDBI) said on that Indian financial institutions were ready to take over the troubled US$3 million Dabhol Power Company (DPC) if its promoters Enron pulled out, but said FIs would not run the company. "In the worst circumstances (Enron pulling out), we can takeover the power project," IDBI S C Chakravarti told reporters here. He, however, said the FIs would not run the company. An operations and maintenance contractor would be appointed to run the show. Enron has threatened to walk out of the 740 MW Phase-I, which is operational, and 1444 MW Phase-II to be commissioned shortly, project over payment disputes with Maharashtra State Electricity Board (MSEB). Chakravarti said three US energy companies have expressed interest in taking over DPC, but refused to divulge further details. Indian financial institutions were due to meet in Delhi Monday evening to discuss the future course of action. Asked about the Central bailout package, involving sale of power from DPC to energy deficit states, Chakravarti said he was unaware of developments and would not be able to comment on it. (PTI) 03-07 1007 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Three US firms in talks with Indian lenders to take over DPC Our Economy Bureau NEW DELHI 07/03/2001 Business Standard 2 Copyright © Business Standard Three US electricity generation companies are in talks with Indian lenders for taking over the operations of Enron-promoted Dabhol Power Corporation, top financial institution executives said. Industrial Development Bank of India chairman S K Chakraborti said that these generation companies have approached Indian lenders who are keen on the completion of the project. But, he declined to name the companies saying talks have just been initiated. The lenders, who earlier had a cover on assets, have also taken control of the DPC's equity which can be used as security. AES has already evinced interest in the project and is learnt to have initiated talks with the power ministry and IDBI, the lead institution for the DPC. "We are prepared to take over Enron's stake if it decides to pull out. We would not run the company but the operations and maintenance contractor would be appointed to run the show," he said Enron has threatened to walk out of the 740 mw phase-I, which is operational, and 1,444 mw phase-II to be commissioned shortly. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Selected details from state's unedited power contracts, at-a-glance 07/02/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. Here's some of the details from the state's unedited power contracts, at-a-glance: - Controller Kathleen Connell releases unedited version of power contracts Gov. Gray Davis sought to keep secret. - She releases 41 contracts with 27 power generators. Four are short-term contracts, the balance are long-term. - Most of the long-term contracts are for 10 years; one is 20 years. - The state paid as much as $410 per megawatt hour under the contracts. - Most contract prices are from $70 to $200 per megawatt hour, Connell says. - The state has paid $402.6 million toward the long-term energy contracts to date. - The state paid at least $2.8 million to energy consultants, including former industry officials such as Davis chief energy adviser S. David Freeman, who have been negotiating the state's long-term power contracts. - Los Angeles Department of Water and Power offered two consecutive 30-day contacts starting March 1, totaling $57.9 million. The municipal district provided a constant flow of 167 megawatts in March and 250 megawatts in April. One megawatt is roughly enough power for 750 homes. - Houston-based Enron Power Marketing Inc. sold a steady stream of 200 megawatts, 16 hours a day, six days a week in March and April. In its contract, Enron required the state to pay its bill once a week. - "Please pay the amount above. Thank you," a Dynergy Power Marketing Inc. officials wrote neatly on one $1.76 million invoice. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. SMARTMONEY.COM: What Will the Second Half Bring? By Rebecca Thomas 07/02/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) Of SMARTMONEY.COM AS THE DOORS closed on the second quarter, investors found themselves in nearly the same situation as in the first three months of the year. The U.S. economy is barely growing, and corporate profits remain in recession. Lower interest rates and tax rebates will inevitably bring relief sooner or later, but the emphasis is now on later. Yet many of our pundits insist they see sunshine poking through the clouds. They'll be the first to acknowledge that the implosion in corporate profits has been painful, but they're quick to add that the equity market tends to lead the business cycle recovery by three to six months. Investors who get in now - though they're assuming substantial risk - stand to reap the greatest rewards if the economy recovers any time in the second half of this year, they promise. "If the U.S. is in recession now, and if the market turns up five months before the recession ends (which has been the average), then the stock market is OK if the recession ends by October," says ISI Group chief economist Ed Hyman, typically one of our most bearish pundits. Adds the generally upbeat Thomas Galvin, chief investment strategist at Credit Suisse First Boston: "Once the [economic] data points change, which I think they're in the process of doing, everyone and their mother will be back in the market." Of course, there's no denying that conditions worsened in the second quarter and remain inordinately weak. The deterioration in corporate profitability and capital spending, as well as slowing consumer spending and sluggish growth abroad, continue to make the threat of recession a real concern. As UBS Warburg's Ed Kerschner, our No. 2- ranked pundit, puts it: "No doubt about it - it's nasty out there." Our pundits have adjusted their profit estimates to reflect this reality. Kerschner now expects second-quarter S&P 500 operating earnings to fall at least 14.4% below year-ago levels. "[T]his looks like the worst quarter of the profit cycle," he says. And the next two quarters might not be that much better, according to Ed Yardeni. On June 25, the chief investment strategist at Deutsche Banc. Alex Brown lowered his full-year S&P 500 profit estimate to $47 - reflecting a 14% year-over-year decline. Kerschner is the first Wall Street strategist to project earnings below $50 a share. Given the dreary near-term outlook, it's hard to blame investors for their wariness. Goldman Sachs guru Abby Joseph Cohen, for one, recognizes that investors who are often eager to pay up for potentially good news when the market is rising become reluctant to assume the same risk in periods of uncertainty. Galvin is equally understanding: "Investors are not bankrupt, but sentiment is clearly broke," he says. "Today the average money-market fund rarely yields 4%, yet most investors are happy to sit on cash." Indeed, investors currently hold $2.1 trillion in money-market funds - the highest level ever as a percentage of the market value of the Wilshire 5000 - and savings-account deposits are up 14% from last year, Galvin says. But if our pundits sympathize with investors' blas, attitude about stocks, they're definitely out to change it. Those who wait too long to get back into the market stand to lose out on potential profits in the end, they explain. "Many investors would prefer to wait until favorable price momentum returns to stocks," says Cohen in reiterating her belief that share prices and price-to-earnings multiples for many companies have already fallen to attractive levels relative to growth expectations. "We would rather make an early call, allowing our investing clients an opportunity to structure portfolios accordingly." Elaine Garzarelli, the chairwoman of Garzarelli Capital, agrees: "Eventually there will come a point when analysts revise down their estimates too much and then must rush to revise up when the economy snaps back...Because of this, we believe this is a good time to invest before upward revisions begin." Lehman Brothers' Jeffrey Applegate is of similar mind. In his opinion, the broad market is actually 15% undervalued at current levels, despite being up 12% since its last trough on April 4. Historically, equity returns have averaged 17% in the 12 months from this level of undervaluation, he says. Because cyclical stocks - such as retailers, financials and technology - tend to perform best in the early stages of a market recovery, the strategist last week boosted the economic sensitivity of his U.S. equity portfolio. Specifically, he increased his position in Internet-infrastructure software maker BEA Systems (BEAS) and storage king EMC (EMC), bringing his overall technology weighting to 24%. In the consumer-cyclical sector, Applegate snatched up more shares of homebuilder D.R. Horton (DHI), jewelry juggernaut Tiffany (TIF) and Viad (VVI), a provider of products and services in money orders and payment processing. And in the financial industry (which accounts for a whopping 29% of his portfolio), Applegate replaced leasing- and financial-services provider GATX (GMT) with the more interest-rate receptive consumer-finance firm Household International (HI). To pay for his purchases, Applegate sold off a few defensive names - including AES (AES), Enron (ENE), Calpine (CPN) and Dynegy (DYN) - in energy and utilities. Knowing which companies to avoid in this nasty environment is also part of the game, says Kerschner, who screened out 37 companies that have the "dubious distinction" of having failed to meet Wall Street consensus estimates at least three times over the past five quarters. These companies, explains the strategist, "did not successfully play the time-honored game of assiduously guiding down analysts' estimates during the quarter and then triumphantly meeting or beating the final figure." Among the tainted 37 are US Airways Group (U), Bank One (ONE), Computer Sciences (CSC), American Home Products (AHP), Charles Schwab (SCH), Halliburton (HAL), Harrah's Entertainment (HET), McDonald's (MCD), Novell (NOVL) and Newmont Mining (NEM). As the second quarter ushers in the third, it's important to remember that things could indeed still get worse before they get better. But take note: It's during times like these that the early bird catches the worm. For more information and analysis of companies and mutual funds, visit SmartMoney.com at http://www.smartmoney.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Duke denies using plant to sway Calif. power prices. 07/02/2001 Reuters English News Service (C) Reuters Limited 2001. SAN FRANCISCO, July 2 (Reuters) - Duke Energy, one of California's big, independent power generators, laid out on Monday written records it said prove it did not shut its San Diego power plant last winter to jack up electricity prices. Charlotte, N.C.-based Duke said any fluctuations in generation last winter at its 700 megawatt, gas-fired South Bay plant were ordered by the California Independent System Operator (ISO), the agency that oversees operation of the state's power grid. "Records from the ISO's Automatic Dispatch System demonstrate that Duke Energy Trading and Marketing received instructions from the ISO for increasing and decreasing the power output from the South Bay plant," the company said in a statement. California has petitioned the Federal Energy Regulatory Commission (FERC) to order $9 billion in refunds from power companies it claims took advantage of the state's energy crisis to "gouge" the market, pushing wholesale prices up tenfold over the past year. Duke has repeatedly denied it tried to manipulate prices, citing plant maintenance, strict pollution rules, soaring natural gas prices and the financial risks linked to doing business with California's cash-strapped utilities as the main reasons behind the state's volatile spot power prices. Duke, together with Dynegy Inc. , Enron Corp. , Williams Cos Inc. , and Reliant Energy , is currently being investigated by state and federal officials to determine whether they manipulated the market by witholding power. Three former South Bay plant employees last month told a California senate hearing that Duke had instructed them to ramp down generation at the plant at times when the state's electricity reserves were extremely low. The three workers were hired by Sempra Energy's utility subsidiary San Diego Gas & Electric and remained at the plant after it was sold to Duke in 1998. They were eventually let go by Duke as part of the plant takeover. Earlier Monday, Duke said it was trimming $20 million from the bills it presented to the ISO and California Power Exchange for energy sales to the two this past January and February. The move implements a June 19 FERC order that Duke Energy "offset any invoiced amounts above the proxy price set for electricity," which was set at $273 per megawatt hour for January and $430 for February. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. State controller releases unedited power contracts By JENNIFER COLEMAN Associated Press Writer 07/02/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SACRAMENTO (AP) - State Controller Kathleen Connell released unedited versions of $43 billion worth of long-term energy contracts with 27 power generators on Monday, including several short-term deals whose release the Davis administration warned could drive up prices. The 41 contracts released Monday were the subject of a court fight between Democratic Gov. Gray Davis, Republican legislators and news organizations including The Associated Press. For months, Davis had refused to release details of long-term contacts the state has signed with electricity providers, saying the documents needed to remain secret. The state began negotiating the contracts in January after the state's three private utilities were unable to secure credit to buy power. On June 15, Davis released 38 long-term contracts, but they had key portions blacked out. The news organizations then sued to have the complete contracts released. Steve Maviglio, spokesman for Davis, said the administration had agreed Friday to release the long-term contracts, but asked to have the release of the short-term contracts delayed for three months. The four short-term contracts Connell released Monday, which range from days to months, reveal more of the state's strategy for buying on the spot market, said Maviglio and Department of Water Resources spokesman Oscar Hidalgo. Revealing that could lead to higher wholesale prices, Maviglio said. "It shows the irresponsibility of the controller and every California who gets a higher electricity bill can thank Kathleen Connell," Maviglio said. The newly released documents show which companies are selling power to the state, how much they are charging and where it is generated. Two of the short-term contracts included 30-day contacts with the Los Angeles Department of Water and Power that totaled $57.9 million. The municipal district provided a constant flow of 167 megawatts in March and 250 megawatts in April. One megawatt is roughly enough power for 750 homes. "We still feel that those will hinder our leverage in gaining reasonably priced power on the spot market," Hidalgo said. "It shows our position on the daily spot market and what we're willing to pay." Generators can use that information to time their sales and drive up their prices, Hidalgo said. Another short-term contract was with Houston-based Enron Power Marketing Inc., which sold a steady stream of 200 megawatts, 16 hours a day, six days a week in March and April. In its contract, Enron required the state to pay its bill once a week. "It is not unusual. The state had never been in this type of position. They wanted to be sure they got some sort of payment," Hidalgo said. "You'll notice, though, that we haven't dealt with Enron since. There's no deals pending, and they're a very big player." Connell said her initial analysis of the contracts she released was that the average price per megawatt was higher than the governor's estimate of $70. But Maviglio said the administration's math was correct. "Given the controller's track record in assessing the work we've done this far, I wouldn't give much weight to her guesswork," he said. "The governor and the treasurer have consistently proven her wrong on every one of her claims." Mike Wilczek, senior western power market reporter for Platts, the energy market information division of The McGraw-Hill Companies, said much of the information in the contracts would be more valuable to the companies' competitors than to the public. "It's very clear why you'd want to keep that stuff secret," he said. Competitors will be particularly interested in delivery points, the power plants that will supply electricity to a particular delivery point, and the heat rates. Heat rates, for instance, "tells them how efficient the plant is," Wilczek said. "You can look at this stuff and say, 'That's as low as they can go"' in pricing their electricity at that plant. "That's probably the most sensitive information," he said. Knowing which plant supplies which delivery point could affect prices for that particular generator. For instance, if a competitor knows a particular plant is down, and the supplier is contractually responsible for sending power to that distribution point, "they're going to take advantage of that," he said. Connell said the judge heard all the evidence before ordering the complete contracts released and "there is no reason that information should raise prices. Today's prices aren't going to be affected by prices engineered several months ago." Public Utilities Commissioner Richard Bills said the terms of the contracts, most of which are 10 years, are too long. By signing long-term contracts in a volatile market like this, Bills said, "the result could well be that we get burned because we've entered in too long an agreement at prices that will be well above market as these contracts mature." In addition to the energy contracts, Connell also released documents showing the state has paid $402.6 million toward the contract totals. The state also paid various energy consultants $2.8 million. Those contracts include payments to several industry officials who have been negotiating the state's long-term power contracts, such as S. David Freeman, the governor's chief energy adviser. --- Editors: AP Writer Don Thompson contributed to this report. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Oregon Lawmakers Pass Bill To Delay Elec Dereg 5 Months By Jessica Berthold Of DOW JONES NEWSWIRES 07/02/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- The Oregon House of Representatives Sunday approved a bill delaying the partial deregulation of the state's electricity industry by five months, a spokesman for the Oregon Public Utilities Commission said Monday. The bill, which passed 53-6, sets a date of March 1, 2002, for large business customers of Enron Corp.'s (ENE) Portland General Electric Co. and Scottish Power's (SPI) PacifiCorp to begin choosing their own electricity suppliers. Those customers can also opt to retain regulated rates until July 2003, said OPUC spokesman Bob Valdez. Delaying deregulation until March will ensure the state gets through its high-demand winter months without the possibility of glitches caused by the new system, Valdez said. Residential and small business customers would continue to have regulated rates. The governor is expected to sign the bill, Valdez said. The House was originally scheduled to vote on the bill last Monday, but Democrats boycotted the state's Capitol for a week in protest of a Republican redistricting plan. The OPUC will determine by late July which customers qualify as large businesses, Valdez said. The new start date ensures customers won't mistakenly attribute an unrelated rate increase, also planned for Oct. 1, to the start of deregulation. The rate hike is necessary, because the Bonneville Power Administration, a federal hydropower marketer which sells to the state's utilities, has raised its rates to cover the cost of buying more power than usual in the high-priced spot market to meet burgeoning customer demand. "I think the utilities are pretty happy," Valdez said. "I don't know that they were quite ready, with billing and such, for restructuring by Oct. 1." -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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