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Enron Mail |
Poland-Norway Gas Deal Might Hit Mkt Liberalization
Dow Jones Energy Service, 04/27/01 Peoples Energy Reports Second Quarter Results Reaffirms Fiscal 2001 Estimate PR Newswire, 04/27/01 Report: Enron official given authority to end power project in India Associated Press Newswires, 04/27/01 State employees' retirement funds benefitting from power crisis Associated Press Newswires, 04/27/01 DHABOL BOARD EMPOWERED TO END POWER CONTRACT WITH INDIAN STATE Asia Pulse, 04/27/01 NO ADVERSE FALLOUT TO COME FROM ENRON DECISION: INDIAN MINISTER Asia Pulse, 04/27/01 India: Starving oneself to stuff others? Business Line, 04/27/01 HEADING The Times of India News Service, 04/27/01 Success of state bandh isolate BJP The Times of India, 04/27/01 Additional power for Delhi promises Prabhu The Times of India, 04/27/01 Enron ready to pull out, but lenders say wait The Times of India, 04/27/01 India's single largest foreign investor threatens to pull out Agence France-Presse, 04/27/01 Indian Utility Pays $28 Million March Bill To Enron The New York Times, 04/27/01 DAILY BRIEFING The Atlanta Constitution, 04/27/01 Business Brief -- Enron Corp.: Sale of Utility Subsidiary To Sierra Pacific Is Canceled The Wall Street Journal, 04/27/01 Indian State to Pay Enron for March Supply Asian Wall Street Journal, 04/27/01 Colombia Suspends Isagen Sale Pending Court Ruling, Papers Say Bloomberg, 04/27/01 Poland-Norway Gas Deal Might Hit Mkt Liberalization By Joe Harper Of DOW JONES NEWSWIRES 04/27/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) WARSAW -(Dow Jones)- Poland will limit its chances of developing a flexible and diversified gas market if the government goes ahead with a long-awaited gas import deal with Norwegian and Danish companies, said a participant at the Power in Poland conference in Warsaw this week. "Entering into long-term guaranteed take-or-pay contracts with Norwegian and Danish partners would result in the incumbent contract holders having an incentive to delay domestic gas market liberalization at any cost," said Jarek Astramowicz, president of Enron Poland, the Polish unit of the U.S.'s Enron Corp. (ENE). The incumbent contract holder - Poland's gas monopoly Polskie Gornictwo Naftowe i Gazownictwo (R.PGN), or PGNiG - said recently it will sign a long-term, guaranteed take-or-pay contract with Norway's state oil company Statoil AS (Y.DNS) and Danish state-owned oil and gas utility DONG in May. The three parties are negotiating a trade deal that could see between five and eight billion cubic meters (bcm) a year exported from Norway and Denmark to Poland by 2007. According to Polish press reports Statoil reportedly wants financial guarantees from the Polish government before signing any sales agreement with PGNiG. The Norwegians also said they need to sell at least eight bcm of gas a year to Poland to make the project financially viable, while the Polish side has said it wants to import only 5 bcm a year. PGNiG president Andrzej Lipko said this week PGNiG and Statoil were "negotiating intensively," but didn't say when a deal might be signed. Astramowicz said the deal would reduce the Polish side's room for maneuver in future gas importation and corner Poland into accepting gas at higher prices than it could find on E.U. markets when the Polish and E.U. grids are fully interconnected. Enron, like other traders, operates best in markets where there is greater liquidity, and the Norway deal would dry up considerable amounts of potential liquidity. Astramowicz added that the Polish market would be oversupplied if the deal goes ahead, pushing up end-user prices. And it's the projected increases in demand for gas in Poland over the next 10 years that presents the major problem. Barbara Litak-Zarebska, Deputy Treasury Minister, said this week gas demand projections were largely based on an expected rapid shift from coal-powered to gas-powered electricity generation in Poland. Poland's Economy Ministry estimates the country's current annual gas consumption at 10.5bcm-11 bcm, and expects this total to reach 18.4 bcm by 2010, including 6.1 bcm to be consumed by the newly constructed, gas fired power plants. Astramowicz said this projection was too high, claiming the power sector was likely to take only 2.5bcm-3.5 bcm by 2010. "Furthermore, power generated from gas cannot compete with power generated by coal-fired power plants in price terms. Therefore, this source of increase in gas demand will not materialize in the near future," he said. As an alternative to the Norway deal Astramowicz pointed to western European gas trading hubs already offering flexible gas supply contracts with terms of up to ten years. "For example, competitively priced gas supplies based on the contracts executed in Zeebrugge (Belgium) or Emden (Germany) are already reaching customers in eastern Germany today and, as Polish gas consumption grows, could easily be used to source any additional gas supplies needed for customers in Poland," said Astramowicz. He also pointed to potential import price advantages from the E.U. He said gas imported from the E.U. would cost about $135/1000cm, against a price on the current Yamal contract of $120/1000cm and a Norwegian gas price (including the estimated transmission charge to the Polish border of $20/1000cm), of $150/1000cm. PGNiG's Lipko said that imported Russian gas prices would not be $30 cheaper than Norwegian supplies once a pipeline linking the two countries had been built. By Joe Harper, Dow Jones Newswires; 48-22 622-2766; joe.harper@dowjones.com Peoples Energy Reports Second Quarter Results Reaffirms Fiscal 2001 Estimate 04/27/2001 PR Newswire (Copyright © 2001, PR Newswire) CHICAGO, April 27 /PRNewswire/ -- Peoples Energy (NYSE: PGL) reported today that its second quarter earnings for the three month period ended March 31, 2001 were $62.5 million, or $1.77 per share, up from $57.4 million, or $1.62 per share for the same period a year ago. For the most recent six month period, earnings were $98.8 million or $2.80 per share, compared to $87.0 million, or $2.45 per share for the same period last year. Quarterly and fiscal year-to-date results were positively impacted by weather that was colder than the prior year periods by 19% and 23%, respectively, offset by the negative impact of gas prices that were at record levels. The combined effect of these two factors is reflected in current accounts receivable balances, which are significantly higher than a year ago. The company has implemented several flexible payment programs and is actively pursuing collection of past due amounts. "We are pleased with the results from our gas distribution business despite challenging circumstances and with the continuing growth from our diversified business segments," said Richard E. Terry, chairman and chief executive officer. "We are reaffirming our earlier fiscal 2001 earnings estimate of $3.05 to $3.15 per share, assuming normal weather and planned utility performance for the rest of the year. The South Texas oil and gas property acquisition that we announced today will add $.10 to $.15 per share to that projection." Peoples Energy reported second quarter and fiscal year-to-date results for its primary business segments: Gas Distribution. Operating income was $101.6 million for the second quarter and $180.0 million for the six month period, as compared to $98.9 million and $156.3 million, respectively, in the prior year. The increases were mainly due to colder weather, reduced depreciation expense, and the positive effects of pension benefit accounting, offset by increases in the provision for uncollectible accounts and customer conservation resulting from higher gas costs in the current periods. Power Generation. Operating income and equity investment income grew to $5.6 million and $6.0 million for the current quarter and fiscal year-to-date periods compared with $572,000 and $3.9 million, respectively, in the previous fiscal year. These increases of $5.0 million and $2.1 million, respectively, are primarily due to a gain on the liquidation of financial hedges associated with Elwood's gas supply requirements and increased capacity revenues during the second quarter, offset in part by higher gas costs in both current periods. Effective March 1, 2001, the power sales contracts on the Phase I Elwood units were restructured as tolling agreements. Midstream Services. Operating income and equity investment income was $5.0 million and $10.6 million for the current quarter and six month periods, compared to $5.8 million and $8.1 million, respectively in the year-ago comparable periods. Results in the current periods were positively impacted by equity income from our enovate partnership with Enron, offset by lower operating income from hub and peaking activities. Operating income from wholesale activities benefited in the prior periods from a nonrecurring pipeline construction project. Retail Energy Services. Operating income in the second quarter grew to $2.2 million, an increase of $2.3 million over the year-ago period. Fiscal year-to-date results reflect an increase of $1.9 million over the prior period loss of $1.6 million. The current periods benefited from increased gas and electric margins, partially offset by higher operating expenses related to growth. Both current periods also benefited from a one-time change in inventory accounting methods. Oil and Gas Production. Operating income and equity investment income was $2.8 million and $6.6 million for the current three and six month periods, up from $1.7 million and $2.7 million, respectively, in last year's comparable periods. These increases were primarily due to the impact of reserve acquisitions subsequent to the year-ago periods, positive results from drilling programs and higher sales prices on production volumes. The most recent six month period reflects increased equity income from our EnerVest partnership. In addition to the above business segment operating results, net income for the current periods reflect higher financing costs resulting from long-term debt issued to fund diversified growth and short-term debt incurred for utility working capital needs, offset by lower interest on utility long-term debt due to prior-year refinancing. The current six month period reflects the mark-to-market pricing of unrealized liabilities for stock appreciation rights granted to certain employees under the company's long-term incentive compensation plan. Peoples Energy is a diversified energy company comprised of five primary business segments: Gas Distribution, Power Generation, Midstream Services, Retail Energy Services, and Oil and Gas Production. The Gas Distribution business serves about 1 million retail customers in Chicago and northeastern Illinois. Visit the Peoples Energy web site at PeoplesEnergy.com . Forward-Looking Information. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as expectations of development and growth arising out of the company's diversified energy businesses. Actual results could differ materially from such expectations because of many uncertainties, including, but not limited to: the company's success in identifying diversified energy opportunities on financially acceptable terms and generating earnings within a reasonable time; adverse resolution of material litigation; developments in the company's utility subsidiaries' mercury inspection and remediation program; general U.S. and Illinois economic conditions; business and competitive conditions resulting from deregulation and consolidation of the energy industry; the timing and extent of changes in energy commodity prices and interest rates; and regulatory developments in the U.S., Illinois and other states where Peoples Energy has business activities. Some of the uncertainties that may affect future results are discussed in more detail under "Item 1 - Business" of Peoples Energy's Form 10-K for the year ended September 30, 2000. All forward-looking statements included in this press release are based upon information presently available, and Peoples Energy assumes no obligation to update any forward-looking statements. PEOPLES ENERGY CORPORATION FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended March 31, 2001 2000 Total Operating Revenues $1,073,789,000 $525,248,000 Operating Income $102,370,000 $102,254,000 Equity Investment Income $11,006,000 $1,972,000 Net Income $62,491,000 $57,428,000 Earnings Per Share $1.77 $1.62 Diluted Earnings Per Share $1.76 $1.62 Basic Average Shares Outstanding 35,388,000 35,510,000 Dilutive Average Shares Outstanding 35,450,000 35,511,000 Six Months Ended March 31, 2001 2000 Total Operating Revenues $1,790,771,000 $937,146,000 Operating Income $173,000,000 $155,928,000 Equity Investment Income $15,804,000 $6,050,000 Net Income $98,848,000 $86,999,000 Earnings Per Share $2.80 $2.45 Diluted Earnings Per Share $2.79 $2.45 Basic Average Shares Outstanding 35,363,000 35,512,000 Dilutive Average Shares Outstanding 35,414,000 35,517,000 MAKE YOUR OPINION COUNT - Click Here http://tbutton.prnewswire.com/prn/11690X86138293 /CONTACT: Luis Diaz-Perez, 312-240-4567, or Mary Ann Wall, Investor Relations, 312-240-7534, both of Peoples Energy/ 07:00 EDT Report: Enron official given authority to end power project in India By RAMOLA TALWAR BADAM Associated Press Writer 04/27/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. BOMBAY, India (AP) - A top official of U.S. energy giant Enron Corp. was authorized to issue a termination notice to pull out of a controversial power project in western India, the largest foreign investment in the country, a newspaper reported Friday. The board of the Dabhol Power Company, the Indian subsidiary of Enron, met in London on Wednesday and authorized the company's managing director to issue a preliminary notice to terminate the project, billed as the world's largest natural gas fired power plant, The Times of India reported. "The board has given powers to the management to issue the pre-termination notice. But the meeting unanimously felt the need of the hour was not to terminate the project but to initiate a re-negotiation process," Vinay Bansal, chairman of the Maharashtra State Electricity Board, was quoted as saying by the newspaper. Enron officials have refused comment. The notice is the first of three steps that could end in the abandonment of the dlrs 3 billion project. A six-month reconciliation period would follow any move by the Dabhol Power Company to issue the termination notice, Bansal said. Indian lenders, present at a meeting with foreign financial institutions in London earlier this week, have said they favor renegotiation. The project has been in trouble since December when the Maharashtra state government, where the Dabhol project is located, said the tariff was exorbitant and demanded a new price agreement. The state power utility said it could not pay Dabhol's monthly electricity dues, which prompted the company to invoke a federal guarantee in February. This was the first time in India that a federal guarantee was invoked. As part of the 1995 agreement between the company and the state government, the federal government has to pay in case of a state default. But before the federal government stepped in, the state government paid dlrs17 million in outstanding bills. Since then, the state power utility has confirmed that all pending bills have been paid. But a dispute over payment of dlrs 48 million for December and January bills is pending. Several political parties had earlier demanded the project be scrapped, since the costs had increased from 1.8 rupees (four cents) per unit agreed six years ago for electricity generated by the 740-megawatt naphtha plant, to 7 rupees (15 cents). Enron has maintained that work will be completed by year-end on the 1,444 megawatt liquified natural gas plant. Houston, Texas-based Enron has a 65 percent stake in Dabhol Power, and is the project's largest shareholder. Other shareholders include the Maharashtra State Electricity Board with 15 percent and General Electric Co. and Bechtel Enterprises with 10 percent each. (rtb, nnm, kgo) State employees' retirement funds benefitting from power crisis 04/27/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. OAKLAND (AP) - Dozens of state legislators, more than a million state workers - and even Gov. Gray Davis may be indirectly profitting from California's power woes. Calpers, the state retirement and pension system, has more than a billion dollars invested in power generators. KTVU reports Calpers holds more than $250 million of Enron stock, almost $153 million of Duke Energy, $90 million of El Paso Energy and $62 million in Reliant Energy. The governor and other lawmakers have threatened to investigate power producers for gouging California consumers. Many energy producers have been reporting record profits during the power crisis. Jim Knox, of California Common Cause, said Calpers should look at divesting its stock if the companies are profiting at the expense of California consumers. "I assume their Enron and Reliant stock has done quite well in the last couple of years, but it has done well at the expense of California consumers," he said. But Pat Macht, a Calpers spokeswoman, says if Calpers were to divest of every stock that had a critic, it would be impossible to manage. Senator Don Perata (D-Oakland) agreed with Macht. "We have been through this before - and it is a very complicated thing," he said. "But for us to divest of all the energy stocks, I mean, we would be using candles." In the past, Calpers has divested from South African and tobacco stocks. Macht said the decision was a purely financial one and that Calpers is so large it has investments in every sector - not just energy. It is important to point out that there is no direct conflict of interest for the governor or for any legislature, KTVU reports. When they eventually retire, those officials' monthly payments from the state will be "doled out" according to a pre-set formula. (KTVU, San Francisco Bay Area) DHABOL BOARD EMPOWERED TO END POWER CONTRACT WITH INDIAN STATE 04/27/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. LONDON, April 27 Asia Pulse - The management of Enron's Indian affiliate, the Dhabol Power Company, has been empowered by the board to sever the power supply agreeement with the Maharastra State Electricity Board, a move that could inflict a financial liability of about Rs 2.84 billion (US$6.06 million) on the Indian government. A decision to authorise DPC President Neil McGregor to issue a termination notice to MSEB for sale of power was taken by the Board at its meeting here yesterday by a vote of six to one after Maharastra government representatives were prevented from voting on ground of 'interested party'. Dubbed as 'unfortunate' by the Maharashtra Chief Minister, Vilasrao Deshmukh, the decision was the culmination of the bitter fight between the US energy giant Enron and the state government over price of power from the US$3 billion project, the first one to get the federal government's counter guarantee. (PTI) 27-04 1940 NO ADVERSE FALLOUT TO COME FROM ENRON DECISION: INDIAN MINISTER 04/27/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, April 27 Asia Pulse - The Indian government wore a brave face on Thursday, following the Enron promoted Dhabhol Power Company (DPC) board's decision to empower management to terminate an agreement with the Maharashta State Electricity Board. Federal power minister Suresh Prabhu said there would not be any adverse effect on foreign investment within the country's power sector a a result of the decision. Following an Economic Affairs meeting, Prabhu said "We are expecting cooperation from many Scandivian countries as well as European nations in the power sector." On Tuesday, the board of DPC, in which Enron has a 65 per cent stake, decided to take the step after a bitter feud with the state government over a payment issue. (PTI) 27-04 1803 India: Starving oneself to stuff others? 04/27/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire NEW DELHI, April 26. THE Food Corporation of India (FCI) has identified 10 locations for creation of 20 lakh tonnes (l.t.) bulk storage capacity on build-own-operate (BOO) basis by the private sector. These include establishing godowns/silos of three l.t. capacity each in Nabha, Barnala and Moga in Punjab and Sirsa and Kaithal in Haryana and one l.t. each in Hooghly, Chennai, Coimbatore, Bangalore and Mumbai. Besides, FCI has invited 'expression of interest' for the construction of conventional godowns of 1,000 to 20,000 tonnes capacity each through the BOO route. In this case, it is proposed to build nearly six l.t. of aggregate capacity in around 80 locations all over the country. Private parties investing in these facilities would store and maintain foodgrains procured by FCI, for which they will be paid storage costs. Under the National Policy on Handling, Storage and Transportation of Foodgrain, notified on July 4, 2000, FCI will 'guarantee' utilisation of these facilities up to 100 per cent for the first 10 years and 75 per cent for the next 10 years. Further, the 2001-02 Budget has granted a five-year tax holiday and 30 per cent deduction of profits for the next five years to "enterprises engaged in the integrated business of handling, transportation and storage of foodgrains." The policy also provides for deduction of 40 per cent of profits derived by institutions financing these projects - prompting the likes of ICICI and IDFC to enter the fray and offer their advisory and funding 'expertise' in the area. The move to involve the private sector in the creation as well as operation of storage facilities on FCI's behalf has been defended mainly on two counts. Firstly, it would tackle the Government's spiralling food subsidy problem through reduction in grain handling and operating costs - something that FCI cannot achieve on its own. Secondly, there is a massive dearth of storage capacity with Government agencies, which neither have the resources to make fresh investments. To address the first point, one needs to consider the real cost dimensions involved. Conservative estimates are that private investors would incur a cost of roughly Rs 15,000 per tonne for constructing bulk silos. Thus, creation of 20 l.t. storage capacity entails investments of Rs 3,000 crore. Assuming a 1:1 debt-equity ratio, the annual interest outgo on investment would come to at least Rs 1,000 per tonne. The investor also has to spend on labour, fumigation, storage, interest on grain, turnover of stocks, etc., - all of which adds to another Rs 1,500 per tonne. Besides, annual maintenance costs are reckoned at about Rs 500 per tonne. If over and above this, investors are to be given a 'decent' 15 per cent return on equity, FCI would have to fork out nothing less than Rs 4,000 per tonne for sub-contracting its storage operations to private parties. And on 20 l.t. capacity, the annual outgo works out to about Rs 800 crore. Compare this to FCI's own current annual 'carrying cost' of Rs 2,300 per tonne for its grains. In 2000-01, FCI held about 200 l.t. of buffer stocks over and above the normative requirement, on which it incurred carrying costs (interest plus storage) of nearly Rs 5,000 crore. In the proposed regime, it would end up coughing over one-sixth of these sums for a tenth of the capacity! That raises the issue of inadequate storage capacity with Government agencies. According to the Ministry of Consumer Affairs and Public Distribution's latest Annual Report, storage capacity with FCI as on December 31, 2000 stood at 30.06 million tonnes, of which covered godowns accounted for 22.70 m.t. and CAP (Cover and Plinth) 7.36 m.t.. The Central Warehousing Corporation (CWC) had eight m.t. capacity, of which covered godowns comprised seven m.t.. The aggregate storage capacity of CWC's 16 associate State Warehousing Corporations came to another 14 m.t., including 13 m.t. of covered godowns. If one adds to this the estimated 17 m.t. of capacities available with State Governments, the public sector has almost 70 m.t. of storage capacity, which is more than sufficient to cater to the existing 46 m.t. of foodgrain stocks in the Central pool. And contrary to general belief, the proportion of crude CAP structures, which are ostensibly vulnerable to rodent attack and moisture ingress, is hardly 20 per cent. That the pronouncements of public godowns bursting at their seams are somewhat exaggerated is also borne by the fact that CWC godowns today operate at around 80 per cent of their capacity. On the other hand, the Government is committed to ensuring 100 per cent capacity utilisation for bulk storage capacity built by private agencies, including leading grain handling entities from Australia and Canada. Whether this would lead to a 'mini-Enron' situation - remains to be seen. Harish Damodaran HEADING The Times of India News Service 04/27/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) Crucial meeting of DF allies on Enron issue postponed Mr Deshmukh is heading the group demanding a judicial inquiry into the first and second phases of the Enron power project. He is supported by the Peasants and Workers Party, the Janata Dal (secular), the Samajwadi Party and the CPM. This group of smaller parties of the Democratic Front have already told chief minister Vilasrao Deshmukh that they would reconsider their support to the ruling front unless a judicial probe is ordered on the lines of Srikrishna Commission. Mr Deshmmukh has requested the group not to take any hasty decision. Prof Gopal Dukhande, spokesperson of the Janata Dal (secular) told this newspaper that the group had not given up its main demand to order a judicial probe into the way the Power Purchase Agreements (PPAs) were singed with Enron. He said the group would meet on May 2 to take into considerations all the developments taking place regarding the Enron power project. The official coordination committee of the DF government is also scheduled to meet at the state guest house, Sahyadri, on the same day. N.D. Patil of the PWP, who is the convener of the DF coordination committee, is also opposed to renegotiations and wants the government to appoint an inquiry commission. ``We are opposed to the way the PPAs were signed with Enron ignoring the interests of the state. The inquiry commission will bring out the truth,'' a senior minister said. ``Even if Enron now wants to withdraw from the project, we should not let it go without investigating the matter,'' he added. Meanwhile union finance minister Yashwant Sinha has agreed to depute a high-level representative of the Union government to represent finance, power, petroleum, and other union government agencies on the renegotiation team. These departments will set up their own internal coordination committee to review the situation from time to time and guide the renegotiation team to be set up by the Maharashtra government. Success of state bandh isolates BJP 04/27/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: The state unit of the Bharatiya Janata Party (BJP) finds itself politically isolated following the Maharashtra bandh on Wednesday. The protest was jointly organised by the Shiv Sena, an ally of the BJP, the left parties and several trade union organisations. Even a section of the Congress backed the bandh. The bandh was specifically targeted at the BJP, which heads the National Democratic Alliance (NDA) at the Centre. Even though the Sena is a part of the NDA, it seems to have cleverly sensed the mood of the people, which is clearly against the economic policies of the Centre, and joined hands with the left and democratic parties to organise the bandh. A BJP office-bearer said, ``The Sena finds the ground slipping from under its feet, and hence it is indulging in gimmicks like sponsoring bandhs.'' However, Sena leader Uddhav Thackeray said, ``We have, unambiguously, demonstrated that we are on the side of the workers, farmers and the middle class. We have prioritised our commitments and our first priority is to the people and not to cabinet berths.'' Sources in the Sena said the party does not want to be punished by the people during elections for the blunders made by the BJP. ``The deleterious effects of globalisation are there for everyone to see. Thousands of looms have fallen silent because of textile imports; apples and chocolates from New Zealand and Switzerland and toys, chemicals and dyes from China and Taiwan are edging out Indian products in local markets. Not only workers, even middle-class employees are being fired by their employers. Are we to mutely watch the crushing of thousands of families under the wheels of the globalisation juggernaut,'' asked a Sena leader. Interestingly, many in the BJP concur with this viewpoint, but are afraid to speak out lest they are accused of violating the party discipline. In private, BJP activists are extremely critical of the Vajpayee government's ``non-response'' to the torture and killing of 16 jawans of the Border Security Force by Bangladesh Rifles. ``Our foreign minister Jaswant Singh personally escorts top Pakistani terrorist Maulana Masood Azhar from a jail to Afghanistan and sets him free. Mr Vajpayee, unilaterally, declares a ceasefire in Kashmir. And, now he does nothing when our jawans are killed by a small nation like Bangladesh,'' a senior BJP leader observed. Senior leader of the Vishwa Hindu Parishad (VHP) Ashok Singhal, who was in the city recently, openly stated that the Vajpayee government has come to a standstill. However, party spokesperson Atul Bhatkhalkar said, ``We do not want to do anything that will complicate the situation for Bangladeshi prime minister Hasina Wajed, who is pro-India. People should appreciate the ground realities.'' Meanwhile, the Enron issue is likely to emerge as a test of the recent unity between the Sena and parties of the left. The controversial power project of the U.S. MNC was endorsed by the Sena when it, along with the BJP, was in power in the state. But the left parties want the project to be scrapped. Sena chief Bal Thackeray has gone on record stating that his government was under pressure from the U.S. to sign the accord with Enron. With Enron in a confrontationist mode vis-a-vis the state and Central governments, the Sena's response is being keenly watched in political circles here. Additional power for Delhi promises Prabhu A Staff Reporter 04/27/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) NEW DELHI: Union power minister Suresh Prabhu on Thursday assured chief minister Sheila Dikshit that the Capital would be provided an additional 150 MW of electricity starting first week of May. Dikshit met Prabhu to apprise him of the power situation in the Capital. She told Prabhu that the city was facing a power deficit of about 300 MW and desperately needed an additional supply to meet the increasing demand. The Centre promised that the additional power would be made available from the Eastern Grid. Dikshit told Prabhu that the Delhi government was negotiating with the Chhatisgarh government to buy 100 MW. She said the Delhi government was facing severe problem in getting power from Himachal Pradesh Electricity Board due to reduction in the power generation in the state. The government is now contemplating talks with West Bengal to purchase power. Dikshit said her government was negotiating a deal with Enron, but was reluctant to buy electricity due to the high tariff quoted by the company. Dikshit said additional power was also expected from the three units at Dadri, Badarpur and Raj Ghat power stations which would be become functional by May 10. Besides Dikshit, Delhi power minister Narendra Nath and principal secretary power Ashok Pradhan and Delhi Vidyut Board chairman Jagdish Sagar were also present. Enron ready to pull out, but lenders say wait Business Times Bureau 04/27/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: The Dabhol Power Company board, which met on Wednesday in London, authorised the company management to issue a termination notice to the Maharashtra State Electricity Board. The company, however, may not pull out of the project yet, considering its lenders, who met on Monday, opposed such a move and favoured renegotiations. Sources present during both the meetings said that though foreign lenders supported Enron on the termination issue, domestic financial institutions, led by the Industrial Development Bank of India, prevailed over the deliberations to oppose any such drastic move. Enron needs the lenders' consent to file a pre-termination notice for pulling out from the project. The decision to empower DPC chief Wade Cline to issue a termination notice was taken with six votes in favour against a single IDBI vote against such a move. Another significant development during the entire proceedings was that the financial institutions made it clear that further funding of Phase II of the project will depend on the Government of India assuring payment mechanisms. Institutions are yet to disburse about 30 per cent of the sanctioned package, which is crucial for completing the Phase II expansion project. ``The board has given powers to Wade Cline to issue a pre-termination notice. But the meeting quite unanimously felt the need of the hour is not to terminate the project but to initiate serious re-negotiation proceedings,'' said MSEB Chairman Vinay Bansal, who attended the board meeting. ``MSEB presented their views to the board members and it was understood by Enron which also included the Rs 401 crore penalty issue which is heading for arbitration proceedings. ``We have also made it clear that the tariff structure of Enron is quite high and a downward revision of tariffs is unavoidable," Bansal added. ``They cannot issue a termination notice without our consent since our exposure in the project is quite large and the lenders should approve any plans in that direction,'' said a top banker who was present during the lenders' meet. ``There is a general consensus that the project must be completed and the proposal to terminate the PPA should be kept in abeyance,'' he added. The global arrangers for the DPC include ANZ Investment Bank, Credit Suisse First Boston, ABN-AMRO, Citibank and the State Bank of India, where all these parties conducted separate meetings with the company officials. However, some bankers said the company can file a termination notice even if one lender with a minimum 5 per cent exposure on the project favours such proceedings. Meanwhile, in a clear reversal of roles, Maharashtra Chief Minister Vilasrao Deshmukh said that the state government was not keen on terminating the PPA. ``We will ask them to refrain from taking any such harsh steps since that would be bad news for all of us, including DPC,'' Deshmukh said. Deshmukh was echoing Union Power Minister Suresh Prabhu's sentiments, who said that the government wanted an amicable settlement of the payment row. He, however, added that termination of the project would not hurt foreign investments, and dismissed warnings by analysts that winding up the $2.9 billion project would be a blow to India's efforts to woo foreign investors. The DPC has already slapped one conciliation notice on the Centre and three arbitration notices on the state government over non-payment of dues amounting to Rs 213 crore and interest towards the bills due for December 2000 and January 2001. Meanwhile, MSEB officials said in Mumbai that the March bills amounting to Rs 134 crore was paid on Thursday as protest payment, despite the dispute over the amount. When asked on the future course of action, Bansal said it was up to the DPC. The Enron issue was also raised in the Lok Sabha on Thursday, when Prabhu said that scrapping of the agreement would cost Rs 2,840 crore to the Centre, whose liability in the project agreement was limited. Centre's liability in case of termination is one year's electricity bill and a termination fee of $300 million, he said. India's single largest foreign investor threatens to pull out Madhu Nainan 04/27/2001 Agence France-Presse (Copyright 2001) BOMBAY, April 27 (AFP) - The biggest single foreign investor in India, US-based Enron Power Corp., is threatening to pack its bags in frustration -- a move that would cast doubts over the country's investment-friendly credentials Enron's Indian subsidiary Dabhol Power Co. (DPC) is putting up a 2.9-billion-dollar power station in India's industrial heartland Maharashtra state. At a meeting in London on Wednesday, the DPC board of directors authorised chief executive officer Neil McGregor and Enron India chief K. Wade Cline to serve a "preliminary" termination notice for sale of power, within the next four weeks, to the Maharashtra electricity board. The two-part power station is being erected at the port town of Dabhol, some 200 kilometres south of the state capital Bombay. Payments for electricity have been guaranteed by the state and federal governments. Part one began generating power in May 1999, but the project has been mired in controversy and acrimony, with the state government arguing it could not afford the high electricity bills. "This is a drastic and unfortunate decision the board of directors has taken, even though we made it clear that we want to find a solution to the impasse," Maharashtra energy minister Padamsinh Patil told AFP. Patil said a decision had been taken by the state and federal governments last week to set up a panel to renegotiate the power purchase agreement. "Enron knew about the decision. We have no animosity towards Enron. We have paid the February bill under duress and we told them we are ready to pay the other bills also under protest." Vijay Kalantri, president of the All India Association of Industries described the Enron move as "unbusinesslike". "They have done this to build up the pressure on the state and federal governments. Economic disputes are not resolved by threats, but by sitting down to discuss and re-negotiate contracts." Kalantri agreed that if Enron carried out its threat, the consequences would be "bad" for all parties. Ashok Khinvasara, director at the Ispat group, said India could suffer as a foreign investment destination, especially in the power sector. The Ispat group's plans to put up a 1.4 billion-dollar power project in Maharashtra have been put on hold in the wake of the Enron controversy. "Since the state electricity board is not paying its dues, Enron is within its rights to serve a termination notice," Khinvasara said. "The board will not be hit initially as it buys very little power from DPC now, but the size of Enron's claims and the speed with which it sets in motion a recovery process could turn out to be worrisome. Enron's claims could be more than 30 billion rupees (652 million dollars)." Khinvasara said the Enron episode showed that future investors should take care to see that tariffs are "affordable" and should not take comfort merely in contracts and government guarantees. The DPC board of directors' decision is the second in a series of moves to increase the pressure on the government. Early in April DPC served the state electricity board a notice of political "force majeure" which is a legal manoeuvre that enables a party to break a contract in the case of events beyond its control. The Dabhol project has had a turbulent ride ever since it was signed in 1992. Allegations of corruption and high costs led to the scrapping of the contract in 1995, but it was re-negotiated the same year. In February a state government panel recommended fresh re- negotiations to bring down the tariffs and charged Enron with inflating costs. man/gh/lh Business/Financial Desk; Section C COMPANY NEWS INDIAN UTILITY PAYS $28 MILLION MARCH BILL TO ENRON Reuters 04/27/2001 The New York Times Page 4, Column 1 c. 2001 New York Times Company The Maharashtra State Electricity Board in India paid its March power bill to the Enron Corporation yesterday, a day after Enron said it might stop selling power to the utility. The utility gave Enron's 65-percent-owned Dabhol Power Company 1.34 billion rupees ($28.6 million) for electricity it bought last month, a utility official said. But the utility still owes the company 2.26 billion rupees for power purchases in December and January. It has refused to pay, saying Dabhol should adjust that amount with the penalty of 4 billion rupees it has levied on the company for what it says was a failure to meet capacity targets. Business DAILY BRIEFING STAFF REPORTS AND NEWS SERVICES 04/27/2001 The Atlanta Constitution Home C.2 (Copyright, The Atlanta Journal and Constitution - 2001) < Denotes item of particular local interest. UTILITIES/ENERGY: Enron, Sierra Pacific cancel Portland deal Houston --- Enron Corp.'s $3.1 billion sale of Portland General Electric Co. to Sierra Pacific Resources was canceled by mutual agreement, the companies said. Enron said last month that the sale probably wouldn't be completed because of California's energy crisis. Business Brief -- Enron Corp.: Sale of Utility Subsidiary To Sierra Pacific Is Canceled 04/27/2001 The Wall Street Journal B8 (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON -- Enron Corp. and Sierra Pacific Resources said they ended their $2 billion agreement for Sierra, of Reno, Nev., to buy Enron's electric utility subsidiary, Portland General Electric. The collapse of the pact was expected after Jeffrey K. Skilling, Enron's president and chief executive, said last month the sale wasn't likely to go through. "As we have discussed in the past few weeks, the energy markets in California and Nevada have led to a regulatory and legislative environment that has made this transaction increasingly difficult to complete," said Mr. Skilling in a news release. International News Indian State to Pay Enron for March Supply Associated Press 04/27/2001 The Asian Wall Street Journal 7 (Copyright © 2001, Dow Jones & Company, Inc.) BOMBAY -- The Maharashtra state power utility will pay outstanding electricity bills for March as part of a dispute over tariffs with U.S. power company Enron Corp. "We will make the payment of 1.34 billion rupees ($28.7 million) today for the March bill. The February bill of 1.1 billion rupees was already paid up last month," Krishna Rao, a member of the Maharashtra State Electricity Board, said on Thursday. "As far as we are concerned, there are no more payments outstanding." Colombia Suspends Isagen Sale Pending Court Ruling, Papers Say 2001-04-27 09:47 (New York) Bogota, April 27 (Bloomberg) -- Colombia suspended its sale of state electric generator Isagen until a high court can rule on An injunction request filed by Empresas Publicas de Medellin, the country's largest municipal utility, newspapers said. Finance Minister Juan Manuel Santos said the sale of Isagen, the No. 3 power generator, was suspended on the order of a Medellin court, pending a ruling by the Council of State, a high court that oversees state entities, the daily El Tiempo said. Santos said the decision wouldn't affect government financing plans for this year because it has lined up most of its financing, La Republica said. The government said it wanted to raise $450 million from the sale, which has repeatedly been postponed since 1999 due to limited investor interest stemming from guerrilla attacks on the power grid and legal wrangling. The government planned to sell the company this month, La Republica said. The Council of State in September ruled in favor of an energy regulator measure that barred EPM, as the Medellin utility is known, from taking a majority stake in Isagen, clearing the way for the sale to go ahead. (4/27; Tiempo; Sec. 1; P. 10; {TMPO <GO<}) ( ; Republica; Sec. 1; P. 2 {LRPB <MGO<}) --Robert Willis in Bogota (571) 317-4000 bwillis@bloomberg.net, through the New York newsroom (212) 318-2300 /rhj Story illustration: For news on employment in Colombia, enter {COUETOTL <Index< CN <GO<}.
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