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INDIA: Indian states to issue bonds to pay utilities dues.
Reuters English News Service, 07/06/01 Factiva Energy Digest - July 6, 2001. Factiva Energy Digest, 07/06/01 Commodities Review:Coffee Hits Another Low,$450/Ton Eyed Dow Jones Commodities Service, 07/06/01 INDIA: Indian states to issue bonds to pay utilities dues. 07/06/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, July 6 (Reuters) - Indian states have agreed to issue bonds to help bankrupt electricity boards pay $8.8 billion owed to federal utilities but they persuaded the government to cut part of the money due, Junior Power Minister Jayawanti Mehta said. The move is seen as a vital step toward putting the ailing utilities back on the road to financial health and reforming the power sector. "There has been an agreement. The states have agreed to issue bonds," she told reporters late on Friday after a meeting of the Empowered Group of chief ministers and energy ministers of several states. The group was set up in March after Prime Minister Atal Behari Vajpayee met chief ministers of all the states and urged them to reform their utilities, which are expected to report a combined loss of $5.1 billion this year. Officials said the chief ministers in the group and the federal Power Minister Suresh Prabhu will discuss the proposal with heads of other states before the proposal is finalised. The state utilities' debt comprises a principal amount of about $5.3 billion and a surcharge of about $3.4 billion levied as interest. The federal government had offered to waive 50 percent of the surcharge and allow states to issue tax-free bonds bearing an annual interest rate of 8.5 percent for the rest of the amount. Mehta said New Delhi had agreed to the states' demand that 60 percent of the surcharge be waived instead of the 50 percent proposed by the federal government. This and some other concessions granted to the states had imposed an additional burden of 20 billion rupees ($425 million) on the federal government, she said. Mehta said the states had also agreed to set up committees to review tariffs. State utilities supply free or heavily subsidised electricity to farmers and charge a hefty fee for power given to commercial customers. Heavy losses and widespread theft has made the state power boards bankrupt and unable to pay power producers for electricity. Default by the state utility in the western state of Maharashtra prompted U.S. energy firm, Enron Corp, to issue a preliminary termination notice for the $2.9-billion Dabhol Power plant which is India's largest foreign investment. Factiva Energy Digest - July 6, 2001. 07/06/2001 Factiva Energy Digest Copyright © 2001 Dow Jones Reuters Business Interactive Ltd., trading as Factiva. OIL & GAS HEADLINES *OPEC Secretary-General Says Resumption of Iraqi Exports Unlikely to Affect Prices *U.S. Energy Department Bucks American Petroleum Institute, Showing 11th U.S. Weekly Gasoline Build *Brazil Petrobras Global Offer to Close on July 18 *Tanker Body Reports 42 Accidents in First Half POWER & UTILITY HEADLINES *Fiat Says Italenergia Filed for Montedison Shareholders Meeting *Italy Watchdog Undecided on Italenergia/Montedison *New Power Adds Customers With Two Deals REGULATORY & ENVIRONMENT HEADLINES *Germany Sets Up Power Grid Competition Watchdog *Belgium Government Holding Up Gas Market Opening *Energy Regulatory Commission Judge Pushes for California Refund Plan Friday *California Asks SEC to Review PG&E Utility Transfers *Bankrupt PG&E Seeks Approval to Pay Franchise Fees *EU Fears for Climate Deal After Australia Talks ************************************** OIL & GAS *OPEC Secretary-General Says Resumption of Iraqi Exports Unlikely to Affect Prices INTERLAKEN, Switzerland (Reuters) - OPEC Secretary-General Ali Rodriguez said on Friday a resumption of Iraqi oil exports following a U.N. extension of the oil-for-food deal was unlikely to affect current oil prices. "Before Iraq closed production the situation was stabilized and the price was falling a bit," he told reporters on the sidelines of a business conference in Interlaken. "OPEC took the decision to maintain production levels and now the price is oscillating more or less around $25 which is the objective of OPEC. Now after the United Nations decision (to extend the oil-for-food deal) the situation is the same." Iraqi U.N. Ambassador Mohammed Aldouri said on Thursday that Baghdad had accepted the U.N. decision to extend the oil-for-food program for another five months to November 30. But Aldouri delayed until next week the signing of the memorandum of understanding to extend the program, citing a "minor technical issue" that needed to be resolved. *U.S. Energy Department Bucks American Petroleum Institute, Showing 11th U.S. Weekly Gasoline Build NEW YORK (Reuters) - U.S. gasoline stocks increased for the 11th straight week, new government data showed Thursday, evidence that demand may not be recovering as much as an industry report showed earlier in the week, analysts said. Gasoline stocks rose 0.9 million barrels to 221.6 million barrels for the week ending June 29, according to Energy Information Administration, the statistics branch of the Department of Energy. EIA gasoline stocks are now 12.4 million barrels greater than this time last year. The government data were delayed one day by the U.S. Independence Day holiday Wednesday. The EIA build countered a draw of more than 2.5 million barrels shown in industry data earlier in the week in the American Petroleum Institute's stock report. API implied demand was 9.6 million barrels a day, up from 8.56 million barrels a day the week before. Both reports showed big crude draws. EIA had a draw of 4.8 million barrels while API had a 4 million barrel draw. But both showed crude stocks were roughly at 310 million barrels, much higher than stocks this time last year. EIA showed crude stocks nearly 20 million barrels greater than last year, while API showed crude stocks are more than 18 million above last year. Both reports showed builds in distillates, though EIA showed a build of 1.6 million barrels opposed to API's build of nearly 2 million barrels. *Brazil Petrobras Global Offer to Close on July 18 RIO DE JANEIRO (Reuters) - Brazil's state oil giant Petrobras said on Thursday that a global offering of about 2 billion reais ($800 million) of its shares will be closed on July 18. Brazil's National Development Bank (BNDES) said earlier this week that it had filed a request with U.S. and Brazilian authorities to sell the Petrobras shares in its portfolio. The 36 million preferred shares are equivalent to 8% of voting stock or 3.3% of total capital. If demand is strong, the BNDES said on Thursday that the offer could be extended to include a further 5.4 million preferred shares. Coordinators of the sale and analysts said on Thursday that they expect strong demand for the shares due to the high international price of oil and the company's increasing transparency. *Tanker Body Reports 42 Accidents in First Half LONDON (Reuters) - The tanker industry recorded 42 shipping accidents in the first half to 2001, over half of which involved collision, fire or explosion and a quarter resulted in pollution, the tanker federation Intertanko said this week. "Whilst naturally concerned over the 42 incidents, some small satisfaction is taken from the knowledge that the figures for the last six months continued to follow the downward trend of the last few years", Intertanko MD Peter Swift told Reuters. Of the 42 incidents this year that Intertanko compiled from Lloyds casualty reports, 12 were collisions, 11 were fires or explosions and nine were groundings. Fires and explosions have accounted for just 8% of incidents over the last 22 years, according to Intertanko figures, so the 11 incidents reported in the first half is an unusually high proportion. ************************************** POWER & UTILITY *Fiat Says Italenergia Filed for Montedison Shareholders Meeting MILAN (Reuters) - Fiat CEO Paulo Cantarella said on Friday the Fiat-led Italenergia consortium had formally presented the documents necessary to call a Montedison shareholders meeting. "We have presented everything," he said on the margins of a press conference to announce a joint venture with IBM. "As regards our formal obligations, there is nothing more to do." Italenergia, which on Monday declared it controlled 52% of Montedison's capital, had called on Montedison to hold an extraordinary shareholders meeting to kick out the current management. At a board meeting on Wednesday, Montedison's board said it refused to call the meeting as the official procedures were not correct. *Italy Watchdog Undecided on Italenergia/Montedison ROME (Reuters) - Italy's competition watchdog on Friday said it had yet to decide if Italenergia's acquisition of a controlling stake of Montedison fell under their jurisdiction to evaluate or the European Union's. "We are evaluating first, as we always do, if we are the competent institution," said Giuseppe Tesauro, the head of Italy's Antitrust on the sidelines of a conference, in response to reporters questions on whether they will look into the deal or the EU. "We have 30 to 45 days to decide." Italenergia, which is lead by car maker Fiat and includes France's energy giant EDF, on Monday declared it controlled 52% of agro-energy conglomerate Montedison's capital. *New Power Adds Customers With Two Deals NEW YORK (Reuters) - New Power Co., a national energy provider partly owned by powerhouse Enron Corp., said on Thursday it plans to make two separate acquisitions that would increase its customer base by about 20% and raise its visibility in Pennsylvania and Ohio. Financial terms of the agreements with AES Direct, the retail marketing subsidiary of independent power company AES Corp., and with CoEnergy, a unit of Michigan-based DTE Energy, were not disclosed. Purchase, New York-based New Power, a unit of NewPower Holdings Inc., said the deals would add a total of 121,000 electric and natural gas customers. At the end of the first quarter, it had about 631,000 customers, a company spokeswoman said. New Power said it signed an agreement to buy AES Direct's customer base and related assets, including natural gas inventory, supply and transportation contracts as well as billing and customer service operations. It also is buying Ohio-based customers from CoEnergy, gaining entry into service areas of four additional utilities. ************************************** REGULATORY & ENVIRONMENT *Germany Sets Up Power Grid Competition Watchdog BONN (Reuters) - Germany's federal cartel office is about to set up a department to stamp out anti-competitive practices in power grid operations, a spokesman said on Friday. "The department will deal with barriers to free access to the electricity grids," spokesman Stefan Siebert told Reuters. "It will take up its work this month and probably have four staff," he added. Cartel office president Ulf Boege announced the installation of the department in a speech issued along with the office's annual report on Thursday. He said three years after market liberalization, established utilities were still blocking competition. "These companies have developed a whole array of measures to illegally prevent competition from taking place," he said. There have been numerous complaints about excessive grid access and switching fees along with other bureaucratic complications due to low voltage grid owners owning the "last mile" to the customers' site or home use to discourage alternative suppliers. *Belgium Government Holding Up Gas Market Opening AMSTERDAM (Reuters) - Belgium's move towards opening up its gas market to competition is being slowed because of government delays in implementing key legislation, a senior official of the country's energy regulator said on Friday. "Basically we are waiting for the decrees (from the government)," Jean-Paul Pinon, director of technical operations for gas at regulator CREG, told Reuters on Friday at the sidelines of a conference. "The Gas Act which is expected to come in this summer gives an indication of how the market can be organized, but it gives no indication of when this will happen - the decrees will do that." Pinon said the government was presented with proposals in October but had yet to give any indication of when it intends to publish the decrees. "I am amazed the first decree has not been published yet. The market is not liberalized because the decrees have not been enacted", he said. "The Gas Act will give more freedom to liberalize through the decrees." *Energy Regulatory Commission Judge Pushes for California Refund Plan Friday WASHINGTON (Reuters) - Negotiations over refunds of billions of dollars for Western electricity entered a critical stage Thursday, with the administrative law judge overseeing the talks threatening to issue his own plan Friday unless progress was made. Curtis Wagner, the chief judge at the Federal Energy Regulatory Commission (FERC), also said a public hearing could be quickly scheduled for Sunday or Monday if necessary to discuss his proposed settlement plan for California and other Western states. California has asked FERC to order refunds worth some $9 billion for alleged overcharges for wholesale electricity during the past year. In total, the tab for the region's demands runs closer to $15 billion, counting the states of Washington, Oregon and others. Western states, plus independent generators, major utilities and other parties, are involved in the refund talks. *California Asks SEC to Review PG&E Utility Transfers SACRAMENTO, Calif. (Reuters) - California's attorney general asked federal regulators Thursday to scrutinize PG&E Corp. for potential abuses in the transfer of billions of dollars from its bankrupt utility Pacific Gas and Electric. Attorney General Bill Lockyer filed a petition in Washington D.C. urging the Securities and Exchange Commission (SEC) to apply federal regulatory oversight to determine whether the transfers helped trigger the utility's decision to file for bankruptcy protection in April. The SEC currently exempts San Francisco-based PG&E Corp. from almost all requirements and review based on the holding company's position that it is an interstate entity, Lockyer said. But the petition said because PG&E Corp. controls more than $13 billion in assets outside California and is pursuing business activities in at least a dozen other states it is open to federal review under the Public Utility Holding Company Act. *Bankrupt PG&E Seeks Approval to Pay Franchise Fees SAN FRANCISCO (Reuters) - Pacific Gas & Electric Co. on Thursday said it filed a motion with the U.S. Bankruptcy Court here for authorization to assume more than $76 million in 510 franchise fee agreements with California cities and counties. The utility, a subsidiary of San Francisco-based PG&E Corp., filed for Chapter 11 bankruptcy protection on April 6. The company needs the bankruptcy court's approval to make the franchise fee payments to the cities and counties, most of which will be due in the first quarter of 2002, said Ron Low, a spokesman for the utility. A hearing on the motion is set for July 31, he said *EU Fears for Climate Deal After Australia Talks SYDNEY (Reuters) - The European Union raised concerns about global climate talks in mid-July on Friday after failing to bridge a gap with Australia over how to deal with Washington's rejection of the Kyoto global warming pact. In talks with a visiting EU delegation, Canberra stuck by its view the agreement between industrialized countries to cut greenhouse gas emissions was dead without U.S. support, Environment Minister Robert Hill said. With Japan also preferring to bring the world's top polluter back into the fold before pressing on with Kyoto, Belgian Energy Minister Olivier Deleuze acknowledged it would be tough to win a consensus at the next world climate talks in Bonn on July 16. "I think that in Bonn there should be negotiations with success at the end with as many countries as possible and we don't have this certainty today," Deleuze told reporters in Sydney. ************************************** Full versions of these and other energy stories are available from Dow Jones Interactive and Reuters Business Briefing ************************************** Factiva Contact: Marc Donatiello, +1 609-627-2659, marc.donatiello@factiva.com. (Copyright © 2001, Dow Jones & Company, Inc.). Homepage Address: http://www.factiva.com. Commodities Review:Coffee Hits Another Low,$450/Ton Eyed By Ian Stephenson and David Elliott Of DOW JONES NEWSWIRES 07/06/2001 Dow Jones Commodities Service (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -(Dow Jones)- Robusta coffee futures traded in London fell to another fresh 30-year low Friday as the glut of coffee on world markets continued to weigh on the market. And the market is set to continue even lower short term, barring a frost in Brazil, as further supplies come onto the market, traders and analysts said. "The whole market is consumed with coffee, wherever you look it is there," a Liffe coffee broker said. "We're in a downward spiral and there's nothing out there to stop us going lower still," said another broker. Despite hovering above record low prices for some time, producers aren't being deterred from producing or selling. And as the coffee continues to trickle onto the market the gradual erosion in prices is set to continue, with $450 a metric ton a possible target. The benchmark September robusta coffee contract on Liffe ended at $540/ton Friday, having set a new low of $532/ton. "Technically the market is oversold but such considerations appear to have little impact in the face of overwhelming supply of robusta (coffee). For this reason, the chances of a meaningful recovery are slight and the talk of $500/ton or $450/ton on (September) becomes even louder," one brokerage said in its daily report. Apart from the fall in the level of the Brazilian real, Liffe coffee is under pressure from constant origin selling - with India, Uganda, Vietnam and India all noted current sellers - and the lack of any frost in Brazilian coffee growing regions. And Brazil's coffee belt is seen safe from any crop damaging frost at least until July 20, according to Sao Paulo weather forecasters Somar Meteorologia. Temperatures may cool again from July 16, "but we're not calling for any frost risk yet," said one Somar meteorologist Friday. Brazil's frost season lasts into August, but as time ticks by, the risk of crop damage recedes, traders said. The Brazilian real's recent fall has been a major part of the recent falls on Liffe coffee, traders said, encouraging producers to sell onto dollar-denominated markets. Brazil is reported to have around 10 million-11 million bags of robusta coffee to sell, they said. And the outlook for robusta coffee prices is no better long term, traders and analysts said. Some analysts had predicted that the low prices would cause producers to cut back or to move out of coffee production, but with the vast increase in Vietnamese production in the past 10 years, little impact is expected if there are any cut backs, said others. There are plans to remove less productive trees in Vietnam, but this is likely to be offset by younger trees in more productive areas reaching maturity, said one analyst. In the long term, participants believe the low prices will see producers being less able to add inputs, such as fertilizers and pesticides, which may help to stabilize production, but this is unlikely to cause the dramatic shift in supplies that is needed to lift world prices. LME Copper Hits Two-Year Low As Stocks Surge Elsewhere, London Metal Exchange copper fell to a fresh two-year low Friday as early weakness was compounded by another steep invenventory hike before strong trade buying and bargain hunting lifted prices for the close. Speculator selling caused a sharp slump in the aluminum market overnight in Asia and leant pressure to the already nervous copper market, but it wasn't until the release of London Metal Exchange stock data that prices hit the one-year low at $1,552/ton. Copper stocks rose a further 6,525 tons Friday, bringing total stocks to 503,650 tons, a rise of 76,550 tons since June 22. Although the move has been widely predicted, such substantial stock builds will still have a bearish effect on prices short term, an LME floor dealer said. "You can't expect people to ignore stock jumps like this even if they have been expecting them for a while," he said. Unconfirmed talk is that major trade house Enron is behind much of the stock build, in an effort to reduce the market's nearby supply tightness and alleviate the large short positions they are thought to have built up on the July-for-a-week spread. When questioned, Enron declined to comment. However, the builds aren't thought to be over yet, said a London-based analyst, predicting that another 30,000 to 40,000 tons of copper are set to enter warehouses over the next two weeks. LME three-month copper ended the late kerb $2.75/ton higher at $1,562.75/ton. -By Ian Stephenson and David Elliott, Dow Jones Newswires; 44-20-7842-9358; ian.stephenson@dowjones.com -0- 06/07/01 17-00G
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