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Enron Mail |
World Business Briefing Asia: India: Power Dispute
The New York Times, 05/31/01 World Watch The Wall Street Journal, 05/31/01 Spin Control: Spain Hits Turning Point At Windmill Parks --- Some Are Well Planned, Others Scar the Landscape --- EU Pride and Promises at Stake The Wall Street Journal Europe, 05/31/01 Struggling Enron plant in India stops production Houston Chronicle, 05/31/01 BP Doesn't Expect Lead Role In Saudi Gas Proj - Source Dow Jones Energy Service, 05/31/01 Regulators want state trade-off for caps / Davis asked to give up control of power lines The San Francisco Chronicle, 05/31/01 Plan would have biggest customers pay Edison's debt The San Francisco Chronicle, 05/31/01 INDIA'S MSEB DOUBTFUL OVER DABHOL'S 10 PCT TARIFF CUT PROPOSAL Asia Pulse, 05/31/01 India: Interest rate dichotomy growing wider Business Line (The Hindu), 05/31/01 India: Enron willing to continue project Business Line (The Hindu), 05/31/01 INDIA'S DABHOL SHUTS POWER PLANT, TO ISSUE TERMINATION NOTICE Asia Pulse, 05/31/01 That's right, double-click there, sir Techies, executives cross-pollinate as reverse mentoring gains ground The Globe and Mail, 05/31/01 Enron Willing To Continue India Power Project - Report Dow Jones International News, 05/31/01 Business/Financial Desk; Section W World Business Briefing Asia: India: Power Dispute By Saritha Rai (NYT) 05/31/2001 The New York Times Page 1, Column 1 c. 2001 New York Times Company The Dabhol Power Company, the Enron Corporation's unit in India, stopped generating electricity at its $3 billion power plant after its sole customer, the utility of the Indian state of Maharashtra, stopped buying power on Tuesday. The halt in power generation was the latest move in a months-long dispute that has cast doubt on the future of Dabhol's $2.9 billion power project in India, the largest foreign investment ever in India. Jimmy Mogul, a spokesman for Enron, which owns 65 percent of Dabhol, said the company remained open to discussions in the dispute, which involves overdue payments for power. Dabhol had issued a preliminary termination notice on May 19 saying it was pulling out of the Indian project. Final termination requires a contractual six-month cooling-off period. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. International World Watch Compiled by David I. Oyama 05/31/2001 The Wall Street Journal A10 (Copyright © 2001, Dow Jones & Company, Inc.) BRIEFLY: -- Japan's NEC said it will cut back a plan to expand chip-production capacity at its Shanghai, China, joint venture because of the global chip industry's downturn. -- Taiwan's Finance Ministry said the island's domestic banks will be allowed to open representative offices in China. It said the banks will be allowed to conduct market research in China, but they won't be able to establish branches. -- In an effort to placate creditors of Asia Pulp & Paper, part of Sinar Mas Group, the Indonesian Bank Restructuring Agency said it has "no present intention to immediately foreclose or liquidate" Sinar Mas assets that it has taken as security. -- Dabhol Power, a unit of U.S. energy company Enron, said the Maharashtra State Electricity Board, its only customer, has stopped ordering electricity from Dabhol's $3 billion power plant. But Dabhol said that the plant remains operational according to its contractual obligations. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Column One Spin Control: Spain Hits Turning Point At Windmill Parks --- Some Are Well Planned, Others Scar the Landscape --- EU Pride and Promises at Stake By Keith Johnson Staff Reporter 05/31/2001 The Wall Street Journal Europe 1 (Copyright © 2001, Dow Jones & Company, Inc.) BARBATE, Spain -- The economy of this fishing community is as battered as its town hall, where dim lights flicker in the hallways and chips of paint flake off the walls. Up in his second-floor office, the mayor, Juan Manuel de Jesus, has an in-tray overflowing with troubles: a third of the town out of work; a desperately needed fishing treaty with Morocco; rising crime and drug abuse; and a big municipal budget deficit. But this morning, his thoughts revolve around a different irritant: windmills. "Look at this," he says, unfolding on his desk a map of the countryside surrounding Barbate. Large yellow and green splotches -- a military training zone and a swarm of natural parks -- hem in the seaside town, leaving just a pair of white slivers. "Those are the only areas open for development," he says. His finger stabs one of the white areas near the Atlantic coast. "And that's where they're putting the windmills -- the one place we could have built a hotel, a resort, something that would bring us some jobs." The mayor sees the windmills as a blight on the land, driving away tourists and crimping more lucrative projects. Local environmentalists fret that the installation, with its rows of steel towers and sharp metal blades, will play havoc with migrating birds and mar the coastline as they did in nearby Tarifa, a windsurfing mecca on the Strait of Gibraltar. Tilting at windmills is nothing new in the land of Don Quixote. But wind power doesn't have to be like this. At the opposite end of the country, more than 1,000 kilometers to the north in the green hills of Navarra, 28 steel windmills perch on a ridge over a landscape that resembles a nature reserve. Cows nap in the shade of the towers, and the narrow gravel access roads follow original grazing trails. Electricity is transformed in a nearby substation built to resemble the neighboring stone houses. The approach -- the result of close cooperation between business and government -- has won accolades from environmentalists and business leaders alike. Spain, the world's No. 3 producer of wind power, has become a battleground for two competing models of developing the business: the hodgepodge of unsightly wind parks seen in the south and the carefully planned and unobtrusive installations found up north. The conflict is intensely local, with the country building enough new windmills to more than triple its wind-power capacity by 2005. But the model that prevails will have consequences far beyond the Iberian Peninsula. Anxious to clean up its environment and limit its dependence on imports of natural gas, the European Union has committed itself to generating 22% of its electricity from renewable energy sources by 2010. Yet less than 5% of the EU's electricity output now comes from windmills, thanks largely to poor execution and a brewing backlash. If Spain -- with its open spaces and relatively low population density -- can't sell the public on windmills, the EU will likely find it difficult to convince Europeans to accept more ambitious forms of alternative energy, such as biomass plants, which turn agricultural, animal and human waste into energy. The failure could also call into question the EU's commitment to the 1997 Kyoto global-warming treaty, which U.S. President George W. Bush has been roundly criticized in Europe for rejecting. Few expected this turn in events back in 1996, when the EU first set a more modest 2010 target. At the time, wind power looked like the fresh breeze of the future. Soon, the union's most green-minded states, led by Germany and Denmark, were busily building wind parks to the applause of environmental groups, which saw wind power as a clean alternative to nuclear power and coal-burning power plants. But early enthusiasm led to shortsighted projects, leaving the European landscape littered with inefficient wind parks. Germany, for example, quickly became the world's largest producer of wind power, with 6,113 megawatts of capacity installed at the end of last year. But the breakneck growth has gobbled up most of the available sites for windmills, prompting government officials to promise more careful planning procedures. Opposition is also building in Denmark, forcing the government to rethink a wind-power subsidy program. All of this spells trouble for wind power, which relies heavily on government funding. "Lower-quality projects are mucking up the panorama," says James Stettler, a renewable energy analyst with Dresdner Kleinwort Wasserstein in London. Finding the right balance between wind development and environmental care would go a long way toward assuaging public opposition -- notably in wind-rich but windmill-poor Britain and Ireland -- and toward avoiding California-like blackouts in Spain in the years to come. The danger is real, says Rafael Miranda, chairman of Spanish utility Endesa SA, who this month urged the government to ease restrictions on new investments in power plants or risk outages. One way forward can be seen in the hills of northern Navarra, at the installations of Energia Hidroelectrica de Navarra SA, a Spanish company that specializes in renewable energy. On a recent afternoon, EHN official Enrique Huidobro races his four-by-four past two huge trucks on a dusty track leading up to Alaiz, an 85-turbine park built in 1999. EHN's head of civil works, Mr. Huidobro is working overtime -- patching the land, clearing debris and replanting grass around the park's latest additions, 10 big 660-kilowatt turbines whose 23-meter-long blades whoosh over the landscape with barely a whisper. EHN is Spain's largest wind-park developer. The company has installed more than 600 megawatts of wind capacity in Spain over the past five years, mostly in Navarra. Its parks have won accolades from environmental groups and business leaders alike, and company-sponsored surveys show public approval ratings above 80%. One of its subsidiaries, Energias Eolicas Europeas, this spring landed the biggest-ever financing package in the wind sector: some 900 million euros from five European banks to build 31 wind parks in Don Quixote's La Mancha in south-central Spain. "The extra costs from taking care of the environment aren't questioned here," says EHN's chief executive, Esteban Morras, seated beneath oil paintings of modern windmills in his office in Pamplona. "That's the most profitable investment there is in the long run." Mr. Morras isn't just paying lip service to the green lobby. A former attorney and civil servant, he spent years working on water-resource and energy issues in the governments of his hometown and, later, the region. So when EHN was founded in 1989 and he became CEO, he was merely taking his passion to the private sector. Fresh from his morning English lesson -- EHN is expanding into the U.S., Eastern Europe and Latin America -- Mr. Morras outlines what he sees as the keys to making wind power palatable: careful planning, environmental sensitivity and the latest in technology. Then he grabs a pair of binoculars and peers out the window behind his desk. On the crest of a hill in the distance is EHN's newest prototype, a 1.3-megawatt turbine. It's 10 times bigger than the turbines first installed in southern Spain, yet its 27-meter-long blades spin in much gentler breezes. "With more machines like that," Mr. Morras says, "we'll have parks that are less cluttered -- and more reliable and economical." The company's success owes a lot to the region's government. Navarra helped create EHN and still owns 48% of it. Navarra also approved generous tax credits for companies that invest in renewable-energy projects and established coherent and far-reaching planning procedures for wind power across the region. The strategy transformed the region from an also-ran in wind power to a model of development in five years Sitting in an office overlooking Navarra's first wind park, the regional official who guides the program reflects on the strategy. "It's not just about megawatts," says Nuria Iturriagagoitia, Navarra's director of industry, trade, labor and tourism. "You have to consider how it affects employment, education, agriculture, even tourism. The key was having a clear idea from the beginning on how to promote and implement alternative energies. EHN is the vehicle of our energy policy." She ticks off details of the 1995 energy plan. "The government studied 72 sites across Navarra," she says, sketching a map of the shield-shaped region on a piece of paper. "It ruled out 43 of them: They were virgin territory, or too close to natural parks, even though they were some of the best, windiest sites," she explains, crossing out huge swaths of the hilly province. In the end, 16 sites made the cut. But Navarra's strategy for quelling opposition didn't end there. After EHN began its detailed planning, Mr. Morras held weekly public meetings with environmentalists, developers and local residents. "We discussed every curve of every road," he says. "Everybody was included." EHN, unlike many Spanish wind-park developers, also decided to have all its windmills assembled in local factories. Its new project in Castilla-La Mancha, for example, will be supplied by a newly built local Enron Corp. plant. The approach paid off. Today, all 16 sites have operational wind parks. Five years after the first turbines started spinning, some 35% of Navarra's electricity comes from wind power. That compares with about 2% for Spain as a whole, and 13% for Denmark, the world's fourth-largest wind-power producer. Having won over the citizens of Navarra, the regional government and EHN are now working to educate the whole country about wind power. They regularly bus students from across Spain to their wind parks, some of which have become tourist attractions. Compare this with the haphazard patchwork of windmills cropping up down south in Andalusia, home to one of the country's first wind parks -- the sprawling installation of low-power windmills planted in Tarifa in 1992. In 1997, wind-power developers presented some 65 projects to the regional government. But Andalusia had no overall plan for exploiting the region's wind-swept coasts and inland hilltops. The region had no plan to oversee wind-power development, and no uniform criteria for installing or removing windmills. In the end, about 20 wind parks were approved with little thought to how much total energy they would generate for the region or how they would cumulatively affect the environment. The result: Trucks and cranes have chewed up many pristine areas, leaving behind 45-meter-high towers and concrete-block substations. Yet wind power still generates less than 1% of Andalusia's electricity. Soledad Bonet, a spokeswoman for Andalusia's environmental department, acknowledges that the region has no global planning procedure for new energy installations, including wind parks. Although the region's departments of environment, labor and industry all review wind-park plans, individual municipal governments are essentially free to award development licenses as they see fit. The crosswinds of these forces can be seen on a hilltop west of Barbate, where Desarrollos Eolicos SA, the wind park unit of engineering firm Abengoa SA, is busy erecting a row of windmills. More than 20 towers are already in place, and neighbors worry the looming turbines and gouged-out access roads will create another Tarifa. "They might be `green' and all," says Antonio Aragon, a taxi driver who gets an eyeful every time he wheels out of town. "But they sure do foul up the landscape something awful." This is "third-world" development, says Jose Luis Tirado, a 47-year-old sculptor who heads of a local group of environmentalists, businessmen and landowners who oppose the wind park. "We've spent decades calling for alternative energy sources," he says. "But doing it like this -- without any sort of planning -- is worse than doing nothing at all." Equally galling, he says, is that none of the wind-park developers active in the region have shifted any production to local factories, despite Andalucia's jobless rate of more than 20%. Back in Barbate's town hall, Mayor de Jesus sits at his desk and recalls how he invoked building-permit irregularities to stop work on the wind park earlier this year. A few months later, though, a local judge overruled him, arguing that Abengoa stood to lose its investment and that Barbate would have had to reimburse the company for the cost of the whole project. Construction has begun again. Abengoa declines to comment. Now, Mr. de Jesus leafs through a dossier of proposed economic initiatives for his town, then sets it aside with a sigh. His legal battle to halt construction looks hopeless, as does his chance of winning a new accord that will allow local fishermen to cast their nets in Moroccan waters. Unemployment and drugs are slowly killing his town, he says. "Those turbines are being built -- there's nothing we can do about that," he says. "But that's it. We're passing a new urban plan this year. There won't be any more [wind-park] licenses in the future, not here." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. May 31, 2001 Houston Chronicle Struggling Enron plant in India stops production By LAURA GOLDBERG Copyright 2001 Houston Chronicle Enron Corp.'s India power plant has stopped production after its sole customer stopped ordering electricity. The Maharashtra State Electricity Board had not issued dispatch instructions for power from the Dabhol Power Co. since early Tuesday, Enron spokesman John Ambler said Wednesday. The move by the board is the latest in a series of actions and counteractions surrounding the $3 billion project, in which Enron has a 65 percent stake. Though the plant can't produce power unless it has dispatch instructions, the plant hasn't been shut down. Employees are there and the plant reportedly is operational -- ready to produce power. The board told Enron last week it was canceling a 7-year-old power purchase agreement. Enron says the board doesn't have the right to do so. Under the contract, the board is supposed to pay Enron whether it takes power or not, said Carol Coale, an energy analyst with Prudential Securities in Houston. But the board has already refused to pay for power, saying Enron isn't living up to its contract. Enron, which says it is meeting the contract's terms, is owed about $64 million for power sold in December and January. Days before the board gave notice to Enron, the company started proceedings to end the contract because of unpaid power bills. But six months must pass before Enron can end it. There is continued speculation that Enron is looking to sell its stake in the project. In a statement, Enron said Wednesday it is "still open to constructive discussions on solutions." Indian officials also have been talking to some of the country's states about purchasing electricity from Dabhol, Bloomberg News reported Wednesday. The project has faced ongoing problems, almost from the time of Enron's initial investment in it in the early 1990s. BP Doesn't Expect Lead Role In Saudi Gas Proj - Source 05/31/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) DUBAI -(Dow Jones)- BP Plc (BP) doesn't expect to be awarded the lead role in Saudi Arabia's South Ghawar gas project, a source at the company told Dow Jones Newswires Thursday, requesting anonymity. Two weeks ago, Saudi Arabia announced its selection of international oil companies to develop three gas projects together, estimated to require investment of $25 billion-$30 billion. BP was selected, along with Exxon Mobil Corp. (XOM), Royal Dutch/Shell Group (RD), and Phillips Petroleum Co. (P), to develop the South Ghawar field, also known as Core Venture 1. Analysts estimate Core Venture 1 will need initial investment of between $15 billion and $17 billion. Industry sources have said that ExxonMobil and Shell are the strongest contenders to lead the project. The BP source said the leader of Core Venture 1 will get a 35% stake, Phillips a 15% stake, and the other two partners, 25% each. ExxonMobil has been appointed leader of Core Venture 2, or the Red Sea project, with a joint bid by Occidental Petroleum Corp. (OXY) and Enron Corp. (ENE) securing a minority stake. Core Venture 3, the Shaybah project, was awarded to a consortium of Shell, TotalFinaElf (TOT), and Conoco Inc. (COCA). Leaders for Core Ventures 1 and 3 have yet to be announced. Oil company executives are due to sign initial agreements Sunday. By Dyala Sabbagh, Dow Jones Newswires; 9714-331-4260; dyala.sabbagh@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS Regulators want state trade-off for caps / Davis asked to give up control of power lines Bernadette Tansey Chronicle Staff Writer 05/31/2001 The San Francisco Chronicle FINAL A.1 (Copyright 2001) California's testy relationship with federal energy regulators could turn into a showdown tomorrow, when state power officials must decide whether to surrender some control over the state's electricity market or risk losing limited price curbs that kicked in this week. In agreeing last month to set flexible caps to restrict price gouging during electricity shortages, the Federal Energy Regulatory Commission said the state and its utilities must agree to let an independent organization manage California's power transmission lines. Under that setup, California would be one of a group of Western states sharing a linked transmission grid whose rates and access rules would be set by independent managers. It is part of the commission's drive to create regional electricity markets throughout the country and make it easier to trade power across state lines. The regional grids would be a prelude to the nationwide free market in electricity advocated by the Bush administration and power marketers like Enron. But California Assembly Democrats who have challenged the federal demand say the requirement could interfere with some of the state's homegrown solutions to its energy crisis, such as Gov. Gray Davis' proposal that the state buy and run transmission lines owned by Southern California Edison Co. "A lot of folks were wondering how those two things would interact and are they mutually exclusive," said Paul Hefner, an aide to Assembly Speaker Robert Hertzberg, D-Sherman Oaks. Other officials say the federal requirement is premature because no regional organization yet exists that California can join. Mike Florio, a board member of the California Independent System Operator, which manages the state's power grid, said California is already part of regional efforts to clear transmission bottlenecks and share surplus power. But Florio said no Western state will rush into a regional arrangement and surrender part of its authority without ensuring a good deal for its own consumers. "We certainly don't want to be forced into an entity where generators or power marketers get to dictate the terms," Florio said. "This has got to be a long courtship rather than a shotgun wedding." When federal regulators initiated the move toward regional transmission grids during the Clinton administration in 1999, participation was voluntary, said Gary Cohen, general counsel to the state Public Utilities Commission. But in its April 26 order, the federal energy commission made its offer of limited price relief contingent on a filing by June 1 from the Independent System Operator committing the state to a regional management plan. The PUC and the Assembly are challenging that requirement. If anything, Cohen said, the state needs to increase control over its energy system while it recovers from its disastrous debut into deregulation, rather than submit to a regional authority that would be overseen by the federal government. "This doesn't seem to be the time to be doing more experimenting," Cohen said. "We certainly have not been able to rely on FERC to look out for the interests of Californians." WAITING FOR STATE'S RESPONSE Curt Hebert, chairman of the federal commission, declined to say yesterday whether the government would immediately yank the soft price caps that went into effect this week if it found the ISO response unsatisfactory. "He said he didn't want to prejudge the case," said commission spokeswoman Tamara Young-Allen. "He will wait to see what California files." PUC Commissioner Jeff Brown said he would be willing to give up some state control of the grid in exchange for meaningful price controls. But, he said, the federal measures granted fell far short of what California needed. "Hell, those caps are pretty toothless as they are," Brown said. The price controls are in effect only during power shortages. The cap is the price offered by the least-efficient generating plant. And generators can challenge any federal ruling that they have exceeded the caps, by claiming high costs. The controls were in place for the first time yesterday, when the state declared a Stage 2 power emergency, meaning reserves fell below 5 percent of available capacity. Florio said state power managers' answer to the federal government will probably be that they are already doing within California much of what a regional transmission organization would do. ISO COULD PLAY A ROLE The ISO manages the grid to ensure that power gets to where it is needed in the state, the organization told federal regulators in January. The agency could represent California when a Western regional organization develops, it said. The governor declined to say yesterday what stand he would take on federal regulators' demand. "I'm of a mind to do something, but I still have to talk to my lawyers," Davis said. Assembly Democrats say regulators in Washington have no right to withhold actions to correct California's dysfunctional power market. "They're required to . . . ensure that just and reasonable rates prevail in the market," Hefner said. "Why should we have to dicker to get them to do the job Congress created them to do?" Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS Plan would have biggest customers pay Edison's debt Greg Lucas Sacramento Bureau Chief 05/31/2001 The San Francisco Chronicle FINAL A.5 (Copyright 2001) Legislative leaders are drafting a new rescue plan for Southern California Edison that would put the utility back on its feet financially at the expense of its biggest customers. The plan would leave manufacturers, refineries and other big industrial customers with the burden of paying nearly all the utility's $3.5 billion back debt through a dedicated charge. Residential and small commercial users would be on the hook for only a fraction of the back debt. Big users say it is unfair to saddle them with all of Edison's debt, but supporters of the plan say it's these users that wanted deregulation and should shoulder the costs it created. "We're trying to put something together in a way that solves all these problems, and if people are to be pigheaded about it, we won't solve any problems," said Assemblyman Fred Keeley, D-Boulder Creek (Santa Cruz County). Although the plan is an alternative to Gov. Gray Davis' proposed deal to put Edison back on its feet financially, it could be used as a model to help restore Pacific Gas and Electric Co. to solvency. Democrats say the plan contains some elements desired by Republicans, but GOP lawmakers object to saddling large business users with Edison's debt. The plan is based on the way gas customers are divided into "core" and "noncore" users. SEPARATING 'CORE' USERS Under this proposal, electrical users would be divided the same way. Core users would be customers who use 500 kilowatts or less a month. Noncore would be those using more than 500 kilowatts. Out of Edison's 4.2 million customers, only 3,600 would be noncore customers. But those 3,600 customers use about 26 percent of Edison's demand for energy. Core customers would get their power from generators owned by Edison, long-term contracts and alternative energy producers, such as wind farms and solar panels, on contract with the utility. That would mean those customers would no longer be subject to the whims of the spot market, which has far higher prices than other sources of electricity. Large users, the noncore customers, would be given the right to negotiate to buy their power directly from generators or build on- site power plants to make themselves energy self-sufficient. The plan would be phased in through January 2003 to give large energy customers time to prepare for buying power on the open market. During that period, residential, small business and large industrial users would all share in paying off Edison's debt. But in 2003, that burden would shift exclusively to the big users. Republican lawmakers and those same large users have been clamoring to be given what is called "direct access" to generators so they can negotiate cheaper rates. Enron is also backing the idea of cutting loose the largest electricity users because that would create a built-in market for the energy the company sells. Large users who want to remain on the grid could do so. EDISON 'ENCOURAGED' Sources said Edison officials met with lawmakers over the weekend to iron out details of the plan. A spokesman for Edison said he was "encouraged" by the talks. "I haven't seen a finished product or a plan," said Bob Foster, a senior vice president with Edison. "They're approaching this in a spirit of goodwill and trying to find a solution." Big businesses complain that the plan does not work because right now, there is nowhere they can buy cheap electricity. "We're very concerned that separating the core from the noncore means we will experience extreme rate hikes over the next two years," said D.J. Smith, a lobbyist for the California Large Energy Consumers Association. "When you add blackouts, the multiple interruptions of production and another potentially huge rate hike, the result would be catastrophic to the economy," Smith said. Added Dorothy Rothrock, a lobbyist for the California Manufacturers and Technology Association: "What's the rationale for the noncore to be paying the entire Edison undercollection? It sounds to me like just pure politics. They don't want voters to pay because they vote." CONSUMER ADVOCATE SMELLS A RAT Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights, said he thought the plan would eventually turn into a bailout as business interests muscle lawmakers into pushing some portion of Edison's debt onto residential and smaller commercial customers. "I think it's a trick. We've seen this same tactic used at the Public Utilities Commission, where what were supposed to be rate increases for big business end up costing more for residential and small businesses," Rosenfield said. The new plan also does not include the outright purchase of Edison's part of the transmission system that loops electricity around the state. Davis backs buying the lines for $2.7 billion. Democrats have insisted that for the state's financial help, taxpayers receive something of value. Republicans have insisted that they will back no proposal that includes state purchase of transmission lines. In the new proposal, the state would have a five-year option to buy the transmission lines for $1.2 billion -- the book value of the asset. In addition, the utility would make $1.5 billion available to the state to either purchase other assets -- such as Edison's hydroelectric facilities, for example -- or use it in partnership to build new power plants. PHOTO; Caption: "If people are to be pigheaded about it, we won't solve any problems," said Assemblyman Fred Keeley. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA'S MSEB DOUBTFUL OVER DABHOL'S 10 PCT TARIFF CUT PROPOSAL 05/31/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, May 31 Asia Pulse - The Maharashtra State Electricity Board (MSEB) has expressed serious doubts over Enron-promoted Dabhol Power Company's (DPC) proposal to reduce its tariff by 10 per cent from the current average to Rs 3.15 per unit. "Agreed that they have mooted such a proposal verbally, we should not forget that it is ridden with assumptions, which are unacceptable to the board," the MSEB sources told PTI here today. (PTI) 31-05 1745 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Interest rate dichotomy growing wider 05/31/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MORE than 30 per cent of the targeted Government borrowings for the current year have been lifted from the market at pretty low yields. Over the last two months, the Reserve Bank of India seems to have managed short-term liquidity and interest rates to subserve the larger interest of making a success of the Centre's borrowing programme. Over the last two years, the Government has been able to borrow cheap from the markets - a facility denied to other parts of the economy that have to borrow at stiff lending rates from the banks. Banks credit-rate borrowers and only the best get funds - this is perfectly logical. They also blindly put in funds into Government floats as they are totally risk-free, which again is perfectly sensible. Perhaps, in no part of the world is the practice of banking so risk-free as in Mera Bharat Mahan, with banks carrying NPAs of well over Rs 52,000 crore. The votaries of higher Government spending should not crib as the Centre's borrowing programmes have received a huge applause from the banking community. And the Centre promptly uses the funds on interest payments, defence and subsidies with capital investment getting to be negative. Allowing the private sector greater latitude has not curbed the scope of public sector capital investment. If it has not taken place, it is because even the Government is reluctant to set up power plants which have to offer free power to farmers. That is precisely why the private parties are insisting on escrow accounts. Over the planning period, public sector investment did not believe in cost-benefit principles as neck-high taxation levels and subsidies helped to hide the inefficiency. That is not possible today. In fact, higher savings of the Indian economy are being wasted more by the Government than by anybody else; also savings cannot be said to be acting as a restraint to the investment process. In the urban sector, there is an interest rate dichotomy with New Delhi getting easier funds than the corporate world. There is no premium on the interest rates for Government inefficiency. The same dichotomy prevails in the rural sector with bank funds flow tapering off and informal channels busy. Under Indian conditions, higher savings have nowhere to go, making the cut in contractual savings look sensible. It hurts not because interest rates are low but because there is no growth to absorb bank funds. At this point of time, one may not be able to find the tomes of any international economist to analyse the Indian economy. High savings, nil growth, steep Government borrowings and pervasive hunger and the rest cannot be reconciled into a neat econometric equation. Only growth can help. Sure we (our patriotic politicians and bureaucrats) allowed Enron to milk us. Today, if you are not a critic of Enron, you are bound to be dubbed a traitor. But can the Maharashtra State Electricity Board (MSEB) make money and get bank funds if has to provide power free to large sections of the public? Can it get some funds to revamp the existing plants? For us, there is progress in getting stuck at the Hindu growth rate of 3 per cent to getting stranded at the Orange growth rate of 6 per cent as breaking free is not in us. P. Devarajan Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Enron willing to continue project 05/31/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, May 30. ENRON today updated Indian lenders about the status of the project and discussed ways for resolution of the current crisis. According to sources, Enron showed a willingness to continue with the project even after all the problems. Mr Wade Cline, Managing Director, is understood to have told the lenders that even though DPC had mentioned about taking a 10 per cent cut on its returns, it would not do so unilaterally. According to Mr Cline, the adjustments that Enron could make are contingent upon other parties too making an effort to make concessions. He made a presentation to the lenders about the current status of the project and the problems. Meanwhile, Dabhol Power Company today clarified that it has not "shut down" its plant. A spokesman said the plant continues to be "operational" as required by the power purchase agreement (PPA). He, however, confirmed that the Maharashtra State Electricity Board (MSEB) has not issued despatch instructions since 12 noon on May 29. He also said the company is "currently" not planning to terminate the PPA prior to the lapse of six months after the serving of the preliminary termination notice. Sources said that even though MSEB is not purchasing power from DPC, the company is not likely to default on its payments to lenders. This is because DPC has some money left from the disbursements of the first phase of the project. It can use the money to service its debt. It can, however, not transfer the amount to the second phase without the lenders' permission. The company also has a sizable amount of "completion equity" over and above the base equity to bring in if it chooses to continue construction. According to sources, the Indian lenders today wanted to know from Enron whether it is actually willing to stay back and complete the project or walk away. It appeared they are willing to stay, but only without conceding too much. Top MSEB officials said as far as MSEB is concerned, "DPC power may be available, but we would not take it. We are not recognising the PPA any more". They said the board had given the option to the company saying it would buy power and make payments according to the PPA but on an ad hoc basis. The adjustments could be made at a later date. "However, they threw it back to us saying you cannot have your cake and eat it too. So we decided to keep the cake," a State Government official said. Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA'S DABHOL SHUTS POWER PLANT, TO ISSUE TERMINATION NOTICE 05/31/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, May 31 Asia Pulse - Amidst a rash of allegations and legal wrangles, the US energy major Enron-promoted Dabhol Power Company (DPC) has shut down the US$3 billion Guhagar plant and is set to issue the Termination Notice to its partner the Maharashtra State Electricty Board (MSEB). With the MSEB not drawing power since last noon, the multinational had no option but to shut down the plant as MSEB is their sole customer, a member of the Godbole committee, set up for re-negotiating the power purchase agreement with the DPC, told PTI here Wednesday. "DPC is reeling under tremendous pressure from its lenders who have already given the multinational a go-ahead for a wrap up by terminating the contract," he added. He said the Enron India chief, K Wade Cline, had conveyed DPC lenders' nod for the termination to the Committee members yesterday and had said "we will have to terminate the contract, if no solution is found to this grave crisis. As it is, even now DPC cannot see a way out". The DPC had served a Preliminary Termination Notice to MSEB on May 19. "Even though there exists a cushion period of six months, the energy major will issue the notice," the official said. On the other hand, MSEB officials are not worried over the termination of the contract. "MSEB has already rescinded the PPA. So even if they terminate the contract, it hardly matters to us," they said. Meanwhile, the Godbole committee would meet the MSEB officials on June six, but DPC representatives have not been invited for the same. (PTI) 31-05 1029 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Report on Business: Managing Working Life That's right, double-click there, sir Techies, executives cross-pollinate as reverse mentoring gains ground DIANE LEWIS The Boston Globe 05/31/2001 The Globe and Mail Metro B14 "All material Copyright © Bell Globemedia Publishing Inc. and its licensors. All rights reserved." GE Plastics executive Jay Pomeroy knew familiarity with the Web was fast becoming an essential part of his job. So, to help him get up to speed, his company paired him with Gen-Xer Amelia Burkhart, a tech savvy thirtysomething at the Pittsfield firm who used her on-line experience to show the 46-year-old senior manager the ropes. "I brought him knowledge of the Internet realm," said Ms. Burkhart, global manager of e-plastics.com, GE Plastics' on-line division. "He has to deal with people from other regions and countries. We actually conducted a virtual meeting so that he would understand how to participate in meetings on-line." She added: "Before mentoring, you would never see Jay's name on a same-time chat. Now he is on a lot and he's become a pretty avid Internet user." Call it reverse mentoring -- a form of one-on-one coaching that gives younger techies a chance to teach senior executives how to surf the Net, use instant messaging, collaborate with a team in real time, find new business applications, or explore the ins and outs of buying products on-line. It's a relationship that's also a two-way street: one that allows corporate greenhorns to seek advice from seasoned executives to help hone the managerial skills and relationships they need to advance in the workplace. Specialists say reverse mentoring is one way established companies like General Electric are embracing the Internet in order to survive -- and thrive -- in a technology-driven world. The practice, which began in Europe, is now taking hold in the United States as young workers bring newfound energy and skills to Old Economy companies once labelled slow-moving monoliths. Joel Kurtzman, co-author of a new book titled Radical E: From GE to Enron -- Lessons on How to Rule the Web, says the interchange between mentoring pairs is a form of cross-pollination: Students gain new knowledge; mentors gain valuable institutional information from veterans whose political astuteness and management savvy helped them succeed. Ms. Burkhart, for example, says the program helped her develop a relationship with Mr. Pomeroy, who returned the favour by providing tips on managing her career at GE. He also shared some of his institutional knowledge, and he remains a close contact at the firm. "We now have a relationship that has blossomed," said Ms. Burkhart. "It's also been good exposure for me." Glenn Rifkin, co-author of Radical E, says the trend is one of the more positive results of the dot-com boom. "For the first time, entrenched business people and companies have had their eyes opened to the fact that there are now some really smart young people in their corporate settings who can teach them new things," he said. The authors, who spent months interviewing mature companies with well-known brands, are convinced the future will be shaped by Old Economy "hybrids" -- companies that combine the best practices from e-commerce and older brick-and-mortar firms. This, they say, is a more radical form of reverse mentoring in which Net companies with little business knowledge are paired with established firms, or young employees at mature companies find new ways to do business on-line. Some of those companies include General Motors, Procter & Gamble, GE, and Houston-based Enron, a global energy company. GE, the first Old Economy firm to endorse and use reverse mentoring in the United States, began a formal program two years ago after chief executive officer Jack Welch introduced the concept. The company has since paired dozens of workers in a push to bring key people into the computer age and expand the company's market to include cyberspace. Procter & Gamble began encouraging IT employees to participate in an informal reverse mentoring program last year. "Because technology changes so rapidly, individuals pair up with people who seem to be more adept at the latest application," said P&G spokeswoman Vicky Mayer. Meanwhile, in Philadelphia, the Wharton School has implemented a program that helps top executives from around the world bring New Economy practices into Old Economy firms. One feature of the e-fellows program: Mentoring sessions staffed by MBA students in their 20s who share their knowledge with seasoned corporate leaders. Wharton e-fellows learn how to use the Internet to reshape their firms. Over the course of three weeks, e-fellows spend time at the business school's Philadelphia campus, in Silicon Valley, and at an international site. The program began in September. Executives are paired with MBA students in a one-on-one match. "Typically, these students are Internet savvy and they live in a world where e-business and business are synonymous," said Neil Neveras, director of e-business at Wharton's e-fellows program. Mary Dolan, a 37-year-old manager at Random House, was among the first Wharton e-fellows to participate in the program last year. "My background was more publishing driven than e-commerce driven," said Ms. Dolan, now director of e-book sales for the New York publisher. "The program gave me a broader grasp and view of the world at large, beyond the niche area of publishing." Ms. Dolan was paired with 27-year-old David Turrettino, then a first-year MBA student. Mr. Turrettino taught Ms. Dolan how to collaborate with her peers using Wharton's Net tools. Since the program is team-based, Ms. Dolan learned to conduct meetings on the Net and experiment with on-line business models. "This is a partnership between the generations," said Mr. Kurtzman, a global partner at PricewaterhouseCoopers. "But at the height of the dot-com boom, people were saying strategy is dead. . . . Now there is an understanding that you must have the business savvy that comes with experience." Mr. Pomeroy, of GE Plastics, says having a Web presence has paid off. "At GE Plastics we took a presence on the Web, which was about $10-million [U.S.] in sales revenues in 1998, and expanded it to $1.5-billion in business by 2000," he said. "This year, we expect to do close to $4-billion in business on-line." Mr. Pomeroy said Ms. Burkhart helped him use the Net with greater ease. "Now, everything we do is predicated on the internal or external Web," said Mr. Pomeroy. "Everything is on that square screen that sits on our desks." Illustration Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Willing To Continue India Power Project - Report 05/31/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- U.S. based power major Enron Corp. (ENE) may be willing to continue with its India project the Dabhol Power Co., Wade Cline, managing director of Enron's indian unit, told the projects Indian lenders, the Business Line newspaper reports Thursday. Cline told lenders that Dabhol Power could make adjustments, including a 10% cut in power tariffs, but it wouldn't do so unilaterally, the news report added. Any adjustments would depend on similar concessions from purchasing parties. The $3-billion Dabhol Power project, India's biggest foreign investment project, is situated in the western Indian state of Maharashtra. The project, which will generate 2,184 megawatts of power when the second phase is completed later this year, is at the center of a power supply dispute between the state government of Maharashtra and Dabhol Power over what the government claims are "unaffordable" power tariffs. The dispute has unnerved foreign lenders. Tuesday, the Maharashtra State Electricity Board stopped buying power from the two-year-old Dabhol plant. The move came five days after the MSEB told DPC that it was canceling the 1995 Power Purchasing Agreement between the two parties that sets electricity prices. MSEB officials said Wednesday that the Dabhol plant has stopped producing electricity. The news report however quoted a Dabhol Power official as saying that while the MSEB had stopped dispatch instructions, the plant continued to be operational. MSEB was Dabhol's only buyer. -By Muneeza Arjuman, Dow Jones Newswires; 91-11-461-9427; muneeza.arjuman@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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