-----Original Message-----
From: Mahan, Mariella 
Sent: Sunday, November 18, 2001 10:43 PM
To: Horton, Stanley; Hughes, James A.
Cc: Tortolero, Elio; Boe, Larry A. (Lawrence); Sommers, Jeffrey E.; Walls Jr., Rob; Donahue, Jeff; Lundstrom, Bruce; Romero, Isabel
Subject: Weekly Report


Stan/Jim,
 
Following is a list of last week's most salient events.
 
Central America/DR:
 
Guatemala:  MARAD will reply this week as to their position vis-a-vis the reduction of Enron's contingent support from $28 to $10 million.  It is possible they will ask for additional information.  
 
Nicaragua:  Current credit ratings required the funding of approximately $6.3 million into a debt service reserve account (project was allowed to sweep the funds against a corporate guarantee by Enron, which was backstopped by the partners pro-rata to their ownership in the project).  Partners to reimburse Enron their pro-rata share, such that Enron's ultimate outflow will be approximately $2.2 million.  Team tried to get MARAD to agree to alternative solutions but MARAD simply refused citing bad past experience and political implications.
 
Panama:  Team in Houston last week to review the upcoming PPA bids by Elektra (one of the two distribution companies in Panama).  Three issues are worth noting: (i) requirement to post bid bonds (approximately $10 million) will likely need some sort of Enron support (BLM can't get bid bonds on its own although local management continues attempting to do so); (ii) BLM's marginal costs are among highest in Panama.  A preliminary strategy has been mapped out; and (iii) PPA terms are a bit "one-sided" in favor of the distributor.  BLM and other market participants have tried repeatedly to get the distco to change terms without success.  
 
Dominican Republic:  El Paso confirmed it can't work with us.  Operationally, the plant is working well.  As noted on an earlier e-mail, EFI's fuel supplier for SECLP, Vitol, asked for a letter of credit or pre-payment terms.  Enron rejected the request.  SECLP bought cargo directly from Vitol.  We are working closely with Tom Moran of ENE credit on these issues.
 
Ecoelectrica:
This week was a very productive week.  Update as follows:  Lender Process:  Based on several conversations this week, lenders have stated they understand that Mirant's insurance package is the result of market conditions.  Lenders are prepared to pursue credit committee approval with the $300 million coverage.  Mirant offered a 6-month only waiver on the deductibles.  Lenders appear content with that option.  ENE insurance has approximately 75% of the underwriters on board with our back-up plan to provide the additional $200 million tranche.  Backup will be used only if credit committee(s) kick back existing coverage.  Mirant to issue a certification of compliance with QF (by Eco) and a legal opinion asap.  Based on the progress this week and the remaining commitment on deliverables, it is expected that the lender's agent can put together the entire lender package and submit it to the lender group by Tuesday of next week.  Finally, Mirant also committed to providing comments (if any) to the Lender Consent Agreement.  ENE and EME have reviewed and provided comments already.  GE Consent:  Mirant committed to sending their "versions" of the key documents on the GE buy-out on Friday nite (late).  I have not seen the document but they have repeatedly stated that the documents are "conforming".  Union Carbide Guarantee:  Plan to finalize language early next week.  Schedule:  Mirant has committed to fulfilling CP's as early as possible (and is acting on that statement) as long as we can allow them to fund on 12/19.  They state they are confident they can close CP's by earlier than 12/14 and can fund on 12/19.  CSFB has not shed light on the apparent funding (timing) limitation but has offered to investigate further.  
 
APACHI  
 
Philippines: The team did an excellent job of advancing discussions and negotiations with NPC but was unable to move the slow government machinery fast enough to make it to a signing by last Thursday's New York event.  Nevertheless, momentum is high and team continues to work toward a 12/15 agreement date; funding wouldn't occur until early next year. 
 
Guam:  Continue discussions with Mirant and AES with a focus on getting them over the hump on the issue of Enron's contingent obligation to cover the potential shortfall under a GPA buy-out event.  Work continues.  Meetings have been set with Dr. Boyce to discuss his interest in the Guam project.  
 
China:  Unit 2 still scheduled to come back on line on 11/23.  Two likely causes still under investigation (poor vaccum or material design flaw).  Work on capital reduction for Chengdu on hold until discussions are held with Houston to ensure consensus.  In the mean time, several parties have approached us with interest in Chengdu.  On Hainan, team is paying several visits to the new SAFE representatives, first to work on the mid November repayment ($10 million).   Next step would be liquidation.  
 
Europe  
 
Gaza:  Waiting to hear from CCC (partner) on conceptual proposal: ENE to provide limited technical support and financial services support to help put in place cost over-run facility and to help with remaining construction activities and CCC to take our equity (at no cost) and any remaining obligations.  Aim is to eliminate the potential exposure on ENE's $9 million of guarantees.  
 
Trakya:  During meetings in London, OPIC informed us that they had had good meetings with the Ministry of Finance and Ministry of Energy.  Government stated they would "clean up" arrears but could not do so before January 2002 (presumably there are no budget funds left).  Government committed to work with OPIC on resolving the forex dispute issue but acknowledged that the legal opinion they had sought and received didn't address the issue properly and thus needed additional work to provide the Government with the backing it needed to give the issue resolution.  OPIC agreed to send the Government "terms of reference" on their conceptual agreements.  On our question of change in frequency in the distribution of dividends OPIC stated they would expeditiously move to review our proposal, indicating no pre-disposed position against it.  
 
Sarlux:  team continues to prepare to submit response to EPC contractor's claim, as well as our own counter-claim, all scheduled to be submitted on November 30th.   Team continues to work on sorting out technical issues at the plant, including meetings with senior Texaco officials.  
 
ENS:  local team and Adam Overfield worked to resolve remaining issue over final completion certificate.  Issue was related to CO2 emmissions on GT12 vs the EPC contract parameters.  Team has convinced the lender's engineer that issue is of no relevance.  Team is now moving to secure lender approval.  This releases $1.95 million of contingent support by ENE.  
 
Europe Sales Prospects:  IPower submitted preliminary proposals for ENS and Trakya, both well below expectations.
 
Other:  Team is working closely with RAC to come up with updated fair market valuations, cashflow projections by month for the quarter ended Dec. 31, and revised/updated transfer restriction information.
 
Thanks, Mariella
 
Isabel: please distribute to team as customary.
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