Daily Briefing
The Atlanta Constitution, 02/15/2001

State Sees $2.3 Billion Tab for Emergency Buys
San Diego Union-Tribune, 02/15/2001

Deals & Deal Makers: First Boston's `Son of Tyco' Deal Goes Sour ---
Underwriter Left Holding A Bagful of Unsold Bonds
The Wall Street Journal, 02/15/2001

Envera Becomes Preferred Settlement Network for Enron Global Markets'
Petrochemical Transactions
PR Newswire, 02/15/2001

LME to Continue with Longer Open-outcry Hours
Reuters, 02/15/2001

Nigeria Races Against Time to End Power Outages
Reuters, 02/15/2001

Team Canada Assists China's Power Monopolists
Financial Post - Canada, 02/15/2001

US Marathon Oil Mum On Reported Enron India Assets Buy
Dow Jones, 02/15/2001

State Agrees to Widen Scope of Enron Review Committee
The Economic Times, 02/15/2001

Indian Newspaper Highlights
Asia Pulse, 02/15/2001

India: For a Dabhol Relief Fund?
Business Line (The Hindu), 02/15/2001

Enron Saga: Power of Political Will on Test
The Times of India, 02/15/2001

Making the Power Sector Viable
The Hindu, 02/15/2001

Prabhu Stresses Supply Reforms
Business Standard, 02/15/2001

Apps off the Shack
Computers Today, 02/15/2001

National Award From The Points of Light Foundation Honors Six Companies
Dedicated to Community Service
PR Newswire, 02/15/2001

Lawsuits Pending in the Wake of State's Energy Crisis
Associated Press Newswires, 02/14/2001

Power Crisis Was Long in the Making: California Deregulation Just Hastened
Reckoning
Seattle Post-Intelligencer, 02/14/2001

Letters Page
Denver Rocky Mountain News, 02/14/2001

Catholic Health East signs energy supply contract
Times Union Albany, 02/14/2001

Rentable Storage: Efficient But Risky
CMP TechWeb, 02/14/2001

3 Members Keep Off First Enron Panel Meet
The Indian Express, 02/14/2001

Letters to the Editor: A Contradiction?
The Statesman, 02/14/2001

Letters to the Editor: A test of principles and being practical
The Statesman, 02/14/2001

Regulator Authorizes Enron and British Gas to Use Brazil-Bolivia Gas Pipeline
Gazeta Mercantil, 02/14/2001

Studios Release Movies for Internet
Reuters, 02/14/2001

Video Store No More?
TheStandard.com, 02/14/2001

Stonepath Group to Sell Interest in Intermodal Business To Enron Global
Markets
PR Newswire, 02/14/2001

------------------------------------------------------------------------------
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Business
DAILY BRIEFING
STAFF REPORTS AND NEWS SERVICES

02/15/2001
The Atlanta Constitution
Home
G; 2
(Copyright, The Atlanta Journal and Constitution - 2001)

UTILITIES/ENERGY: Enron says it can help California power woes

Enron, the largest energy trader, has turbines that could be used in new
California power plants if the state gives generators incentives to relieve
an electricity shortage there, Chairman Kenneth Lay said. California Gov.
Gray Davis wants to boost the state's generating capacity by 5,000 megawatts,
enough to light 5 million homes, by July.

--- Staff, Associated Press, Bloomberg News, Dow Jones News Service, Wall
Street Journal

State sees $2.3 billion tab for emergency buys
San Diego Union-Tribune
By Ed Mendel
UNION-TRIBUNE STAFF WRITER
February 15, 2001

SACRAMENTO -- The amount the state expects to spend on emergency power has
soared to $2.3 billion and may continue to grow for weeks or months.
A request for an additional $500 million last week was quickly followed by a
request for another $500 million this week, in part because the state has
begun buying power for San Diego Gas & Electric.

The emergency purchases began Jan. 17 when Gov. Gray Davis declared an
emergency because suppliers would no longer sell power to two nearly bankrupt
utilities, Pacific Gas and Electric and Southern California Edison.

The state is buying power on the expensive spot market while struggling to
negotiate a portfolio of long-term contracts that are expected to sharply
reduce costs.

Davis said yesterday that more long-term contracts could be announced this
week. But the state does not want to obtain all of its long-term contracts
immediately, because prices could go down later.

Meanwhile, the governor said he hopes that an agreement on a plan to begin
paying off the $13 billion debt of the utilities, in exchange for their
transmission systems and other assets, will calm the market.

The governor intends to reach an agreement with legislative leaders on a
debt-relief plan that can be presented to the utilities tomorrow, setting the
stage for several weeks of negotiations.

"As soon as the utilities indicate their assent to this plan -- or some
modified version we can assent to -- everything will begin to stabilize and
calm down," Davis said.

"There is no question when there is uncertainty it affects prices, and we
want to create the opposite -- some certainty, predictability -- in what I
like to call a challenge," Davis told reporters, "and you guys call a
crisis."

The governor said that state purchase of the transmission systems will be the
biggest part of the proposal tomorrow. Other assets that have been mentioned
are stock options, scenic land around hydroelectric facilities, and payments
from utility parent firms.

The state is not revealing the price of its power purchases, arguing that
would prevent lower-priced bids from suppliers in the future. Davis said he
hopes to have a secrecy period of less than six months and may announce a
schedule in two or three weeks.

"But I definitely do not want to jeopardize the integrity of the secret bid
prices," he said. "Because if we do that, we are just going to force
Californians to pay more for power than they would otherwise."

An official of the state Department of Water Resources, which owns
hydroelectric facilities and is purchasing power for the state, estimated
last month that the state was paying $45 million a day for power.

The governor's emergency order last month authorized the state to dip into
$440 million in Water Resources funds. The Legislature quickly appropriated
$400 million for additional power purchases, and included $500 million in the
bill authorizing long-term contracts.

But Feb. 5, the state Department of Finance sent the Legislature a
"deficiency"
notice saying it intended to begin spending an additional $500 million to buy
power in 10 days, unless the Legislature objected.

The department issued another notice this week saying yet another $500
million will be required because all of the previous funding is expected to
be exhausted by Feb. 23.

"This is somewhat sooner than had earlier been anticipated due to colder
weather and the inclusion of electricity purchases for the San Diego Gas &
Electric service area," said the notice issued Tuesday.

The long-term contracting legislation signed early this month by Davis made
SDG&E eligible for the state purchases. SDG&E is in better financial
condition than PG&E and Edison, but has a debt of more than $500 million.

All three utilities are the victims of a failed deregulation plan: The rates
they can charge customers are capped (in SDG&E's case by legislation after
bills doubled last summer) while the wholesale cost of power soared,
producing huge debts.
The long-term contracting legislation authorizes the state to issue $10
billion or more in bonds to spread the cost of the power purchases over a
period of years in an attempt to avoid a rate increase.

The bonds will be paid off by ratepayers through a monthly charge on their
bill. Money from the bonds also will be used to repay Water Resources and the
state general fund for the purchases made on the spot market.

In comparison, the $2.3 billion that the state expects to spend on power
purchases so far is equal to the reserve in the $104.7 billion state budget
proposed for next fiscal year. It is more than the total amount of money
earmarked for the state's mental health programs.

State Treasurer Phil Angelides told reporters last week that the $10 billion
bond issue will not be ready until May. He said if interim financing through
short-term notes is too expensive, the state has $9 billion in cash reserves.

Angelides said that the long-term contracts must be obtained before the bonds
can be issued. He said the average price of the contracts will determine the
total amount needed for the bond issue, which could exceed $10 billion.

The governor spoke yesterday while revealing more details of his plan to
boost power generation in California by 5,000 megawatts to avoid blackouts
this summer, when air-conditioning drives up the demand for electricity.

He is proposing legislation that would provide rebates to companies that
install small business generators of less than 10 kilowatts, a 50 percent tax
credit for generators between 10 and 200 kilowatts, and $50 million for
co-generation, wind and solar programs.

"We are in for a struggle this summer," Davis said. "It will test our
resolve. But I am convinced if we all do our part, we will get through this
summer without major disruptions."

Jeffrey Skilling, chief executive officer of Enron, the nation's largest
electricity trader, said electricity costs would go down when significant
progress occurs in planning power plants.

"Faster siting will cause the forward price of electricity to drop below $50
a megawatt," Skilling said yesterday at an electric industry conference in
Houston. In retail terms, that is 5 cents a kilowatt.

Yesterday was California's 30th straight day in a Stage 3 power alert. Grid
operators struggled to meet demand by making last-minute power purchases from
the Northwest.

"We came close this morning (to blackouts) but it got better by the hour,"
said Patrick Dorinson, spokesman for the state Independent System Operator.
"It was touch and go."

ISO managers had worried they might not meet demand because of the forced
shutdown of power plants capable of producing 10,400 megawatts -- 400
megawatts more than the day before. Officials said the plants were taken off
line for repair work.

Dorinson said he could not predict how long the state would remain on Stage 3
alert.

"It is the same situation. I feel like Bill Murray," he said, referring to
the star of the movie "Groundhog Day," whose character keeps reliving the
same day.

Deals & Deal Makers: First Boston's `Son of Tyco' Deal Goes Sour ---
Underwriter Left Holding A Bagful of Unsold Bonds
By Suzanne McGee
Staff Reporter of The Wall Street Journal

02/15/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Credit Suisse First Boston is finding there may be too much of a good thing.

The big New York investment bank apparently scored a coup last week when it
was chosen as underwriter to sell $2.25 billion of convertible bonds for
conglomerate Tyco International, a deal that CSFB might have expected to
produce big fees and give the firm a leg up on the widely watched "league
tables" that rank Wall Street underwriters.
. . .
"The market has been flooded with these deals, even as the frustration on the
part of investors has grown," Mr. Cunningham says. "And the new issue market
has been so, so active that everyone's trying to digest what's out there."
--- Hitting the Rocks?

Rumors swirl that underwriters of several big convertible issues weren't able
to sell everything, and still carry some of the
securities on their books.
. . .
Underwriter: Salomon Smith Barney
Company: Enron
Size: $1.25 billion
Date: Feb. 5
Took the still-unusual step of buying some of the issue in the aftermarket as
"stabilization", sparking rumors it still owned the
issue.

Source: WSJ Research

Envera Becomes Preferred Settlement Network for Enron Global Markets'
Petrochemical Transactions

02/15/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

RICHMOND, Va., Feb. 15 /PRNewswire/ -- Envera(TM) announced today that Enron
Global Markets LLC has become its newest equity participant and trading
member. Envera is a leading global electronic network for chemical and
petrochemical industry B2B transactions and services.

Enron Global Markets will connect its petrochemicals, natural gas liquids and
plastics systems to the Envera network. Additionally, Envera will become the
Preferred Settlement Network for members' petrochemical transactions with
Enron Global Markets. Envera members also will have access to Enron's world-
class product and service offerings.

"We welcome Enron as a member of Envera," stated Bob Mooney, Envera's CEO.
"As our newest member, Enron extends Envera's value proposition by opening up
to Enron's trading verticals, including new industries such as oil and gas,
petrochemicals and plastics to Envera's trading members. Furthermore, our
members have enhanced access to Enron's many services, continuing Envera's
"Business FOR Business" (eB4B)(TM) strengths."

ABOUT ENVERA
Envera is a trusted e-business solutions provider that improves members'
supply-chain communications and fosters business growth in the chemical and
petroleum industries. Envera's initial equity and trading partners include:
Albemarle Corporation (NYSE: ALB); Borden Chemical, Inc; Enron Global Markets
group of Enron (NYSE: ENE) Equistar; Ethyl Corporation (NYSE: EY); Lubrizol
(NYSE: LZ); Lyondell Chemical Co. (NYSE: LYO); Mays Chemical; Occidental
Chemical Corporation (NYSE: OXY); Phenolchemie; and Solutia (NYSE: SOI).
Visit Envera via its Web site at www.envera.com or call 1-888-ENVERA1.

/CONTACT: Richard J. Chvala of Envera, 804-788-5667 or rchvala@envera.com or
Douglas Friedman of Enron, 713-853-7377 or Douglas.S.Friedman@enron.com/
06:01 EST

LME to continue with longer open-outcry hours
By Martin Hayes

LONDON, Feb 15 (Reuters) - The London Metal Exchange (LME), the world's
largest non-ferrous metals market, said on Thursday an experimental extension
to its open-outcry hours would continue.

``The board looked at a whole range of issues at its (February) meeting...It
decided that this aspect should continue, but will be kept under review,''
LME Director of Corporate Affairs Jonathan Haslam said.
In a move that bucked the inexorable trend in European markets away from
floors and towards electronic trading platforms, the LME last October
introduced a trial 1330-1510 GMT extension to its open-outcry trading hours.

Before then, there had been a break at the end of the morning session when
the floor was closed. Now LME open-outcry trading hours run from 1140 to 1700
continously.

LME Select, the exchange's screen trading system which was launched on
February 9, operates from 0730 to 1930, with the exception of a 45-minute
closure between 1230 and 1315, when the second official rings take place.

Traders from the LME's 12 ring-dealing members (RDMs), who are entitled to
trade during the open-outcry sessions, said more activity has been seen
during the first part of the extended period.
``The guys on the floor have got accustomed to it now, and are doing more
business than they previously would have,'' one floor trader said.

Others said the bulk of trade was seen after 1330, with business slackening
after some 45 minutes, only to pick up from 1510 onwards when the customary
afternoon rings take place.

``There is a bit of a dead zone between 1415 and 1515...but the longer it
(the floor) is open, the better it is for the survival of the ring,'' another
senior trader said.

EVEN LONGER HOURS UNLIKELY
Last month traders from the RDMs mooted the idea of even longer trading hours
-- with some seeking to begin daily floor trading from as early as 0900 GMT,
ending as now at 1700 GMT.

``It (the board) looked at this situation in the light of a great deal of
change that is taking place....We continue to review the whole of the
operation,'' Haslam said.

As well as introducing an electronic trading platform to run alongside but
not replace open-outcry trading and the inter-office telephone market, the
LME also demutualised late in 2000 and reconstituted its board.

Traders said another extension was unlikely as there was no unanimity among
the 12 RDMs. Also, such a move would meet opposition from the LME's 27
associate broker clearing members (ABCMs). These companies have all the
rights of LME membership, but cannot trade during the open-outcry sessions.

Then they largely become customers of the market and trade through the RDMs.

``The current extension means that they (ABCMs) have lost a lot of their
pricing power over lunch,'' one said.

The RDMs are fighting the advance of electronic trading to maintain
traditional open-outcry trade, which has all but disappeared from European
markets -- only London's International Petroleum Exchange (IPE) still
operates a floor.

As well as LME Select, rival systems managed by Spectron Metals and Enron
Online, part of Enron Corp (NYSE:ENE - news), also operate and capture
business.

Nigeria races against time to end power outages
By Mike Oduniyi

EGBIN, Nigeria, Feb 15 (Reuters) - The rumble of pneumatic drills echoes
through the jungle surrounding this rustic village on the outskirts of
Nigeria's biggest city, Lagos.

Scores of workmen in orange overalls and youths from villages close to
Nigeria's power complex at Egbin dig frantically in a race against time to
complete the country's most eagerly awaited electricity project.

After prolonged squabbling between Lagos State and the federal authorities
over regulatory issues, the U.S. energy group Enron (NYSE:ENE - news) is
finally pushing ahead with the first major private initiative to help end
Nigeria's chronic energy crisis.

Enron has the task of providing 270 megawatts (MW) of emergency electricity
to Lagos by the end of February after a botched earlier plan to start
producing from last December.

``We are working hard to meet the February deadline,'' said Adeola Taiwo, a
worker at the site.
Decades of mismanagement by military rulers have left Nigeria, Africa's top
crude oil producer, with a long running scarcity of both electricity and
refined petroleum products that has paralysed everything from private homes
to industry.

``The economy is at the mercy of the erratic electricity supply,'' said
Adekunle Olumide, head of the Lagos Chamber of Commerce and Industry.

Production costs had soared by 25 percent because companies needed to install
their own generating plants, he told Reuters.

El-Tayeb Ibrahim, an official of the Nigerian Manufacturers Association, said
the energy problem had forced the closure of about 130 companies in northern
Kano State in the past six months.

STATE MONOPOLY A FAILURE
The state power monopoly, the National Electric Power Authority (NEPA) has
become a by-word for inefficiency in Nigeria where some households can be
without electricity for months.

The $800 million Enron project is the initiative of Governor Bola Tinubu,
whose territory covers the sprawling metropolis of Lagos, with a population
of more than 10 million inhabitants.

NEPA now produces just over half the 4,000 MW which it estimates is the
minimum Nigeria needs. Some 40 percent of that is consumed by Lagos, the
country's industrial hub in the southwest.

The most visible part of the work involves laying a 10-km (six-mile) stretch
of pipeline that will collect natural gas from a station in the Ikorodu
district of Lagos state to fire Enron's barge-mounted electricity generating
plants anchored at a small jetty near Egbin.

Also in full steam are contracts awarded by the federal government to fulfil
President Olusegun Obasanjo's pledge to end power outages nationwide by
December this year.

After two countrywide blackouts early last year, an angry Obasanjo went on
state television to apologise to the nation. He sacked NEPA's management and
took direct charge of plans to boost electricity supply.
Obasanjo, who was elected in May 1999 at the end of 15 years of military
rule, faces re-election in 2003. Many Nigerians believe his chances depend
largely on how he delivers on his promise of uninterrupted power supply.

Close to the Enron site lies Nigeria's biggest power station, the Lagos
Thermal Power Station at Egbin. NEPA workers have been clearing sites there
for equipment due to be shipped in by the Japanese engineering firm Marubeni.

The company won the federal contract to overhaul two Egbin generating units
of 220 MW capacity each in the thermal plant.

Similar projects are in progress to refurbish rusty generating plants
neglected by ruling generals.

TOUGH TASK
Obasanjo has set NEPA the tough target of raising electricity output to 4,000
MW by the end of this year.
``It is not going to be easy, but we are achieving this target by end of this
year,'' said NEPA spokesman Mohammed Mousa-Booth.

Electricity generation reached a new record peak of 2,600 MW in the first
week of January, he said. The previous highest level of 2,460 MW was last
attained in 1996.

Other international companies involved in Nigeria's electricity programme
include Germany's Siemens , which is constructing a 276 MW thermal power
plant, and Italy's oil giant Agip which is to build and operate a 450 MW
gas-fired power plant.

The government has also given its approval in principle for the U.S. oil
major ExxonMobil (NYSE:XOM - news) to build and operate a 350 MW thermal
plant.

While the ExxonMobil and Agip projects are long-term, NEPA is hoping to
quickly add 1,226 MW to its present output by September this year.

The government has backed the power programme with a massive 51 billion naira
($460 million) allocation in the 2001 budget which helped push up the overall
capital budget significantly.

($ equals 110.8 naira)

Team Canada assists China's power monopolists
Financial Post - Canada; Feb 15, 2001
BY GRAINNE RYDER

Team Canada's host in China, Premier Zhu Rongji, has performed miracles in
restructuring much of China's debt-ridden state sector. Burdened with
hundreds of thousands of decrepit state companies that could neither repay
their debts nor create new jobs, Mr. Zhu shut down thousands of money-losing
coal mines, textile factories, and steel works, slashing 12 million jobs in
the last three years. He gave the military five months to divest its business
empire of trading companies, luxury hotels, and nightclubs. He granted cities
greater autonomy to run their own affairs -- a move credited with improving
the country's investment climate and providing new incentives for
environmental cleanup. The Far Eastern Economic Review describes his reforms
as "the largest transfer of industrial property since Mao Zedong nationalized
industry in the 1950s."

But Mr. Zhu's plans to bring competition to the last big holdout of the
monopolists -- China's power industry -- have stalled. China's old guard has
decided to make its stand for central rule in the power sector and it has
found an important Western ally: Canada.

Under Mr. Zhu's plans, the power industry would no longer be run as a
monopoly. State power companies operating hydro dams and nuclear stations
would have to compete with private power companies for access to customers.
Consumers would need to pay for transmission costs as well as generation
costs, giving local power producers -- who don't need to ship power a great
distance -- a major cost advantage over distant suppliers.

If Mr. Zhu and his reformers succeed in implementing this plan, China's
multi-billion dollar hydro and nuclear empires -- long subsidized by Canadian
taxpayers -- could face bankruptcy. Even without these reforms being fully
implemented, the state power industry, a bastion of central planning, knows
that it cannot find willing customers for power from its hydro dams and
nuclear plants.

Chinese officials now openly doubt whether the Three Gorges dam, backed by
Canada's Export Development Corporation, will be able to sell all its output
when it starts generating power in 2003. The provinces and cities slated to
buy its power either already have enough power, or they prefer to have the
private sector build local power plants to meet future demand.

Other large government-run hydro projects face the same predicament. The
US$3.5-billion Ertan dam, built with Canadian grants and World Bank loans,
has run at an annual loss of US$120-million since it came online in 1998. It,
too, can't find enough customers. Its largest prospective customer, Chongqing
municipality, balked at buying its overpriced power. The newly built
US$4-billion Xiaolangdi dam, again backed by Canada and the World Bank, can't
find customers either. As the retired deputy general manager of the Three
Gorges Project Corporation recently explained to China Business Times,
provincial governments and municipalities favour local power plants over the
central government's distant hydro dams because local plants produce
lower-cost power and, when they're privately owned, generate local tax
revenue.

Under pressure from residents who are tasting democracy and making
environmental demands, cities are also switching from coal to cleaner-burning
gas -- but rarely with the help of Canada. The city of Lanzhou, on the World
Health Organization's list of the world's 10 worst-polluted cities, is
working with Siemens of Germany to co-finance and retrofit its existing coal
plant with gas turbines and to build a new gas-fired plant. Hangzhou city,
with Japanese financing, is building a 100-megawatt, gas-fired co-generation
plant that will save 200,000 tons of coal a year and eliminate dozens of the
city's inefficient industrial boilers. Already, five major Chinese cities
have built their own natural gas networks to promote private investment in
gas-fired power plants.

While Canada partners with China's aging monopolists to push outdated,
money-losing technologies -- Team Canada is expected to announce another
Three Gorges Dam contract today -- China's newly privatized power companies
are mostly turning to U.S. and European energy know-how.

"Gas is the quickest way to get a turnaround in pollution levels," says Brian
Anderson, chairman of Shell Companies, Northeast Asia, who saw China's cities
begin the switch from coal to gas in 1998. With only 2% of China's energy
needs currently met by gas (coal still provides 70%), there is plenty of room
for growth. Last year, China's State Council approved construction of a
US$12-billion, 4,200-kilometre gas pipeline from Xinjiang to Shanghai,
expected to be built in partnership with Enron and BP Amoco. Royal
Dutch/Shell Group is investing US$3-billion in gas pipelines and power plants
to serve Beijing and neighboring cities.

In the coastal province of Guangdong, where electricity demand has grown
rapidly over the last decade, Swiss-giant ABB has built several
combined-cycle plants, running them on alternate fuels (diesel, blast furnace
gas) until natural gas comes online. An advanced ABB combined-cycle plant
supplies electricity and steam to China's largest steelmaker, the
newly-privatized Bao Shan Steel Corporation. Shakou Power Plant Company now
supplies electricity to Foshan city using a 280-megawatt oil-fired
combined-cycle plant financed by Hong Kong banks.

Knowing that large hydro, coal and nuclear cannot compete with this new breed
of cleaner and lower-cost power producer, the central monopolists are
fighting back. To prop up the uneconomic nuclear plants that Canada and
China's domestic nuclear industry are providing, China's State Council not
only provides a host of subsidies, it wants to force large power consumers to
buy nuclear power. To prop up the Three Gorges project -- a pariah that no
western government would touch before Canada endorsed it with subsidies on a
previous Team Canada mission -- the State Economic and Trade Commission
announced that provincial and city authorities will have to buy electricity
from the Three Gorges dam once it starts generating electricity in 2003. At
the same time, the government is shutting down small power plants, ostensibly
for environmental reasons, and forbidding electricity distribution
authorities in areas served by large hydro dams to buy power from private
suppliers.

But these successes by the old guard at subverting markets are exceptions.
Apart from Canada, the power monopolists have few friends. Should the power
monopolists lose their grip to Mr. Zhu -- as have other monopolists in
China's economy -- Canada's power industry may find it has few friends in
China.

Thursday, February 15
US Marathon Oil Mum On Reported Enron India Assets Buy
SINGAPORE (Dow Jones)--U.S.-based Marathon Oil & Gas Co. declined to comment
late Wednesday on Indian press reports saying it has submitted a bid for
Enron Corp.'s (ENE) upstream Indian oil and gas assets.

Quoting unnamed industry sources, the Financial Express reported Tuesday that
Marathon had emerged as one of the strong contenders for picking up Enron's
30% stake in the Mukta, Panna and Tapti oil and gas fields.

"Top industry sources disclosed that Marathon has also been shortlisted in
the first round of bidding along with Reliance (Reliance Petroleum Ltd.
(R.RPT)) and ONGC (Oil & Natural Gas Co. (P.ONG)) for buying Enron's stake in
these fields," the Financial Express reported.

Asked to comment on the report, Roger Holliday, Marathon's director of public
affairs told Dow Jones Newswires that "it is not company practice to respond
to speculation in the media."

Enron said last year it was considering selling its oil and gas assets
located in the Mukta, Panna and Tapti oil and gas fields. Reliance Petroleum
and ONGC, Enron's joint ventures partners, have expressed an interest in
bidding for the stake.

Enron India operates three offshore oil and gas fields in a joint venture
with ONGC and Reliance Petroleum. The Tapti, Panna and Mukta fields are
located off the coast of Gujarat and Maharastra.

It holds a 30% stake in each field, while ONGC and Reliance hold 40% and 30%
stakes respectively.
Analysts said Enron may be seeking to divest its oil and gas assets to focus
instead on "new economy" sectors such as telecommunications.

State agrees to widen scope of Enron review committee
Our Bureau

02/15/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

MUMBAI
IN RESPONSE to persistent demands from the anti-Enron section of the ruling
alliance, the Maharashtra government on Wednesday agreed to widen the terms
and references of the high-powered Enron review committee.

The state government has instituted the review committee to look into the
states energy scenario, with special reference to the US energy giant Enron,s
Dabhol Power Company.

The terms and references of the review committee will be extended as
suggested by the allies of the ruling Democratic Front and whatever documents
are sought by the committee will be provided to it including the power
purchase agreement, chief minister Vilasrao Deshmukh said on Wednesday.
He, however, refused to go into details of the extended scope of the review
panel saying, all issues raised by the DF constituents will be studied.

The DF co-ordination committee convenor, N D Patil had earlier disapproved
the terms and references of the Madhav Godbole-led panel saying, the
committee should look not only into the PPA but also the Enron project in
totality. He had written to the chief minister asking him to widen the review
committees scope.

The review committee will be submitting its interim report about the PPA
signed between the Maharashtra State Electricity Board and Enron,s DPC,
within a month, said the chief minister.

It could take another month or so to submit its report concerning issues
raised by the DF splinter groups, Deshmukh said, adding, there are no
differences in the ruling alliance over the matter.

When asked about the state governments Rs 74-crore payment to MSEB to clear
the last installment of DPCs November bill of Rs 148 crore, Deshmukh said,
The amount was not paid to clear DPCs dues. It is the amount payable to MSEB
from the budgetary allocation. It is purely at the discretion of the board as
how to use its funds, he clarified.

To a query, he said, we have not asked the MSEB to put a stop to DPCs
payments.

Deshmukh reiterated that the Centre should take over DPCs project and said,
the state government was yet to receive any communication in this regard.

Asked about renegotiations with DPC, Deshmukh said, let the review committee
submit its report first.
Meanwhile Kirit Parikh, a prominent member of the review committee, has
expressed his inability to attend some of the committee meetings. The
anti-Enron section of the DF allies had expressed displeasure at Parikhs
inclusion in the committee, citing his pro-Enron stance in the past.

Parikh is not withdrawing from the committee, said Deshmukh, while confirming
the development. It might not be possible for a member to attend each and
every meeting of the committee, he said.

INDIAN NEWSPAPER HIGHLIGHTS - FEB 15, 2001

02/15/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, Feb 15 Asia Pulse - Highlights of today's newspapers:

THE FINANCIAL EXPRESS
- Maharashtra (western India state) government has agreed to widen the terms
and references of the high-powered committee, instituted to look into the
state's energy scenario with special reference to US energy major Enron
promoted Dabhol Power Company.

India: For a Dabhol relief fund?

02/15/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) -
Asia Intelligence Wire

IMAGINE this. You are running a company and sign a long-term contract with a
supplier. You guarantee the supplier you will buy at least 90 per cent of
everything he produces. In case you fail to buy up to 90 per cent of the
supplier's plant capacity then you agree to pay a penalty to the supplier.

The absolute quantum you have to pay is determined, among other factors, by
the rupee-dollar rate as well as the prices of certain commodities in the
international market. Under the terms of the contract, you agree to shoulder
both these risks.

In case you fail to pay your supplier who, incidentally, is supplying only
about a fifth of your total requirements, the contract mortgages all your
assets as well the assets of your parent company. The contract also
guarantees that in case you fail to pay the supplier, your parent company
will be forced to pay the supplier and then deduct it from the revenues due
to your company.

As if all this is not enough, the contract also stipulates that it is not
governed by Indian laws and that the parent company will continue to pay the
supplier even if the contract is termed illegal, invalid or unenforceable.

The supplier starts his operations and given the nature of the contract, the
product is extremely high-priced and your company is not in a position to
pay. What would you do?

"Are you stupid? I would never sign a contract like that." "If my company
even got a hint that I was contemplating signing a contract like this, I
would be sacked and legal proceedings initiated against me," were some of the
reactions I got when I put this proposal to some of my friends from the
corporate circles.

Why is it then that the Maharashtra State Electricity Board, the Maharashtra
Government as well as the Union Government have got into such an agreement
with the Enron-promoted Dabhol Power Corporation? Were they all really
concerned about the power situation in Maharashtra or were there other unsaid
imperatives?

We will perhaps never get the answers to these questions, but as DPC evoked
the Central counter-guarantee for its payment, the controversial project has
once again become the focus of media attention.
Last week was full of stories and discussions on the controversy from
day-to-day news reports, to a lengthy feature in the India Business Report.
But the most interesting one was on India Talks on CNBC and featured Mr Harry
Dhaul, Director-General of the Independent Power Producers' Association, and
Mr Abhay Mehta, activist and author of Power Play, an "expose" of the Enron
project.

Anchored by Mr Paranjoy Guha Thakurta, the discussion kicked off by talking
about the options open to the various parties involved. Mr Dhaul,
understandably considering his constituency, was of the opinion that the
first thing to do is honour the contract. He believed it was possible for all
parties concerned to come to some kind of an amicable solution. Mr Guha
Thakurta interrupted to ask him whether the Maharashtra Government going
bankrupt by honouring the contract was an amicable solution. Mr Dhaul's
answer was a classic case of using numbers to confuse the issue. "I do not
know whether by adding five per cent of the capacity the Maharashtra
government will go bankrupt," he said.

Reacting to this, Mr Mehta pointed out that for this additional five per cent
capacity that Mr Dhaul talked about, the MSEB would be shelling out about 30
per cent of its revenues and once the second phase of DPC came on stream, the
MSEB would be paying out close to 70 per cent of its total revenues. "There
is no set of conceivable economic parameters which can allow payments of this
magnitude," he said.

Mr Mehta pointed out that what has never been appreciated is the sheer amount
of money involved. The total contract with DPC is worth $35 billion, "the
single-largest commercial contract in the history of this country," as Mr
Mehta described it and went on to say that if one assumed a 6.5 per cent
annual depreciation of the rupee against the dollar, as it has happened over
the last 50 years, it meant a total outlay of - hold your breath - Rs 400,000
crore.

When Mr Dhaul started to ask whether it meant that the country was not in a
position to accept foreign investment of $2- 3 billion, Mr Guha Thakurta,
again to his credit, interrupted to say the issue was not really the quantum
of foreign investment as the terms at which it has been contracted.

Mr Mehta disputed the claim that DPC has invested $3 billion or about Rs
15,000 crore for a 2,000 MW project. "Are they out of their minds?

Who has checked these figures," he asked, pointing out that internationally,
the norm for power projects was Rs 2 crore per MW. "There is no way they have
invested more than $1.5 billion," he said. Mr Thakurta, with a wicked grin on
his face, interrupted to ask him whether he was including the $20 million
that Ms Linda Powers of Enron had said been spent on educating Indian
authorities. Second, Mr Mehta said that almost 60 per cent of the investments
has come from India from institutions such as the IDBI, SBI, etc.

"We have an absurd situation when a country like Mozambique orders equipment
from the US and the US EXIM bank gives a loan for it without any guarantees.
But the US EXIM Bank's loans to Enron have been guaranteed by Indian
institutions," Mr Mehta said.

Mr Dhaul, while eventually agreeing that power from DPC was more expensive,
said that the regulator in Maharashtra has made certain observations about
it. He said he was not worried about the merit or dispatch aspect of the
issue. Mr Dhaul was, of course, referring to the Maharashtra Electricity
Regulatory Commission's direction to the MSEB to buy power from the cheapest
available sources. But the problem is that, irrespective of whether the MSEB
buys power from Enron or not, the PPA stipulates that it still has to
continue paying. A point that maybe not Mr Dhaul, but all citizens of
Maharashtra should be worried about.

Mr Dhaul went on say that he shared Mr Mehta's concerns about the cost of
electricity, and felt that some sort of solution could be found. But he left
the critical issue unsaid. Where is the money?
How is the Maharashtra Government going to pay the absurd amounts of money
that it has contracted for?

May be as a wag suggested, trifle cynically, it is time we set up a Dabhol
Relief Fund.
Menka Shivdasani

Enron Saga: Power of political will on test
Rajesh Ramachandran

02/15/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

NEW DELHI: Is there a way out of the Enron imbroglio? Contrary to what
`experts' and the government say, there seem several options available to the
government. But to avail them would require some political will.

S N Roy, former chairman of the Central Electricity Authority, points out
that just as Pakistan got a US power company to reduce its tariff by half,
India too should get the Enron tariff reduced.

When asked whether it is ready to re-negotiate the power purchase agreement
(PPA) and bring down the tariff, Enron did not respond. Instead, a public
relations agency replied that ``tariffs are not high''.

Observers assert that even after ensuring a reasonable profit for Enron, the
tariffs can be cut. K K Govil, director projects, Power Finance Corporation
insists, ``The present PPA is heavily in favour of Enron. The PPA should be
re-negotiated to get capital costs and rate of return calculated in rupees
and not dollars.''

According to Govil, pegging the costs and tariffs to foreign exchange is
unheard of. ``The capacity related incentive should also go. Ideally, the
cost of a gas-based plant should be half that of a coal-fired plant.
But in Enron's case it is not so. This too has to be rectified,'' said Govil.

The government is tight-lipped, but sources say the government may palm off
the burden to utlilities like National Thermal Power Corporation, Power
Trading Corporation or Power Grid Corporation. That will end the public
scrutiny of the project, contrary to what is happening in Maharashtra now,
and the account will be shared by central utilities, state electricity boards
and others. Also making the round is a politically powerful industrial
house's name, which might broker the deal.

But will all this help? Roy feels it would be a disaster: ``Impossible. How
can the government force NTPC or PTC, a commercial enterprise, to buy power
at Rs 5 a unit and sell it at Rs 2?'' Even at full capacity, Enron's power is
expected to cost around Rs 5 a unit, much higher than the NTPC's selling rate
of about Rs 2 per unit.

Prasant Bhushan, fighting a public interest litigation in the Supreme Court,
has another set of solutions: Nationalise the project by an Act of
Parliament, paying Enron a token or fair amount as in the case of bank
nationalisation. Or, the Maharashtra Electricity Regulatory Commission's
statutory power should be invoked to override the PPA and regulate the
tariffs.

The Supreme Court had earlier limited the petition's scope to accountability
of the public servants. ``If the SC gives full leave, the project will be
voided since there was much illegality involved. Most importantly, if a
criminal investigation into the bribes is initiated, enough evidence could be
unearthed in three months,'' said Bhushan.

Will all this deter foreign investment in India? Ashok Rao, convenor of
national working group for power, feels the bogey of foreign investment
fleeing is a blackmail tactic. He points out that India is a bigger power
industry market than most of Europe, West Asia or Latin America. ``There is a
global recession in power industry. So, most private power companies are just
a front for power equipment manufacturers who have to sell their equipment in
India. That is why they insist there should be no competitive bidding for
equipment.'' Would it hurt much if the government synchronised people's needs
with investor priorities?

Making the power sector viable
Prem Shankar Jha

02/15/2001
The Hindu
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) -
Asia Intelligence Wire

The fact that Enron had to invoke the Central government's guarantee before
the Maharashtra State Electricity Board finally paid its dues till November
shows that both the MSEB and the Maharashtra government are comprehensively
bankrupt. The MSEB paid because the Maharashtra government realised that
pushing the burden onto New Delhi would not get it off the hook. The
counterguarantee ensured that the Centre would pay Enron and deduct the money
from Maharashtra's annual plan allocation. So why did Mumbai create the
confrontation?

If one were to go by the ranting of Maharashtra politicians , it was to make
sure that there would be `no more Enrons', that is, no more corrupt deals
with rapacious foreign investors, bent upon robbing the poor people of India
by forcing them to pay seven rupees a unit for power. But the true reason is
that the Maharashtra government was trying to shift the blame for its own
lack of courage. Like virtually every other State government, Maharashtra
lacks the courage to stop giving electricity free, or nearly free, to more
than three quarters of its consumers. This has plunged the MSEB deep into the
red, because there is an obvious limit to how far the remaining paying
consumers can subsidise the rest.

The CEO of Enron in India put this in a nutshell a few days ago when he
pointed out that the MSEB's problems arose from the fact that it was
subsidising 90 per cent of its consumers and allowing transmission and
distribution losses - an euphemism for power theft - of fully one third of
the power it generated. As if this was not bad enough, the Government
repeatedly declared an amnesty for consumers who had not paid their bills.
The MSEB has therefore sunk deeper and deeper into the red. To cut its costs
it has bought as little as possible from Enron, and that has pushed the per
unit cost of Dabhol power into the stratosphere. Enron's argument is
unassailable. Every single power utility in the world follows one basic rule
in power pricing. This is to set a tariff that covers the average cost of
generation for all the stations that are on line at the time. When a new
power plant is added, or an old one replaced, the much higher cost of
generation from the new plant (the marginal cost to the utility) is absorbed
by raising the average tariff just enough to absorb the increased cost at the
margin. In the case of Maharashtra, since the Dabhol plant added 6 per cent
to the State's total generating capacity and amounted to about 8 per cent of
MSEB's capacity, an 8 per cent increase in average tariff or in the
realisation of unpaid dues, would have sufficed. But although the MSEB had
been increasing its average tariffs in earlier years, it did not do so
between 1997-98 and 1998-99, that is, when Dabhol was commissioned. Add to
this a rise in T&D losses, and MSEB's average realisation actually fell after
Dabhol came on line.

If Maharashtra does not want to buy Dabhol's power, why does it not sell the
surplus to a neighbouring State or to the National Thermal Power Corporation
in the public sector? The answer is that none of them has kept its average
tariff realisation above the average cost of generation. They too will add to
their losses by buying Dabhol power, and therefore prefer load shedding
instead.

The difficulty that Enron is experiencing in recovering its dues has
delivered the coup de grace not just to foreign, but to all private
investment in power projects. For if it takes a dentist's tongs to extract
money secured by a formal central counterguarantee, what will happen to
projects that do not enjoy that safeguard? Since public investment is capable
of adding at most 3000 MW of generating capacity a year when the country
needs three times that capacity, economic growth will soon slow to a snail's
pace for want of power.

The Central government knows this. Since 1996 it has been prodding the State
governments towards breaking up the State electricity boards into separate
generation, transmission and distribution companies, and then privatising
them. But so far only one State - Orissa - has gone the whole way. The crisis
that the country therefore faces is that while at the present pace the
privatisation of distribution could take as long as ten years, the power
crisis is already here. What the country needs is a means to make the State
electricity boards viable today, before they are privatised. So far, apart
from making the States bind themselves to various financial reforms in the
memoranda of understanding that they have signed with the Centre as they ask
for doles to tide them over their financial woes, the Central Government has
done nothing.

There is, however, a way to do this almost immediately. This is to end the
theft of power that is taking place in the country in the name of the farmer.
In sharp contrast to the privatisation of the SEBs, this can be accomplished
in at most two years.

While everyone knows that some of the electricity supposedly consumed by the
farmer is actually diverted to other uses, most people have assumed that the
proportion diverted is relatively small. This is because the rise in the
share of electricity consumed by the rural sector, from 14 per cent in 1978
to 31 per cent in 1995, seems on the face of it reasonable.

Not everyone has realised that in absolute terms, farm consumption increased
by 8.3 times. And this happened when the number of electrified tubewells had
only doubled from 3.3 million to 6.3 million and the land under irrigation
had increased by only 48 per cent. In absolute terms therefore electricity
consumption for agriculture should not have risen by more than three times.
The balance, amounting to 90 billion units in 1998- 99, was in effect stolen.
Had the States realised only Rs. 2 per unit for this electricity, it would
have increased the revenue of the SEBs by Rs. 18,000 crores, and made them
solvent overnight. State governments have been unwilling to raise tariffs for
agriculture for fear of hurting the farmers. But the Central Government can
show them a simple way of continuing to subsidise irrigation, which is
overwhelmingly the main consumer of electricity on the farm, without
encouraging wholesale diversion and theft. This is to issue registration
papers for every electrified pumpset in the country, stating its horsepower
and the land cultivated by the farmer, raise the rural tariff to a flat Rs. 2
per unit, or whatever the SEBs deem appropriate, and offer a rebate of Rs.
1.75 (the going rate of subsidy) on the estimated maximum consumption of
power per tubewell. Farmers need only bring their bills to a local bank with
which they have opened an account, show their registration papers, and pay
the rebated amount. The bill will be paid by the bank (as urban electricity
and telephone bills are paid today) and the rebate collected by it from the
government authority concerned.

This scheme has the added advantage that to avail themselves of the subsidy,
the farmers will have to install electricity meters. State governments have
accepted the need to do this in principle but have so far been unable to
speed up its implementation.

Prabhu stresses supply reforms
Our Economy Bureau NEW DELHI

02/15/2001
Business Standard
2
Copyright (c) Business Standard

Union power minister Suresh Prabhu has called for the need to shift focus
from power generation to the upgradation of the distribution system, so that
generation of power becomes a more paying proposition. We have decided to
constitute a committee to look into the upgradation of the distribution
mechanism in the country, as the pilferages in the distribution procedures
and poor collection mechanisms have been found to be the main constraining
factors in the development of the sector, Prabhu said here today.

Reforms have to be undertaken in the distribution front and the central
government will finance states which are willing to undertake reforms, he
said at the summit, `India Can Make It', organised by Assocham. "An MoU has
already been signed between the Centre and the Haryana government yesterday
for cooperation in the field of power reforms, while more agreements will be
signed with other states in the near future," he said. The Union Cabinet had
held a special meeting on the power situation in the country yesterday, with
the minister giving a detailed presentation on the prospects for reform in
the sector.

The country has already faced a major power breakdown on January 1, while the
invoking of the counter-guarantee by Enron has put both the Centre and the
Maharashtra government in a piquant situation. The MoUs specify clear
milestones which state governments have to achieve, following which central
assistance will be provided, he said. On the transmission front, the
government has decided to create a national grid for effective management of
power.

MASTER FILE
APPS OFF THE SHACK
K. JAYADEV WITH INDRAJIT BASU AND SRINIVAS R.

02/15/2001
Computers Today
32
Copyright 2001 Living Media India Ltd

Much saged, are you finally planning to start a dotcom venture? Planning to
use the Internet as a new tool of doing business? Or want to have a virtual
private network to get not only your various business processes
interconnected, but also net in the suppliers and partners? Sign up with an
Internet data centre (IDC), and your requirements will be taken care of.

Earlier described mostly as Web hosting companies, IDCs offer a host of
facilities for organisations to face the Internet economy. It is a facility
designed specifically to provide organisations with specialised
infrastructure and support required to optimise the security and availability
of the firms' Internet-related activities and initiatives. And as E-business
demands continue to surge and grow in complexity, companies are looking at
fully managed application hosting. Even companies which till now could not
afford applications like enterprise resource planning (ERP) and customer
relationship management (CRM) are on the look out for accessing these key
applications remotely without having to invest in the infrastructure build-up.

What do IDCs Offer?
Data centres are considered to be a critical component of Internet
infrastructure as they contain the servers on which reside the Web sites of
various companies and businesses. They ensure that the data is available and
the integrity is maintained without the customer having to employ and train
someone in-house. It also frees the client of obtaining, maintaining and
upgrading the required hardware/software.

Says Jasjit Sawhney, CEO of Net4India, "Data centres can manage bandwidth in
a very efficient manner which cannot be achieved using leased lines. For
instance, a small company may not require a full-fledged leased line or it
might not want to tie itself down to one office/location. Hence, the company
can place its server at a data centre. Also bandwidth can be increased as and
when the company desires."

Explaining the functions of IDCs, Amar Babu, national channel sales manager
of Intel India, adds, "Data centres provide plain hosting services wherein
space, security and infrastructure is offered to clients. As they progress on
the value chain, they will provide value-added services depending on the need
of their clients, which could range from bandwidth management to various
applications. This would enable them, and in turn their clients, to define
QOS (quality of service) and SLAs (service level agreements) across the
clients' E-business requirements."

Major Players
Industry analysts in India expect investments to the tune of Rs 500 crore
being made in the next 18 months into the data centre business. Starting from
Sify, major players in India include Enron, Reliance, Asianfrontiers,
Net4India and Mantra Online. International giants like Cisco, Microsoft,
Intel, IBM, Sun Microsystems and Compaq are helping organisations build the
data centres.

The investment depends on the number of servers and the space they occupy and
generally range between Rs 3 crore for a small centre and Rs 50 crore for a
big IDC. Standard benchmark developed by international players hovers around
$450 per square feet for a world-class organisation, which is called a level
4 data centre.

IDCs, like other segment of the IT industry, are now looking at how to
differentiate themselves. In addition to focusing on delivering services,
they are also trying to provide carrier neutral facilities and
platform/network independent solutions to customers. This approach offers
customers the maximum flexibility in that they can engineer the solution that
best fits their needs without constriction. It also provides redundancy and
reliability. "IDCs make data a reliable management tool to run a firm with.
You have the holy trinity of data-manageability, reliability and security.
This is ultimately what defines a data centre," observes Parind Parekh of
Exatt Communications.

With Indrajit Basu in Kolkata and Srinivas R. in Bangalore

National Award From The Points of Light Foundation Honors Six Companies
Dedicated to Community Service

02/15/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

Ongoing employee volunteer programs benefit companies and their communities

WASHINGTON, Feb. 15 /PRNewswire/ -- The Points of Light Foundation is
presenting an national community service award to six companies for their
contributions and commitment to developing and managing effective employee
volunteering programs.

The award is part of an ongoing effort by the Foundation to encourage every
company to get involved in volunteering and make a difference.

"In industries as diverse as aerospace and e-commerce to the legal profession
and electric utilities, companies are discovering how ongoing community
service programs can deliver real-world results," says Robert K. Goodwin,
president and CEO of the Foundation. "We are excited to have this chance to
honor their accomplishments as former President George Bush presents them
with the 2000 Award for Excellence in Corporate Community Service."

This year's winners include Alibris, an e-commerce company that specializes
in hard-to-find books; the Boeing Co., the largest aerospace company in the
world; Capital One, a financial service provider; Holland & Knight, a law
firm with offices in 21 cities across the United States, as well as several
international locations; Petroleos de Venezuela, an energy company with
40,000 employees based in Caracas, Venezuela; and Salt River Project, an
electric and water utility in Phoenix.
The awards will be presented Feb. 23 at the George Bush Presidential Library
and Museum in College Station, Texas.

The Points of Light Foundation, the nation's leading volunteer resource,
provides a full range of services to help businesses develop and manage
workplace volunteer programs. For more information, visit
www.pointsoflight.org .

Sponsors of the 2000 Awards for Excellence in Corporate Community Service
include Bank of America, BP, Compaq Computer Corp., CVS, Enron Corp.,
Prudential, Roy Ryu, and the Washington Times Foundation & Atlantic Video.

CONTACT: Kimberli Meadows of The Points of Light Foundation, 301-318-9277,
e-mail, kmeadows@pointsoflight.org

Lawsuits pending in the wake of state's energy crisis
By The Associated Press

02/14/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

Here are some of the lawsuits stemming from California's power crisis and
hearing dates, if known:

-Duke Energy vs. California Independent System Operator. Duke is seeking to
force the state to back purchases of expensive emergency power bought by the
ISO. The California Department of Water Resources has said it will only pay
for less expensive energy bought on the day-ahead market. No court date set.

-Duke Energy vs. Gray Davis. Duke claims that Davis' decision to commandeer
long-term power contracts owned by Edison and PG&E violated the supremacy
clause of the U.S. Constitution. The lawsuit claims the emergency power
granted to Davis under state law does not extend to the power contracts,
which are under "exclusive federal jurisdiction." Hearing Feb. 15.

-Enron and Avista vs. California Power Exchange. Three power wholesalers want
to prevent the power exchange from forcing them to pay for nearly $1 billion
owed by Southern California Edison and Pacific Gas and Electric. Under a
federal tariff that governs the exchange, if a buyer of power defaults on
payments, every member of the exchange - including power sellers - must pay a
portion of the debt. hearing Feb. 15.

-Southern California Edison vs. Loretta M. Lynch, et al. Edison wants a
federal court to allow it to pass on the wholesale cost of power to
ratepayers. A judge rejected an attempt earlier this week to force the Public
Utilities Commission to raise rates immediately. Lynch is president of the
PUC. Next hearing is March 5.

-Pacific Gas and Electric vs. Loretta M. Lynch et al. Similar to the suit
filed by Edison. It has been transferred to federal court in Los Angeles and
may be consolidated with the Edison claim. No court date has been set.

News
POWER CRISIS WAS LONG IN THE MAKINGCALIFORNIA DEREGULATION JUST HASTENED
RECKONING
MIKE LEWIS P-I reporter

02/14/2001
Seattle Post-Intelligencer
FINAL
A1
(Copyright 2001)

A decade ago, it seemed like a great idea: Lift regulations on electrical
utilities so that competition could drive down prices.

Deregulating the generation and distribution of power, the theory went, would
create competition among a new breed of power companies that would lower
costs to consumers and unleash creativity, just as deregulation of the
telephone utilities did a decade before.

California and more than dozen other states jumped in; Oregon made a small
step in that direction. Washington took a pass. But now, all three states
share the burden of out-of-control energy costs and the specter of blackouts.

Legislators from Sacramento to Olympia are scrambling to rein in a full-blown
power crisis even as consumers scramble to pay ballooning power bills.
There's little argument that existing deregulation has not only failed, but
has failed so profoundly that politicians and regulators are not talking as
much about fixing it as scuttling it whole.

"Deregulation has gotten to be such a bad word," said state Sen. Bill
Finkbeiner a Kirkland Republican who in 1996 chaired the Legislature's Energy
Committee, which rejected deregulation. "It's never going to happen now, at
least not in the Western U.S."

How bad has the situation become? Over two weeks in late November and early
December, the market price for a megawatt of power jumped five-fold, forcing
King County to briefly shut down one of its two sewage treatment plants.

Some cities are turning off streetlights, and the state's multibillion-dollar
aluminum industry has idled some plants - sometimes to sell power - leaving
hundreds of workers idle. In Seattle, the average monthly City Light bill has
jumped 20 percent, to $45.

For all of us, the power crisis has become a lesson in how policies of
individual states can be rendered meaningless when it comes to interstate and
international commerce. Washington didn't deregulate. California did. Both
states pay the price. As one Northwest corporate lobbyist put it dryly, the
next time his company needs economic protection in Olympia, he'll contact
Sacramento.

"Here's how it is," said Ed Mosey, a Bonneville Power Administration
spokesman. "Everyone else is the tail; California is the dog."

Gov. Gary Locke, who is often reluctant to publicly criticize allies such as
California Gov. Gray Davis, acknowledged in a recent interview that he finds
it frustrating that his state decided against deregulation but still finds
itself in a mess.

"We didn't make the same decision they did," Locke said. "But California's
effect is impossible to avoid."
But blaming California isn't just simplistic, it also isn't entirely
accurate. Those who buy, sell and move electricity and natural gas and the
politicians who attempt to control the markets agree that Washington's rising
power costs are a culmination of events that began to unfold a lifetime ago,
in the depths of the

Great Depression.
President Franklin D. Roosevelt's New Deal gave the Northwest the bargain of
a lifetime. Hoping to lift the nation out of the Depression, the Roosevelt
administration arranged an unprecedented series of public works projects,
providing jobs building roads, bridges and dams, among other things, across
the nation.

The Works Progress Administration built the Bonneville and Grand Coulee dams
on the Columbia River, the vanguard of the 29 federal hydroelectric dams that
now feed power to the Bonneville Power Administration, a self-supporting
federal authority with headquarters near Portland.

The BPA is the powerhouse of a region the size of Texas, providing half of
all electricity used in the Northwest. The remainder comes from a network of
public and private utilities, including giants like Seattle City Light that
pre-date Bonneville by decades.

All told, there are about 250 big and small hydroelectric dams in the
Northwest, and a far smaller number of coal and gas-fired plants.

In the early days, the BPA dams generated so much more power than the
Northwest could use that congressmen joked that even the jackrabbits could be
wired up. During World War II, the government took advantage of the plentiful
power by building aluminum production plants in Tacoma, Spokane and Vancouver
to supply the needs of aircraft makers and shipbuilders such as The Boeing
Co. in Seattle and Henry Kaiser's shipyard in Portland.

After the war, BPA officials and local politicians persuaded the aluminum
producers to stay put, promising continued low-cost, subsidized power -
contracts recently renewed to run through 2006.

For local industry, cheap power has always been a selling point. No raw
materials used in making aluminum are found in the Northwest, but shipping
them here is cost-effective because smelting the ore takes a lot of juice.
One aluminum plant consumes as much electricity as a small city.

In the 1960s, this newly powerful local industry secured its first major
coup: a federal mandate that public utilities in the region, such as Seattle
City Light, could buy power at the subsidized cost of production. Sixty
percent of that "preference power" stays in Washington state. Oregon
generally takes 25 percent. The balance goes to Idaho and Montana, and any
surplus can be sold at market rate.

This combination of natural resources, federal investment and populist
politics has allowed the Northwest to enjoy some of the cheapest electricity
in the nation. A 1998 BPA survey showed that the average residential cost for
power in the region was 5.4 cents per kilowatt hour, compared with a
nationwide average of 8.3 cents, a rate that - at least until now - has
continued to attract industry to the region. In 1999, when Seattle residents
were paying $10 monthly electricity bills, the same amount of power on the
East Coast sometimes cost as much as $40.

"Much of the high-tech relocation up here directly was linked to cheap
power," said Intel's director of governmental relations, Richard Hall. Intel
employs 2,000 people at its plant in DuPont.

While rates have gone up recently, power in the Northwest remains a good
deal. City Light residential customers, for example, pay 3.23 cents per
kilowatt hour for the first 16 kilowatt hours they use in a day, and 7.56
cents for each kilowatt hour afterward.

In 1968 and 1969, the BPA completed an 846-mile line called an intertie
between The Dalles, Ore., and Los Angeles, allowing it to market what seemed
like a never-ending surplus of power to utilities in fast-growing California.

In 1996, BPA sold about 127,000 megawatt-hours for use in California, or
about 12 percent of all BPA power sales that year - the most recent year
Bonneville reported those numbers. It takes about 1,000 megawatts of
generating capacity to serve 1 million homes.

Public utilities in California are small, but two giant private,
investor-owned companies rival Bonneville in size. Monopolies regulated by
the state, California giants Pacific Gas & Electric (PG&E) and Southern
California Edison (CalEd) eventually grew to serve a combined 20 million
customers, making them the nation's two largest private utilities.

During the summer, when air conditioners cause California power use to peak,
utilities there supplement their needs by turning to the Northwest, which
usually has electricity to spare. In winter, when furnaces cause demand to
peak in the Northwest, California plants ship surplus power north. The
relationship worked flawlessly for decades. In fact, it worked too well.

With the West Coast tied into one grid, the easy flow of power between
regions allowed the states to avoid the politically difficult chore of siting
and building new power plants that would allow each to become
self-sufficient, even as the total population in the three states blossomed
from 25.5 million in 1970 to 43.2 million today.

In the mid-1990s, California began climbing out of a recession brought on by
deep defense cuts, high unemployment and energy prices that were among the
highest in the nation, inadvertently driven up by state and federal
regulators who feared that oil and natural gas prices would soar. These
officials had pushed the utilities to diversify their generation methods. The
Federal Energy Regulatory Commission required that they buy a portion of
their power from what were then expensive alternative sources, such as wind
and geothermal plants. CalEd estimates that the order has cost its customers
$25 billion over two decades.

California business interests began to pressure their lawmakers to deregulate
the power industry, allowing them to buy electricity on the open market and
to force PG&E and CalEd to cut rates. Congress wrote the law in 1992, and the
energy commission pressured the utilities to get moving in 1994.
In December 1995, the California Public Utilities Commission voted to open
the state's electricity industry to competition. The Legislature followed
with a law based on an agreement brokered with CalEd, its biggest industrial
customers and an association of independent power producers.

But the deal was based on four colossal miscalculations. And those led to the
current crisis:
No one foresaw that California's economy would come roaring back from
recession so strongly or so quickly, or that so much of the new economy would
depend on energy-hungry computers and the plants that produce them. Both
factors over-taxed a system that hadn't seen a new power plant come online
for nearly a decade.

California generates about 75 percent of the electricity it uses, relying on
imports from the Southwest and the Northwest for the rest. Officials
acknowledge that California has not added enough power plants to accommodate
the roughly 2 percent annual growth in its demand for electricity. To meet
that each year, the state has to add either 1,000 megawatts of generating
capacity or conserve an equal amount.

Regulators forced California utilities to sell their generation divisions
without also requiring them to sign long-term power contracts at fixed - and
presumably lower - rates. This put the utilities at a disadvantage, because
they had to buy power on the open or "spot" market from operators such as
Houston-based as Enron and Dynegy, which have reportedly seen revenues climb
by 400 percent in the past two years while the utilities spiraled into debt.

A combination of factors cut into the amount of power available on the spot
market. Less power has been flowing into the grid because several major
California power plants have been off-line for needed repairs; Northwest
hydroelectric dams have been operating at lower capacity as they try to avoid
draining reservoirs during the drought; and a failure to upgrade California's
distribution system makes it hard to move surplus power to where it is
needed.

In fact that failure to upgrade the transmission system has proven to be a
problem of the same scale as the lack of new power plants. California's first
rolling blackout was caused not by a lack of power but by a lack of free
lines to move it. Washington has missed blackouts because it has enough
capacity to move power when needed.

While attorneys general in all three states are investigating accusations
that some power sellers have been withholding electricity to drive up prices,
it's unclear whether they did, or whether any laws were broken.

With deregulation, the spot market has taken on the trappings of a desperate
auction. Every morning, the power marketers pay what they must for whatever
surplus power they can find. Wholesale prices can swing wildly, climbing and
falling hundreds of dollars per megawatt- hour over a day of trading.

When California's demand began to outstrip its supply last summer, San Diego
was hit first. The Northwest barely noticed. But as the problem spread, the
power that Bonneville and Puget Sound Energy once bought for winter coverage
wasn't there. Local prices began inching up.

Finally, and some would say most important, California's deregulation scheme
included a cap on rates for consumers. In fact, the Legislature there forced
a 10 percent retail rate cut as part of the deal to win passage of
deregulation. These errors and circumstances, combined with some corporate
restructuring that shifted resources away from traditional lines of business,
forced California's big utilities to amass a combined debt of $12.7 billion,
severely limiting their ability to buy power and prompting the recent round
of blackouts in Northern California.

"Do you see the problem there?" asked Mosey, the BPA spokesman. "It didn't
allow the market to function. It gave consumers zero incentive to conserve.
If you had to devise a method whereby you shot yourself in both feet, you
couldn't do a better job."

California lawmakers are trying to undo the damage. They have appropriated
billions of dollars in emergency funding to keep the utilities afloat while
they consider a more expensive bailout and re- regulation scheme that might
involve turning PG&E and CalEd into public utilities - exactly the opposite
of the intent of deregulation.

Deregulation was initially popular in Washington state, but it never had the
same attraction in a region where most voters enjoyed cheap power, thanks to
Bonneville and public utilities.

"At the time, most people wanted it," Finkbeiner recalled. "And I'd like to
say we had the great foresight to pass on it, but that isn't true. We just
couldn't agree on what to do, and it didn't go anywhere."

After two years of debate, Washington lawmakers saw there was no groundswell
of support for deregulation, and they did what politicians do in such cases:
They dropped it in 1997, moving on to the next big issue.

"Now, obviously I'm glad," Finkbeiner said.

But Finkbeiner is once again dealing with deregulation, this time as sponsor
of pending legislation that asks California to drop its power rate cap - a
source of irritation for Northwesterners who have seen their bills zoom up
while Californians' have not.

"I don't know how (Governor Davis) will react, but it is something they have
to do," Finkbeiner said of his bill, which is an entirely symbolic act -
Washington cannot force California to do anything, even though it shares
California's pain.

Color Photo, Photos, Map, Chart; Caption: (1) THE ASSOCIATED PRESS: Jamie
Lubbar, a grid resource coordinator for the California Independent System
Operator, looks at a computer screen while lining up electricity for the
state. (2) THE ASSOCIATED PRESS: Arthur Osha replaces burned-out light bulbs
with energy-efficient models in the business district in Solvang, Calif.
Aside from its Danish influences, Solvang's trademark is the decorative
lighting on the city's businesses. (3) AP/1939: The Grand Coulee Dam on the
Columbia River in Washington is a legacy of the Works Progress
Administration. (4) SEATTLE POST-INTELLIGENCER: DEREGULATING ELECTRIC POWER
(5) KELLI R. PARKER AND JIM WOOLACE/SEATTLE POST-INTELLIGENCER: POWERING THE
WEST COAST (Available only on microfilm)

Editorial
LETTERS PAGE

02/14/2001
Denver Rocky Mountain News
FINAL
43A
(Copyright 2001)

Mike Rosen's `lesson' leaves great deal unsaid

Mike Rosen's latest effort at providing an economics lesson to the great
unwashed masses is typical of his previous efforts - it is rife with errors.

Rosen states that there is no conspiracy of oil and gas companies at work.
Rosen must have forgotten about OPEC, a conspiracy to maximize profits for
oil producers. Rosen must also have forgotten that last year Vice President
Cheney, who at the time was head of Haliburton Oil, praised OPEC for reducing
production.

Rosen must not be aware that California has sued energy companies, including
Enron and Duke Energy, both of which are large contributors to President Bush
and other conservatives, for unfair business practices.

Rosen also blames the California electrical shortage on legislators who fixed
the price of retail electricity and limited the abilities of companies to
build new power plants. What he fails to state is that retail electricity
prices were fixed at the request of power companies at 150 percent of the
national retail electricity price so that power companies could gouge
consumers and receive a $28 billion bailout for their "stranded costs" -
losses that power companies had suffered due to bad investments in nuclear
power plants.

Since 1996, California private power companies had made $20 billion from
those excess prices that were charged to consumers and had used that money to
provide dividends to their shareholders and purchase other power companies.
Further, Southern California Edison (SCE), one of the largest private power
companies in California, lobbied to stop a large energy project because the
project would have reduced SCE's profits.

Rosen infers that there is an electricity shortage in California because it
does not have adequate electrical capacity for its users. What Rosen fails to
mention is that peak usage of electricity in California was higher in both
1998 and 1999 than it was in 2000 and that 25 percent more electricity is
used during the summer when air conditioners are running than during the
winter. Because of those facts, the only reasonable explanation for the
current shortage of electricity is the unrestricted greed of power suppliers
who find it more important to maximize the returns to their shareholders by
restricting supplies and raising profits than to supply necessary power to
the citizens who need it.

Steve Waldmann
Colorado Springs

BUSINESS;
Catholic Health East signs energy supply contract
-- Staff report

02/14/2001
Times Union Albany, NY
THREE STAR
E4
(Copyright 2001)

Enron Energy Services of Houston has signed a 5-year contract to sell
electricity to Catholic Health East, a health care system that includes St.
Peter's Health Care Services in Albany.
The deal covers 20 Catholic Health institutions in New York, New Jersey,
Massachusetts, Maine, Florida and Pennsylvania.

"Our agreement with Enron enables Catholic Health East to manage volatile
energy costs associated with deregulating markets and ultimately avoid
fluctuating market prices," said Tom Gruber, Catholic Health East's vice
president of materials management.

The energy provider does not generate electricity itself, but buys it from a
supplier and re-sells it to customers. Another company -- in this area,
Niagara Mohawk Power Corp. -- actually delivers the electricity to customers.

St. Peter's Health Care includes St. Peter's Hospital, St. Peter's Addiction
Recovery Center and Villa Mary Immaculate nursing home in Albany; The
Community Hospice in Rensselaer; and Our Lady of Mercy Life Center in
Guilderland.

Enron Energy Services is a subsidiary of Enron Corp., which posted revenue of
$101 billion in 2000.

Rentable Storage: Efficient But Risky
Michael Alexander

02/14/2001
CMP TechWeb
Copyright 2001 CMP Media Inc.

EMC, Enron, Exodus, Sun, and other big companies are throwing their weight
behind storage services, promising to help deliver storage capacity much like
utilities furnish electricity.

But a looming market shakeout makes it more vital than ever for companies to
scrutinize providers before committing to a contract.

Some customers already are seeking to protect their data with service-level
agreements (SLAs) that compensate them when their storage service provider
fails to deliver as promised. Experts also recommend examining a provider's
market capitalization, expertise, reference accounts, and all the other
attributes a company would typically consider when choosing a strategic IT
partner.

Storage service providers, or SSPs, claim to remove many headaches of
managing storage. Customers don't have to invest in their own storage
infrastructure and personnel, so SSPs can be a cheaper and faster way to get
started. Customers buy only as much capacity as they need.

The cost of buying and managing a storage system was so prohibitive that
Verilytics Inc. signed on with StorageNetworks, which charges the Web portal
builder about $12,500 per month for 200 Gbytes of storage.

"Because they have a pay-as-you-go model, it allowed us to get in at a fairly
low entry point," said Mike Harvey, head of operations at Verilytics. "As our
needs require, we can add additional capacity."

Verilytics signed an SLA with StorageNetworks that specifies financial
penalties for unplanned downtime based on the length of an outage. In fact,
nearly half of 297 companies surveyed by Dataquest say they're willing to pay
SSPs extra for agreements that compensate them for lost revenue due to
downtime or service problems.

Increasing numbers of customers are even demanding SLAs per application type.

"Unless these storage companies are making appropriate investments so they
can guarantee per-application SLAs, they're going to meet some resistance
from potential customers," said Sage Research president Kathryn Korostoff.

The range of SSP options varies widely. For example, to keep data in-house
because of security or privacy concerns, a company may elect to have the
vendor provide remote storage management.

Companies pay about $20,000 per month per terabyte for basic
storage-on-demand. Additional features*such as scheduled backup and restore,
real-time data replication and SLAs guaranteeing 99.99 percent uptime*can
push costs to more than $80,000 per month per terabyte. That figure includes
equipment, maintenance, floor space and personnel costs. StorageNetworks
quotes fees of $25,000 to $125,000 per month per terabyte, said John Clavin,
executive vice president of marketing.

A downside to outsourcing storage is that an organization is putting valuable
digital assets into someone else's hands. The data may not be adequately
protected from snoops or secured against loss. And what happens to the data
if the SSP should suddenly go out of business? No one really knows.

"We tell our end-user clients to be very selective who they choose, and we
tell them to make sure they have very concrete, very well defined escape
clauses," said Arun Taneja, an analyst at the Enterprise Storage Group.

Brokerage firm Charles Schwab & Co. prefers to maintain control of its huge
repository of customer data, said David Sherr, vice president of architecture
and planning. Sherr questions the wisdom of trusting customer data to a third
party. "It would be problematic," he said. "You need to protect the privacy
of your customers' data."

The initial SSP customers were mostly dot-coms, but in recent months more
Global 2000 enterprises have signed up, according to a recent survey by Sage
Research. The survey found that 3 percent of businesses with fewer than 500
employees and 6 percent of larger enterprises outsource storage. "While those
numbers are small, they are significant because the category is still so
new," Korostoff said.

More than half of the 175 companies with which StorageNetworks has contracts
are large enterprises, Clavin said.

Several companies have jumped into storage services in recent months. Exodus
Communications (stock: EXDS), Sun Microsystems (stock: SUNW), and
StorageNetworks (stock: STOR) said they plan to co-market managed storage
services delivered and hosted by Exodus. Pure SSPs include ManagedStorage,
Storability, and StorageWay.

Among application service providers that also host data are Conxion, Digex,
PSINet (stock: PSIX), and USInternetworking (stock: USIX). Storage vendors
such as Compaq (stock: CPQ), EMC (stock: EMC), IBM (stock: IBM), and Sun have
storage services alliances with ASPs and other providers.

Even energy company Enron is getting into the business. Its Broadband
Services unit launched a B-to-B exchange on Jan. 31 that matches excess
capacity owned by SSPs with corporate storage buyers.

Enron has signed a deal with StorageNetworks and is negotiating similar
agreements with at least six other providers, said Ravi Thuraisingham, Enron
's lead storage trader.

Many analysts see a massive consolidation on the horizon. "A lot of companies
have gone into this business thinking that it's an easy business," Taneja
said. The economics of running an SSP profitably aren't well defined, Taneja
said, and the long-term cost of building and regularly upgrading a
best-of-class storage infrastructure may be too onerous for many.

Meanwhile, the amount of data that companies amass is increasing
exponentially. Forrester Research predicts that companies will increase their
average online storage capacities by a factor of 10 over the next five years.
That means storage and associated administration will grow from 5 percent of
current information systems budgets to 17 percent in 2003, the firm
estimates.

And the business outlook for SSPs is rosy. North American businesses will
spend $6 billion on storage utilities by 2003, according to Dataquest.
Enterprise Storage forecasts a $11.2 billion market in 2004.

3 Members Keep Off First Enron Panel Meet
The Indian Express

MUMBAI, FEB 14: The much-awaited first meeting of the Madhav Godbole review
comittee on Enron held today against the backdrop of protests over its
composition, was attended by only two members of the committee, member
secretary V M Lal and Godbole himself.

Three other members of the six-member committee, Kirit Parikh, Deepak Parikh,
R K Pachauri and E A S Sarma did not attend the meeting.

Anti-Enron activists have strongly opposed the induction of Kirit Parikh and
R.K. Pachauri on the committee. But Chief Minister Vilasrao Deshmukh today
firmly indicated that there would be no change in the choice of members
appointed on the panel. Kirit Parikh and Pachauri would stay on the
committee, he said.

``We have appointed the committee. Let it take the decision now,''he said. On
the absence of members, Deshmukh said Parikh had told him that he would be
unable to attend all meetings of the committee.

He also said that the letter handed over to him by PWP leader N.D. Patil on
amending the terms of reference of the committee had been passed on to the
review committee.

Sources said Godbole and VM Lal were briefed by MSEB chairman Vinay Bansal,
secretary N Sainath and other officials today at the review meeting on the
electricity board's stand on the controversy. Godbole refused to speak to
reporters waiting for him outside the hall after the meeting.

A senior MSEB official said the absent members will attend the meeting of the
committee on Thursday.

Letters to the Editor: A Contradiction?

02/14/2001
The Statesman
Copyright (C) 2001 The Statesman Ltd.; Source: World Reporter (TM) - Asia
Intelligence Wire

Sir, - Enron's Dabhol Power Company has invoked the counter-guarantee clause
and sent a bill for Rs 79 crores to the Government of India. Enron got
guarantees from the Maharashtra State Electricity Board and the Maharashtra
Government. But it is on record that it got counter-guarantees from the
Government of India and the Reserve Bank of India even though it had not
asked for them.

Two questions arise: who in the then Government of India gave them the
counter-guarantee - and why? Secondly, MNCs claim to believe in free
enterprise. That being so, they should face the market: why should they ask
for any guarantee - with regard to purchase of power, or its price?

Yours, etc.,
KR MALKANI. New Delhi, 7 February.

Letters to the Editor: A test of principles and being practical

02/14/2001
The Statesman
Copyright (C) 2001 The Statesman Ltd.; Source: World Reporter (TM) - Asia
Intelligence Wire

SIR, - Two issues, namely the Dabhol power project agreement with the
Maharashtra State Electricity Board and the World Bank's annoyance with
Gridco, are matters of serious concern in view of their likely impact on the
momentum of reform in the power sector initiated after nearly a decade of
planning, privatization and unbundling of SEBs and distribution systems.

The attitude of the Maharashtra Government towards an agreement on Dabhol
does not inspire confidence in our honesty of purpose. Failure to obey the
contract displays frustration, lack of integrity and the untrustworthiness of
the Government. The Government of Maharashtra knew their contractual
obligations beforehand and should have started negotiations with Enron in
order to find a solution. The fact that it. has taken two months to appoint a
committee only indicates the lack of seriousness on its part. Again the
formation of a committee may be rightly or wrongly construed as an attempt to
delay the matter. On the other hand, Enron also should not ignore the power
tariff structure in this country and the rate at which other public
undertakings are selling power from similar naphtha-based power plants, the
capital cost and plant load factor based on demand, etc.

Mr. Sharad Pawar, the architect of the project (and whose party is part of
the present Government), should have been more proactive in resolving the
present issue so that the situation does not deteriorate any further.

There are suggestions for Enron to go in for direct selling, bring in the
Power Trading Corporation (PTC) to deal with the Dabhol power company as an
intermediary and for the NTPC to dilute the price for a large number of
consumers, including those outside Maharastra. None of these are indicative
of any effort to find a compromise between Enron and the Government of
Maharashtra over the present problem or those likely to surface in future.

If the power from Dabhol phase II is not going to be absorbed by Maharashtra,
the PTC, in view of the overall power shortage in the country, should, in
keeping with its mandate, appear on the scene to trade in deficit areas. The
fact remains that deficit is in peak time power supply. Selling power in
off-peak time will not be an easy task for them.

Yours etc.,
CR BHATTACHARJEE. Kolkata, 11 February.

Regulator authorizes Enron and British Gas to use Brazil-Bolivia gas pipeline
Gazeta Mercantil (Brazil)

Rio de Janeiro, 02/14/01 - Energy and gas companies Enron and British Gas are
now finally able to import Bolivian gas into Brazil through the
Brazil-Bolivia gas pipeline. The petroleum sector regulator ANP rejected an
appeal by the pipeline's operator Transportadora Brasileira do Gasoduto
Brasil-Bol?via (TBG) against the authorization for the two companies to use
the pipeline.

Enron and British Gas are expected to sign contracts to use the pipeline
before the end of this week and the first cubic meter of gas to be imported
into Brazil by a private company is expected to arrive in April.The gas will
be imported by British Gas, which will bring in 1 million cubic meters per
day to eight distribution points in S?o Paulo state.

The gas will be sold to one of the three S?o Paulo gas distributors Comg?s
(which distributes gas in metropolitan S?o Paulo). Enron has yet to seal
contracts to sell the gas it plans to import. It is currently negotiating
with another of S?o Paulo's distributors Gas Brasiliano (which distributes in
northern S?o Paulo state).

(Nicola Pamplona, Gazeta Mercantil - Translated by Barney Whiteoak)

Studios release movies for Internet
By Sue Zeidler

02/14/2001
Reuters English News Service
(C) Reuters Limited 2001.

LOS ANGELES, Feb 14 (Reuters) - The Internet is putting a whole new twist on
box office receipts as Hollywood gears up to beam movies directly to "boxes"
in people's homes.

Movie fans too lazy to run to the nearest video store or the theater, will be
able to watch films when they want rather than on cable channels' schedules,
provided they get a high-speed Internet connection.

Fearing a Napster-like service for swapping movies on the Web may emerge,
studios like Sony Corp.'s Sony Pictures Entertainment and Walt Disney Co. and
other big moviemakers are ramping up plans to distribute movies online.

Napster, developed by a 19-year-old college dropout, shook the world's music
industry with its wildly popular service that lets fans swap songs for free
by trading MP3 files.

"The movie studios want to make their films available on the Web, but they
don't want to give them away," said Chuck Sims, a lawyer at Proskauer & Rose,
who is defending the movie industry in a high-profile DVD hacking case.

On Wednesday, Vivendi Universal's Universal Studios said it signed a
multiyear deal with broadband network Intertainer, to deliver such as the
Robert DeNiro's hit "Meet the Parents" over Intertainer's digital cable
platform, starting this month.

Universal joins Miramax Films, which announced a deal with SightSound
Technologies to release 12 films for download over the Internet.

"We're in the very early stages of video on demand. All the players are
evaluating where they fit into this landscape," said Mark Sonnenberg,
executive vice president of marketing for Intertainer.

Web security experts estimate that about 400,000 bootlegged films a day are
swapped on the Net on services such as Freenet, Filetopia and the Internet
Relay Chat.

HOLLYWOOD MOVING QUICKLY, BUT CAREFULLY
While Hollywood moves quickly to embrace the Internet, they have to be
careful not to endanger important relationships with cable companies,
pay-per-view channels or video chains, which are big revenue streams.

Studios will also need higher penetration of broadband, or high speed
Internet connections like cable modem or DSL phone lines to make downloading
films bearable, experts said.

Sony Pictures is planning to launch in the spring its own online movie
service, MovieFly, which will rent hundreds of films from Sony, Universal
Studios - and possibly News Corp.'s Twentieth Century Fox, sources said.

Sony's video on demand model allows users to download movies from its Web
site to their personal computers where they can be viewed for a fee.

Users may then burn the film to a CD and give it to a friend, who can also
watch it for a fee. People can also watch these films on television if they
plug their TV into their computers with a special cable, sources said.

"We believe there is an online market for entertainment, which will prove to
be an important channel for consumers to access entertainment media," a Sony
spokesman said, but declined to comment on specifics about MovieFly.

Alternatively, Walt Disney is said to be studying delivering films via the
Internet on a wireless set-top box.
At a recent meeting with analysts and reporters, Peter Murphy, chief
strategic officer for Disney, said the company was exploring ways to
broadcast video services to a "box" in the home.

Murphy said that while Disney had not yet decided to move forward with this
product, it was an excellent example of the new business models enabled by
digital technologies.

Meanwhile, Blockbuster Inc., the nation's largest video rental chain has also
launched a service in a partnership with Houston energy giant Enron to
deliver on-demand movies over high-speed telephone lines.

The Blockbuster service charges $4.99 for pay-per-view movies selected from
almost 200 titles listed electronically.

Blockbuster is currently carrying content from MGM, Artistan and Lion's Gate
and other independent studios.

And on Tuesday it said it reached a verbal understanding with Universal
Studios to carry its films.
"In my opinion, Enron and Disney are going in the right direction,
television. Sony has done it quicker and more efficiently in terms of
selection, but it will have to migrate the model to television eventually,"
said one source familiar with the different projects.

Reuters/Variety.

Video Store No More?
Wednesday February 14,
TheStandard.com
By Laura Rich

We're inching closer to the day when we won't have to go to the video-rental
store again.

Universal Studios announced on Wednesday that it will distribute new releases
and extensive film archives through video-on-demand service Intertainer.
Subscribers to the digital cable channel will be able to choose among 300
movies from eight major movie studios at any time. The addition of Universal
gives Intertainer the broadest selection of major motion pictures among
video-on-demand, or VOD, players, which include Blockbuster, CinemaNow and
SightSound, and which is rolling out a service in partnership with Enron
Broadband.

"Intertainer is a terrific partner for our ongoing VOD efforts because of its
experience in the category," Holly Leff-Pressman, senior VP at Universal
Television & Networks Group, said in a statement.

Intertainer's deal with Universal comes as Hollywood mulls the digital future
for film. Most studios are digitizing their films and drawing up plans to
deliver their libraries over the Internet to consumers and movie theaters.
Sony's Web-based MovieFly system is gearing up for a spring launch, and
Disney also is said to have a VOD system in the works. The rest of the
studios are said to be in varying stages of talks with Sony or Disney.

Intertainer continues to make strides even though studios have a history of
despising the middleman. Blockbuster has long locked horns with the studios,
which have complained that the chain was reaping ancillary film revenues they
should have controlled.

By aligning with Intertainer, the studios are supporting a new middleman by
bolstering it with a larger selection of movies than their own services
likely will have. Antitrust concerns prevent the studios from grouping all
their content in a single jointly owned channel. But they also are better off
distributing their films to as many outlets as possible. "It's never been the
studios' way to just sell movies to their own channels," said Jonathan
Taplin, president and CEO of Intertainer.

Intertainer is a relatively small competitor from an audience standpoint. The
company was formed in 1997 and just launched its VOD service last spring. The
service is currently available in Cincinnati and Willow Grove, Pa., and will
be rolled out in seven more cities by the end of summer.

Intertainer is offered as a service to digital cable subscribers in those
markets. Currently, there are fewer than 10,000 subscribers to Intertainer.

The deal was Universal's second VOD pact in as many days. On Tuesday,
Universal agreed to add its movies to Blockbuster's VOD service.

Stonepath Group to Sell Interest in Intermodal Business To Enron Global
Markets

02/14/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

PHILADELPHIA, Feb. 14 /PRNewswire/ -- Stonepath Group (Amex: STG) today
announced the signing of a definitive merger agreement between Webmodal, a
Stonepath partner company, and Enron Global Markets, LLC, a subsidiary of
Enron Corporation (NYSE: ENE), one of the world's leading energy companies.
Webmodal, an Illinois-based technology and logistics services business, has
been a Stonepath company since October 1999.  The closing is anticipated to
occur on March 2, 2001.

Upon closing, Stonepath is to receive approximately $6 million in cash
from Enron Global Markets for its stake in Webmodal plus a $1 million loan
repayment.  Closing remains subject to Webmodal shareholder approval, as well
as to the satisfaction of customary and standard closing conditions.

"We're extremely pleased that Enron recognizes Webmodal's value and
potential," said Andrew Panzo, Chairman and CEO of Stonepath Group."

About Stonepath Group
Founded in 1998, Stonepath Group (Amex: STG) currently holds interests in
nine technology companies in various stages of development.  Stonepath Group
(http://www.stonepath.com) is headquartered in Philadelphia, PA.

/CONTACT: John Brine of Stonepath Group, Inc., 646-486-6000/ 17:28 EST