Subject: Re:
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Fri, 8 Dec 2000 06:43:00 -0800 (PST)

The EU summary is okay for someone wishing to get a quick overview.  A few 
errors, though.  Spanish pool is not mandatory.  If you own generation in the 
country, you may bypass the pool.  Denmark has more than two generators, as 
municipalities own a fair amount of generation.  Finally, the 
anti-competitive arrangements in place as "transitional" in The Netherlands 
are not touched upon at all.

Interesting omission of Poland from discussion of Central and Eastern Europe, 
as it is the most progressive of the countries from the former Communist 
sphere.   
thanks for sending this along.   mcs  

From: Steven J Kean@ENRON on 08/12/2000 08:18 CST
To: Mark Schroeder/LON/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Elizabeth 
Linnell/NA/Enron@Enron
cc:  

Subject: 

----- Forwarded by Steven J Kean/NA/Enron on 12/08/2000 08:18 AM -----

	<[email-masked]>
	12/07/2000 02:09 PM
		 
		 To: <[email-masked]>
		 cc: 
		 Subject: 

I thought that you (or some of your colleagues) might find the attached
update on country by country restructuring to be helpful.
----- Forwarded by Suzanne Nimocks/HOU/NorthAmerica/MCKINSEY on 12/07/2000
01:30 PM -----
       Memorandum

    TO:        Adam Lewis
       Alberto Marchi
       Andrew Hertneky
       Andy Steinhubl
       Angela Kuster
       Anjan Asthana
       Antonio Puron
       Antonio Volpin
       Arne Germeyer
       Arturo Vernon
       Ashutosh Shastri
       B. Venki Venkateshwara
       Barbara Fletcher
       Barbara House
       Ben Joyce
       Bernard Minkow
       Bob Edwards
       Bob Felton
       Boris Galonske
       Brian Schofield
       Brian Tulloh
       Buford Alexander
       Carlo Yu
       Carlos Torres
       Carol B White
       Carolyn Loos
       Cecilia Bergman
       Charlie Taylor
       Christoph Brombacher
       Christoph Grobbel
       Claude Genereux
       Corinne Aigroz
       Csilla Ilkei
       Dalila Villar
       Daniel Poller
       Eileen Burnett-Kant
       Enrique de Leyva
       Eric Bartels
       Eric Hanlon
       Eric Lamarre
       Francis Hodsoll
       Franco Magnani
       Francois Lepicard
       Frank-Detlef Drake
       Frank Weigand
       Gerald Klenner
       German Dominguez
       Gerrit van Geyn
       GIANCARLO GHISLANZONI
       Gjermund _ydvin
       Glenn Payne
       Helen Warwick
       Hugo Baquerizo
       Humayun Tai
       Ignacio Quesada
       Intam Rinawati Dewi
       Ivo Bozon
       Jaap Kalkman
       Jan Christer Tryggestad
       Jason Hicks
       Jason Rabbino
       Javier San Felix
       Jeff Walker
       Jessica Ciccone
       Jessica O'Connor-Petts
       Jim Ayala
       Jim Bowen
       Jim Humrichouse
       Jim O'Reilly
       Jim Robb
       Joan Westmoreland
       Joelle Gatineau
       Jon Zagrodzky
       Jonathan Woetzel
       Jorge Fergie
       Jose Federico Castillo
       Jose Maria del Aguila
       Jourik Migom
       Jud Morrison
       Judith Lezaun
       Judy Wade
       Karel Tutein Nolthenius
       Keith . Leslie
       Kelly Kienzle
       Ken Ostrowski
       Kristina Kalinova
       Jyoti Suri
       Lar Bradshaw
       Leonardo Senni
       Leonhard Birnbaum
       Les Silverman
       Linda Mansfield
       Lisa Schwallie
       Luca D'Agnese
       Luis Troyano
       Marcelino Susas
       Marina Ospina
       Mark Ellis
       Marko Schulz
       Marla Aizenshtat
       Matt Rogers
       Menno van Dijk
       Michael Linders
       Michael Morcos
       Mike Juden
       Mike Terry
       Miriam Alvarez
       Nicolas Borges
       Olga Perkovic
       Pablo Toja
       Pankaj Jain
       Pascale Michaud
       Patricia Miller
       Paul Jansen
       Paul Kolter
       Paul LeBrun
       Paul Parfomak
       Pawel Konieczniak
       Per Lekander
       Peter Bisson
       Peter Sidebottom
       Pierre-Yves Ouillet
       Pierre-Yves Roussel
       Pru Sheppard
       Rob Latoff
       Robert Palter
       Robert Samek
       Rodrigo Rubio
       Rogene McCoy
       Roger Abravanel
       Ron Bloemers
       Ruggero Jenna
       Rui De Sousa
       Sally Lindsay
       Scott Andre
       Scott Graham
       Sesha Narayan
       Simon Lowth
       Suzanne Nimocks
       Tera Allas
       Thomas-Olivier Leautier
       Thomas Read
       Thomas R"thel
       Thomas Seitz
       Thomas Vahlenkamp
       Tim Bleakley
       Tommy Inglesby
       Tony Perkins
       Trudy Scott
       Tsun-yan Hsieh
       Valentina Grifo
       Vitaly Negulayev
       Walter Wintersteller
       Yann Duchesne
       Zander Arkin
      CC:
    BCC:

   FROM:   Carol B White
       Pru Sheppard
       EU - EPNG R&I
      DATE:    December 6, 2000

       Power sector restructuring: international activity, June - November
       2000

      This  mailing is a periodic update of the status of international
      electric power sector privatization and restructuring.

      Privatizations and restructuring activity continue apace.
      Governments faced with burgeoning power demands, but lacking the
      funds to meet them, are nearly universally opening their generation
      markets to foreign investors, even where privatization is not on the
      agenda.  More and more, state-owned utilities are unbundling.
      Competition is being introduced into national markets at both the
      wholesale and retail levels.  A few international players have scaled
      back their international investments and shifted substantial portions
      of their portfolio to less risky markets, such as the U.S. or Europe.
      Competition in Europe has been spurred by the EU Directive.  As Asian
      economies recover, most governments are starting to move forward
      again with unbundling / restructuring plans.  After a year in which
      currency devaluations caused a number of early investors to exit
      Latin America, a healthier economy has allowed privatizations to
      restart, but at a slower pace.

      This mailing summarizes recent developments in Europe, Asia-Pacific,
      Latin America, and the Middle East / Africa. Maps that summarize the
      status of restructuring in Europe, Asia, Latin America, and Africa
      and the Middle East are attached as Exhibits 1-4.  A slippery slope
      is Exhibit 5.  Timelines showing the opening of markets in various
      countries, by region, are in Exhibits 6-8.

      (See attached file: Intlmail 3 exhibits.ppt)

      February '99 marked the opening of the market to choice for most
      large EU customers who use over 40 GWh a year.  This accounts for
      about a fourth of demand.  As of "E-Day", neither France nor Italy
      had passed their proposed enabling legislation.  While the EU
      intended for the transmission operator to be independent, EDF intends
      to retain control over the grid, as will ENEL.  A phased deregulation
      of the gas industry began to unfold in similar fashion beginning in
      August 2000.

      Mergers, alliances, and consolidation are a dominant theme as
      companies jockey for position in the new European power market.
      There is a tremendous opportunity for international players to cross
      borders: as suppliers of new generation, as purchasers of assets
      being spun off by liberalization decrees (Italy) or because of market
      concentration rulings in mergers (Germany, Spain). Several
      international companies have opened trading offices in Europe, or  (
      Enron, Reliant, Southern, TXU).  HoustonStreet.com launched a
      European online wholesale energy-trading platform.

           ?  Austria:  Austria's liberalizing market is facing problems
              from within and without.  The EU is dissatisfied with its
              lack of G-T-D unbundling, although accounts were formally
              separated in 1999.  There is no ISO.  Internally, there is
              intense discussion about an accelerated market opening
              (customers over 20 GWh now have choice). Regional utilities
              are angry over the Verbund's proposal to open 100% of the
              market in late 2001. The Verbund, a 51% SOU, is the largest
              generator and owns the transmission grid. However, it has no
              retail customers and hence is strongly exposed to already
              deregulated wholesale customers. (C.B. White, Judith Lezaun)

           ?  Denmark: The 1999 liberalization law exceeds the EU
              directive's goals and establishes full retail access by 2003.
              Choice was phased in for large industrials using more than
              100 GWh in 1997;  the threshold dropped in April '00 more
              than 10 GWh; the next threshold drops to 1GWh at the end of
              2000. The new law includes unbundling of distribution
              activity and regulated TPA. Denmark has recently experienced
              a consolidation wave in generation that leaves the sector
              with 2 large incumbents. The trend is moving downstream into
              distribution and supply. Western Denmark is already part of
              the Nordic power exchange NordPool and East Denmark is due to
              join by the end of 2000. Energy policy aims at twenty percent
              of electricity sales would come from renewables by the end of
              2003, up from a current 10%. (Cecilia Bergman)

           ?  Finland: Finland has been fully open to choice since
              September 1998, when a metering requirement was dropped.
              Prices immediately dropped, but only about 2-3% of households
              have switched supplier. Finland forms part of the Nordic
              power exchange NordPool. The regulator monitors distribution
              tariffs and a rTPA regime is in place. In November '98, the
              Finnish government launched an IPO for 20% of Fortum, the
              holding company for the merger of utility Imatran Voima Oy
              and oil and gas company Neste Oy. The Finnish government
              expects to lower its ownership further. The largest new
              entrant in the market is Swedish Vattenfall, with its
              acquisitions of distributors and some generation capacity.
              Further M&A in the distribution and supply sector is
              expected. (Cecilia Bergman)

           ?  France: There was irony in France's push for liberalization
              as it assumed its six-month EU presidency.    France passed
              its electricity law last February, a year after required by
              EU directive, but had 30-odd implementation decrees stalled
              in the National Assembly.  However, EDF, which still controls
              more than 95% of French generation, realized Brussels would
              hinder its foreign ambitions if its domestic market remained
              closed. It recently convinced French authorities to open up
              34% of the market by the end of 2000 instead of 2003,
              lowering the eligibility threshold to 9 GWh/year (from 16
              GWh). EDF is also aware that its monopoly prevents it from
              easily entering the energy services market  -- leading EDF to
              promote a "relatively rapid" total opening of the French
              market. (Corinne Aigroz, White)

           ?   Germany:  While the Electricity Law was officially effective
              in April '98, real competition is still impeded by
              complicated TPA grid access conditions, especially on the
              retail market. A group of new entrants has organized to call
              for a governmental regulator.  Some recent studies have shown
              the cost of electricity so low on some bills as to indicate a
              "massive cross-subsidization between network operations and
              marketing." Recent charges have been made of obstacles to
              competition by a mulitiplicity of fees, including customer
              switching charges and supplier entrants registration levies.
              In the last 12 months, M&A among big national and
              international utilities has redrawn the German utility
              landscape: EDF bought a share in EnBW, Veba / Viag merged to
              form EON and RWE/VEW merged into RWE. Furthermore, RWE and
              EON must sell their stakes in VEAG due to antitrust
              authority.  Currently, several utilities are and battling for
              control of East German VEAG, whose transmission connections
              make it a portal to Eastern Europe.  (Judith Lezaun, White)

           ?  Greece: According to the FT, Greece has "hired a consultant"
              (us) to produce a 5-year plan for state utility PPC.  PPC is
              preparing an IPO for 15-20% of the company, theoretically set
              for 2001, but likely later.  Greece has been given until 2001
              by the EU to conform to the Directive. An IEA report
              suggested two major swift changes to the energy sector
              structure.  First, the government should create a clearer
              separation between itself and the state-owned PPC, including
              a separate regulatory agency.  Second, the government should
              consider splitting the PPC into competing generators to
              maximize competition, as well as improving market access
              conditions for IPPs and cogenerators.  As the country's
              largest employer, PPC is not likely to effect these changes
              quickly. (White, Thomas Read)

           ?  Ireland: Supply competition was introduced in February '00
              for customers over 4 GWh (28% of the market).  Opening is
              scheduled to increase to 32% in 2003, with further
              liberalisation in 2006.  No date for mid-market and full
              retail opening has been set.   Incumbent ESB plans to split
              off its transmission business, which will remain state-owned.
              Competition in generation will be introduced in 2002 with the
              auctioning of ESB capacity, which is intended to create at
              least two new players.  Independent power production has been
              allowed for two years now. (Ben Joyce)

           ?  Italy:  Italy approved its market deregulation decree in
              March '99; in some measures, it goes beyond the EU Directive.
              ENEL had dominated 80% of generation; by 2003, no entity can
              control more than 50%, or 30% by 2005.  This requires that
              ENEL sell between 15GW and 22GW of its 57GW by 2003.  It has
              separated G-T-D into separate legal entities and been 34.5%
              privatized.  A second tranche should take place in 2001.  A
              pool mechanism should be operating by 2001.  Consortia of
              industrials using more 30GWh/year can contract directly with
              IPPs; by 2002, the threshold will be 9GWh/ year. The
              potential free market currently amounts to 80 TWh a year, or
              30% of total demand.  This will increase to 40% in 2002.
              ENEL, who has a de facto monopoly on T&D, will retain
              ownership of the national grid assets; a separate state-run
              ISO, GRTN, will run transmission and dispatching.  A pool
              mechanism, operated by a GRTN subsidiary, should be operating
              by 2001; in the meantime, the market uses bilateral
              contracts. (Valentina Grifo, White)

           ?  Netherlands:  By June '00 three of the four large generation
              companies had been sold to foreign energy groups.
              Competition for large industrial users began in August '98.
              Large industrials (33% of the market) can currently choose
              their supplier.  By 2002, 58% of the market will be
              competitive, and in 2004, there will be full customer choice.
              The Amsterdam Power Exchange, modeled along Scandinavian
              lines, was launched in May '99.  The APX allows players to
              trade power over the Internet on an hourly basis for the next
              day.  In April '00, it added day-ahead prices at border
              points for Germany, although it is not yet much used; if
              successful, Belgium would follow. In October '00, the
              government agreed to buy the entire high voltage network,
              TenneT, from the four generation companies for $99.1 million.
              Their goal was to improve the supply market and to increase
              real competition. (White, Karel Tutein Nolthenius)

           ?  Norway:  Norway opened up to retail access in one fell swoop
              in 1991. "Real" retail access got started in 1995 when the
              meter requirement was abolished; switching got started in
              1997 when a switching fee was canceled.  The current
              accumulated switching rate lies at 14%. Distribution tariffs
              are regulated and transparent according to rTPA. Norway forms
              part of NordPool. (Cecilia Bergman)

           ?  Portugal: Portugal brought new regulations into force in
              January '99.  They include a price-cap system for determining
              tariffs and the creation of two coexisting supply systems:
              public and independent.  Each is locked into supplying the
              national grid (REN), a regulated and EdP-owned monopoly.
              Producers within the independent system can currently supply
              eligible customers who consume more than 9GWh/year at a
              single site.  The country's four discos may purchase up to 8%
              of consumption outside the public system.  Portugal's
              regulator, ERSE, needs either to extend the eligible
              customers or raise the allowed percent for discos in order to
              reach the percents required by the Directive.  The government
              sold another stake of 20% of state-owned Electricidade de
              Portugal in October '00, following two successful offerings
              in '97 and '98.   This offering raised $1.34 billion.  The
              state retains 32.6% and "golden share" voting rights. (Rui de
              Sousa)

           ?  Spain: After several major Latin American purchases, Endesa
              moved to restructure and consolidate at home, announcing in
              October '00 the merger with Iberdrola.  The resulting company
              would have 80% of the market, so it would be forced to shed
              generation and distribution assets.  It would also create the
              world's 4th largest utility, by market cap. There is also
              movement with the smaller two players.

              The Spanish regulator is applying an eligibility schedule
              faster than the minimum requirements of the EU Directive
              providing for full market opening by January 2003. Several
              foreign players are already authorized to supply eligible
              consumers and there are new generation capacity additions
              announced by some of the large international. Nearly 60% of
              the market can now choose its supplier.  A mandatory pool
              with a bidding system started in Jan '98. (White, Dominguez)

           ?   Sweden: Deregulation was introduced in January '96 with full
              retail access to all customer groups, rTPA and unbundling of
              distribution activities. However, switching was impeded by a
              meter requirement that was abolished in November '99.
              Switching is currently at 10% but with renegotiated contracts
              the figure is more like 25%. Sweden forms part of NordPool, a
              "common electricity market", a forum for physical and
              financial exchanges. Alongside NordPool is a bilateral market
              and an OTC market for financial trading. Consolidation has
              occurred in the distribution sector mainly and the generation
              market is concentrated in the hands of 3 large actors.
              (Cecilia Bergman)

           ?  Switzerland: In October '00, Parliament passed an electricity
              market law.  The first phase of the liberalization should
              start in 2001 granting choice to large industrials (> 20
              GWh); the mid-size market will open in 2004 (> 10 GWh). In
              2007, the law envisions a fully open market. Some aspects of
              the new law, such as the transmission tariff model, are still
              being discussed. (Chris Brombacher, White)

           ?  UK: With market deregulation complete (full choice since May
              1999), the UK market is now settling into a phase of supply
              consolidation.  Seven of the 12 RECs in England & Wales are
              now in joint ownership.  In the generation market, the
              incumbent's share continues to decline: National Power and
              PowerGen have divested further capacity, and now stand at
              8.5% and 6.7%.

              The New Electricity Trading Arrangements for wholesaling have
              been postponed to early 2001.  They will allow for a futures
              and forwards market to trade alongside the established spot
              market.  Markets will be run by independent members, although
              the balancing and settlement mechanism will be run by a
              system operator as before.  A bilateral power exchange will
              also be put in, and is expected to handle a much larger
              demand than the spot market. (Ben Joyce)

      In Central and Eastern Europe, privatization initiatives are
      continuing to attract badly needed capital, while the IMF urges
      reforms as a condition for funding.  Countries that are looking to EU
      membership have moved forward with power sector restructuring and
      gradual opening of their markets to choice.

           ?  Bulgaria: In January, the Energy Agency announced its intent
              to unbundle the state monopoly, NEK, into separate G-T-D
              companies.  NEK will remain a single buyer; 28 distribution
              entities have been merged into seven new companies.  The
              unions are opposing rapid reform, claiming the necessary
              regulations have not yet been written.  The government is
              working with the IMF to set up financial controls and
              eliminate cross-subsidies.  Between 2001 and 2005, all
              generation will be upgraded or privatized.  Transmission will
              remain state-owned.  (Csilla Ilkei, White)

           ?  The Czech Republic: In October '00, the Czech government
              announced it would sell a strategic stake in generator CEZ
              and in six of the eight regional distributors to a single
              buyer. Privatization is expected to begin in 2001.  Many
              Western companies, such as Vattenfall and E.On have already
              been quietly buying up stakes in small municipal distributors
              who need the cash to balance their budgets. A new energy law
              should be also approved by the end of 2000, which would open
              power markets to competition between 2002 and 2006; prices
              should reflect costs by 2002.  Gas liberalization will follow
              in 2005.  CEZ is testing its controversial nuclear plant,
              Temelin, which should begin operating by spring 2001. CEZ
              plans to cut wholesale electricity prices by 20% after the
              commercial launch of Temelin. (Kristina Kalinova, White)

           ?  Hungary: Since December '95, majority shares have been sold
              in the six regional discos and five gencos to Western
              investors.   Eastern Europe's  earliest and most ambitious
              privatization program has fallen victim to a host of
              problems, especially central government price control.  AES
              and IVO-Tomen tendered new capacity tendered in 1999, but AES
              is now bringing MVM to arbitration over its failure to sign
              its agreed-on PPA.   Hungary will partially deregulate its
              market after 2002 but before it joins the EU. Further
              privatization opportunities include a coal-fired power plant
              as well as the monopoly transco, MVM. (Cs. Ilkei, White)

           ?  Moldova: The European Bank for Reconstruction and Development
              has expressed an interest in stakes in privatized assets of
              Modova, giving privatization scheduled for this year a boost.
              Majority shares will be sold in first in five distribution
              companies, then in three generators. The first attempt to
              privatize distribution failed to receive timely bids.  All
              companies will require substantial investment for upgrades.
              (White)

           ?  Romania: In September '00, the national electric company,
              Conel, was split into four independent units. These encompass
              fossil generation, hydro generation, transmission, and
              distribution and metering. Restructuring precedes eventual
              privatization, which will begin with distribution, followed
              by generation.  Current law requires foreign owners to have a
              local partner.  As Romania is one of the countries invited to
              join accession talks with the EU, it is opening its market in
              stages.  Currently, 10% (>100GWh) has choice; this will rise
              to 45% (>40GWh) next year.  Evenually, elegibility thresholds
              will be lowered to 20GWh, then 9GWh. (Cs. Ilkei,White)

           ?  Russia: In the mid-1990s, the Unified Energy Systems of
              Russia Joint Stock Company (UES; also known as RAO), was
              organized into 72 regional joint stock companies; UES still
              holds 49% shares in most of these regional utilities.  In May
              '00, President Putin fired the non-reformist energy minister
              who had blocked earlier attempts at privatization and
              liberalization.  The new minister is an unknown quantity.
              The head of UES has wanted to privatize significant portions
              of UES and to lift foreign ownership controls, currently at
              25%. (White)

           ?  Slovak Republic: In October 2000 the government approved a
              plan to restructure and partially privatize its energy
              sector; implementation legislation needs to be passed.  The
              plan would see state-owned Slovenske Elektrarne (the G-T-D
              monopoly) transformed into a 100% state-owned joint stock
              company.   Regional distributors will be separated from SE
              and merged in the first half of 2001 into three joint-stock
              companies, with a 49% block of shares to be sold.  Generation
              will also be separated and transformed into joint stock
              companies. Municipalities will acquire majority stakes in the
              heating plants.  The government will select a privatization
              adviser for SE and for the distribution companies in early
              2001. (Kristina Kalinova)

           ?  Turkey: The controversy over BOO (build-own-operate) vs. BOT
              (build-operate-transfer) arrangements for IPPs was resolved
              in January 2000.  Turkey passed a retroactive constitutional
              amendment allowing international arbitration for energy
              contracts.  Twenty-three BOT projects are affected.  Turkish
              economic growth is fueling a need to triple its capacity to
              64 GW by 2010.  In September, Turkey proposed an energy law
              that would separate state-owned TEAS into separate G-T-D
              entities.  Generation plants would eventually be available
              for privatization, while new plants would no longer be
              transferred to the government, but remain with the IPP
              builder.  The impetus for this proposed law is Turkey's
              interest in EU membership; only 1/8th of its 120 energy
              regulations meets EU standards.  (White)

           ?  Ukraine:  Authorities have announced the sale of seven of the
              country's 27 regional discos, in a transparent tender.   Such
              a sale has been unsuccessfully tried before.  Each sale will
              be for 25% plus one share. The distribution sector is beset
              with a host of problems including high non-payment, unpaid
              employees, and corruption.  The EBRD is pushing for progress
              on privatization before it provides funds to build an
              alternative to Chernobyl, which the authorities have agreed
              to close.

      Asian economies are recovering from the economic crisis and in some
      countries electricity demand is returning to pre-crisis levels.  Most
      governments are starting to move forward again with unbundling /
      restructuring plans in the power sector; although IPPs are facing
      ongoing problems relating to PPAs and lack of government guarantees.

           ?  Australia:  All customers in Australia should have choice by
              2003.  Victoria will to phase in full competition during
              2001.  New South Wales (NSW) has delayed full competition for
              residential users and small businesses to January '02.  The
              five other states plan to phase in full choice by 2003.
              Victoria's five distributors are facing revenue reductions of
              between 12% and 22% starting in 2001, whey they say will hurt
              their service capability.  Recent M&A activity has seen
              already- privatized Victorian distribution, retail, and
              transmission change hands, with new owners coming from Asia.
              ElectraNet, South Australia's (SA) transco, was sold as a
              200-year lease in September.  The National Electricity
              Market, comprising Victoria and NSW, started operating in
              December '99.  Queensland, SA and ACT will join in the next
              few years.

           ?  China:  China is aiming for nationwide interconnection,
              including Hong Kong, by 2010. Power pooling and increased
              interconnection is being tested in Zhejiang and Shanghai
              provinces.  As there is no process or body in place to
              oversee reforms, some believe that sector reform is a mere
              slogan. Investors are backing off of a number of planned IPPs
              following a government decision to cap the ROR for new
              projects at 10%.  Another issue is lack of government
              guarantees.  China plans to build hundreds of small rural
              hydro projects and to spend Yn55bn to upgrade rural power
              grids in 2000 as part of a project to bring electricity to 75
              million people who currently have no access.

           ?  India:  Five of India's 19 states have undertaken significant
              reforms: Orissa, Haryana, Andhra Pradesh, Karnataka, and
              Uttar Pradesh.  And, only four of the State Electricity
              Boards (SEBs), the principal buyers for independent power,
              are profitable.  IPP builders have been frustrated by a host
              of regulations, lack of guarantees, and SEB insolvencies.
              The growing Indian power deficit was dramatically highlighted
              this year by the withdrawal of two major investors, EdF and
              Cogentrix.
              A draft "Electricity Bill 2000" will be introduced in
              Parliament this winter.  It would create and empower
              autonomous State Electricity Regulation Commissions.  SEBs
              would be unbundled into G-T-D and corporatized within four
              months of passage.  Initially, states would initially retain
              G&D assets; they would later be privatized.  Transmission
              assets would be put under an independent authority, and TPA
              would be allowed.  Significantly, IPP licensing requirements
              would be clarified and reduced, and largely eliminated for
              the growing segment of captive producers.  A key problem of
              theft ? as high as 30% of T&D losses in some areas ? would be
              addressed by strict metering and high penalties.  The
              likelihood, however, of the Bill being passed as proposed is
              not strong, as it faces significant opposition both by unions
              and regional parties in Parliament.

           ?  Indonesia:  Indonesia's IPP program has faced problems over
              power purchase costs and project rates of return, with
              bankrupt state-owned PLN claiming it is unable to pay IPP
              operators for power.  Of 27 planned IPP projects, only three
              now supply power; six others are ready to generate.  PLN
              reached an interim agreement with Paiton Energy under which
              Paiton will supply energy for 10 months, at a rate said to be
              much lower than the original agreed-upon price.  Other PPA
              renegotiations will likely force IPPs to operate at a loss
              until the Indonesian economy revives and PLN's financial
              situation improves.  Unbundling is underway on Java/Bali,
              where PLN has created two generation subsidiaries.  Outside
              Java/Bali, unbundling of PLN will be along geographic lines.
              The Indonesian government recently selected KEMA Consulting
              to develop rules for a competitive market.

           ?  Japan:  On March 21, 8000 large customers (30% of the market)
              were allowed to choose a supplier.  This broke the monopolies
              of the ten regional IOUs for the first time, but high
              transmission access fees set by the incumbents are inhibiting
              true competition. Newer liberalization measures in the
              electricity and gas sectors have since been written --  an
              agreement was signed at the July G8 Summit which provides for
              fair and transparent non-discriminatory access to
              distribution networks in both sectors.  A number of new
              companies are entering (or planning to enter) the market,
              largely set up as JVs with local non-incumbents, often
              offering new products and services.
              In August the government awarded a tender to a non-utility,
              Diamond Power, a Mitsubishi unit, to supply electricity to
              the Ministry of Trade and Industry at a rate 4% lower than
              incumbent TEPCO's.  TEPCO plans to build a new nuclear plant
              to cut generation costs and plans to streamline operations in
              the face of increased competition.

           ?  Malaysia:  Jamaludin Jarjis was appointed as the new chairman
              of Tenaga Nasional Berhad (TNB) in July.  He assured
              investors that restructuring begun three years ago by his
              predecessor would remain intact.  TNB will be transformed
              into two separate T&D companies by 2003, with an equity
              interest in generation.  Generation assets have already been
              separated into TNB Generation; thermal generation will be
              sold.   The government has approved the construction of more
              IPPs to meet the demand for electricity, which has grown 12%
              compared to the period before the economic crisis.  Work on
              the Bakun Hydro Project in East Malaysia has resumed, but it
              remains to be seen whether the project will go ahead as
              originally planned or on a smaller scale.

           ?  New Zealand: 1999 saw ECNZ split into three gencos to create
              further competition  -- Genesis Power, Meridian Energy, and
              Mighty River Power.  They have been corporatized but will
              remain under government ownership.  Legislation passed in
              1999 forbade ownership of wires (non-competitive) and
              generation and retailing (competitive) by the same company.
              Companies have until 2004 either to sell one business type or
              to set up a separate trust to own and run the businesses they
              do not wish to keep. By February '00, most had implemented
              full separation.  The newly merged (75.8%) NGC/TransAlta will
              be the largest energy retailer in New Zealand, with a market
              cap of NZ$2.1billion and more than 650,000 customers.

           ?  Pakistan:  Pakistan is trying to attract IPPs with negotiated
              PPAs which allow fixed ROR of 12%, but IPPs face continued
              lack of guarantees and other political uncertainties.
              Problems continue over Hub Power Company (Hubco), the largest
              IPP project in Pakistan.  Hubco is receiving significantly
              lower payments from WAPDA than originally contracted.  The
              government has alleged that corruption occurred when the PPA
              was amended in the 1990's, making the wholesale power tariff
              untenable for WAPDA and excessively lucrative for Hubco.
              More than 20% of plants have already been sold in a phased
              sell-off of WAPDA's generation.  Eight parties have been
              short-listed for the pending privatization of 51% of Karachi
              Electric Supply Commission, but the sale has been often
              delayed.

           ?  Philippines:   An Omnibus Electricity Bill, which will set
              the framework for the breakup and privatization of Napocor,
              is stalled in a House-Senate reconciliation committee.  The
              Asian Development Bank has threatened to withhold all
              financial assistance, including $100million in loans for
              power related projects, until the legislation is passed.
              Napocor is on the verge of bankruptcy and energy department
              officials are looking at several alternate options for
              selling the utility in the absence of a restructuring bill.
              Government-appointed advisers have also recommended that
              Napocor renegotiate some of its take-or-pay contracts with
              IPPs, asking some IPPs to reduce power off-take on an interim
              basis.  Napocor has offered the IPPs that accede to these
              conditions a longer life span for their projects, but
              developers are reluctant to accept because of their own
              financial commitments.

           ?  Singapore:  Since initial restructuring and corporatization
              in 1995 and the establishment of a pool in 1998, Singapore
              has lagged in power sector deregulation.  Investors complain
              that the market lacks clarity and that retail competition has
              yet to develop even though the rules allow competition for
              large consumers.  A thorough review in 1999 by the Ministry
              of Trade and Industry recommended that:  generation  be
              privatized, but with restrictions on generation
              cross-ownership; transmission and market operation functions
              be separated and an ISO established; and that most retail
              services be privatized.  The government has granted two
              public retail licenses, meaning that the two IPPs can sell
              electricity directly to large users.  Retail licenses are
              expected to be issued to the three power generators.  This
              will allow full competition for large industrial and
              commercial customers, but retail competition for smaller
              customers is unlikely to be in place before 2002.

           ?  South Korea: South Korea is proceeding with a major
              restructuring program, following government approval in July
              1999 for state-owned KEPCO to be broken up into six gencos.
              KEPCO will retain the nuclear assets as one genco.  Each of
              the five other gencos will be listed in stages on the Korea
              Stock Exchange; up to 30% foreign ownership will be
              permitted.  The privatized gencos will sell to KEPCO, which
              will initially retain its T&D services.  Later, a UK-type
              pool will be established where all generators will sell into
              the pool. Competition in distribution and retailing is a
              long-term target.  IPP projects totaling 2,515MW are already
              in operation.  Impending restructuring has not deterred
              foreign interest in several ongoing IPPs.

           ?  Taiwan: Two phases of IPP development have been approved, but
              only one IPP scheme has started up.   Developers have faced
              land acquisition problems, causing IPP schedules to slip.  In
              1999, the government announced plans to launch Phase Three,
              limited to gas-fired plants.  An Electricity Act is before
              Parliament.  Its main provisions include: privatizing
              Taipower without unbundling G-T-D; allowing other companies
              to enter the market as either vertically integrated,
              generation, transmission or distribution companies and to pay
              Taipower a fee for using its facilities; and the creation of
              an independent regulator, especially for tariffs.  IPPs will
              be able to supply customers at 161kV and above, and IPP
              prices will not be regulated.

           ?  Thailand: The 1999 State Enterprise Corporatization Act laid
              out a three-stage process for all state-owned enterprises,
              including power, to create fully competitive, restructured
              and privatized sectors.  A draft Energy Act is under
              discussion, while preparation and implementation of various
              technical frameworks are underway. Under the Act, a
              competitive wholesale pool would be introduced in 2003,
              although some sources doubt that it could be ready by then.
              It is also unclear how soon Thailand will have a transparent
              and independent regulatory body. EGAT transferred two thermal
              units to Ratchaburi following its IPO in October; EGAT also
              plans to corporatize and partially privatize its non-hydro
              plants by 2003.  Before the economic crisis, the government
              had an ambitious IPP program; EGAT now has excess capacity,
              so has delayed many projects.  Its long-term plans include
              the construction of a series of Small Producer Plants (SPPs)
              using renewable energy.  PPAs have been signed with 50 SSPs.

           ?  Vietnam: Vietnam is in the nascent stages of reforming its
              power system. Electricity of Vietnam (EVN) is an unbundled
              state monopoly, which does not even service rural customers.
              Local villages provide services to small farmers and small
              commercial businesses using thin wires and low standards. The
              World Bank has approved a $150million credit to Vietnam to
              extend grid electricity to about 450,000 households scattered
              throughout the country.  A few IPPs are trying to win
              generation projects.   An Electricity Law due to be enacted
              in 2001 would establish a National Electricity Office for
              regulation.   This would replace the existing haphazard
              village-level regulatory system.

      Profoundly affected by inflation and currency fluctuations, many
      Latin American countries have postponed further privatizations.  At
      the same time, ownership limits imposed by several governments limit
      further investments by companies who have already entered the market.
      According to the Inter-American Development Bank, privatization of
      electricity distribution and generation has been accomplished in all
      of the major Latin American economies with the exceptions of
      Venezuela and Mexico.  It estimates that 75 million Latin Americans
      are still not connected to the grid in rural areas of poorer
      countries such as Peru, Bolivia, and some Central American countries.
      Many of the countries that have not already implemented reforms are
      beginning to propose regulatory structures that would open markets to
      investments.  And for those who were already open, a new development
      is the increasing number of transmission systems being offered either
      as concessions to build or as full privatizations.  A big factor
      impacting generation this year has been the region's heavy reliance
      on hydro-power.  Serious region-wide droughts during the last few
      years have caused power shortages and scared away some investors.

           ?  Argentina:  The big news is in Argentina transmission sector.
              This fall, Argentina auctioned off 25% of Transener in an
              IPO, while also offering six lines to the private sector on a
              B-O-M (build-operate-maintain) basis. Endesa (Spain) must
              divest one of its two Buenos Aires distributors due to
              antitrust concerns  (Endesa's two companies are now serving
              40% of the countries 36 million people).  The regulator
              believes that the two holding inhibit its ability to evaluate
              efficiency and to set prices.

           ?  Brazil:   Brazil's wholesale energy market (WEM) began
              operating in October; initially, only 5-10% of power bought
              or sold will go through WEM.  As other contracts expire it
              will eventually supervise $15 billion worth of power.  The
              WEM intends also to create an internet-based trading system.
              The Brazilian system, 95% hydro-run, is dependent on
              plentiful rains to avoid shortages.   Demand growth has far
              outstripped GDP, while new generation is not keeping pace.
              Analysts predict a 15% shortage in 2001, with intermittent
              brownouts, while neighbors are building generation with an
              eye to exporting power to Brazil.
              Sao Paulo state will sell 38.6% of CESP Parana, one of the
              last large generation privatizations,  in December.  The
              state is incenting buyers by offering financing for any
              premium paid over the minimum price of R1.74 billion (US$
              901mil).  Brazil also conducted a successful action of three
              transmission lines in August on a build-operate basis.

           ?  Bolivia:  Ende, Bolivia's utility, was unbundled in '94 and
              has been successively sold off through capitalization (a 50%
              stake and management control).  To meet demand rising at 7.5%
              annually, the government has ordered these buyers to invest
              $296 million in the next three years or face losing their
              concessions; they have not fulfilled previous obligations in
              upgrades.   Generators recently defeated an attempt to allow
              distributors to generate up to 30% of demand instead of 15%.

           ?  Chile: Privatization in Chile is largely complete. Endesa's
              (Spain) controversial takeover of Enersis (Chile) will be the
              basis for its diversification into telecom, via its
              subsidiaries Enersis and Chilectra.  Partially in response to
              Endesa's vertical dominance, partially in response to supply
              conditions engendered by prolonged drought, and partially to
              increase competition, Chile has proposed new regulation plans
              which will open the distribution market and reduce node
              (unregulated) prices from 2MW to 0.2 MW.  Until now,
              transmission charges have been based on existing operating
              costs. Under the proposed reform, they would be calculated on
              the operational costs of an optimum network. The reforms also
              intended to remove control of the grid operation from the
              generators.  The proposed changes likely account for Hydro
              Quebec's being the sole bidder among those pre-qualified for
              the 100% sale of Transelec in September.
              1999 marked a serious recession and drought, seriously
              affecting hydro generators, which represent nearly 80% of
              Chile's generation.  Under the existing system, generators
              had no incentive to plan for long-term supply.  Chile hopes
              the new regulations will break down the entry barriers to
              generation and to introduce competition into distribution,
              heretofore a monopoly.

           ?  Colombia: Continuing labor strikes plus terrorist attacks
              against transmission installations have forced the government
              to postpone the sale of any further power assets, including
              Isagen, the state generator, ISA, the transco, as well as 14
              regional distributors. (A March attack, for instance, caused
              a blackout in 9 provinces and most of Bogota for six hours or
              more.)  The government claims to be reassessing the rules,
              but the reality is that the assets would not receive any
              decent offer now.  For now, 100- 300 million new shares
              (13.5% of capital) in ISA will be sold to the public at a 15%
              discount, to "democratize" the power sector. Since January
              '00, 90% of the market has had choice.

           ?  Cuba:  The first IPP began delivering power to Cuba's grid in
              October '98.  In order to curb programmed blackouts, it has
              invited foreign investors to help discover and develop new
              crude reserves.  Cuba hopes that 70% of its power will be
              generated from local fuels by year-end.

           ?  Dominican Republic: Blackouts still plague this nation a year
              after the government split state-owned CDE into separate
              G-T-D units.  Investors paid $750 for a 50% stake and
              management control of non-hydro generation and of
              distribution.  The new government is requiring IPPs (who
              provide 40% of the republic's power) to renegotiate the terms
              of the privatization contracts signed with the prior
              government.  In the hopes of increasing competition and
              lowering prices, the gencos are planning a power
              clearinghouse through which they will sell electricity to T&D
              companies.  It will, however, "only function when there is
              adequate electricity to meet demand."

           ?  Ecuador: The government has hired Salomon to oversee the sale
              of its power sector.  There is a current investment limit of
              39%, which may need to be raised to 51%.  The government
              realizes that reforms will need to come before privatization
              in order to attract capital.  Its largest utility, EMELEC,
              will be sold in international bidding to pay off extensive
              debts.

           ?  El Salvador: In October, AES bought Reliant's interest in
              three discos (privatized in 1998), which together serve 60%
              of the population.  CEL, the SOU, does not plan to privatize
              its hydro assets or the transmission grid for the moment.

           ?  Guatemala:  Guatemala sold two major discos in 1998;
              investors have made significant system upgrades.  State
              utility INDE still owns 45% of the country's generation, all
              in hydro.  It extensively encouraged IPPs in the early 90s
              with take-or-pay PPAs; IPPs are allowed unrestricted grid
              access.  The power sector, while needing new investment for
              the next five years, may soon be in trouble due to currency
              devaluation, high fuel costs, and the effect of the PPAs.
              Guatemala also needs to finish writing the implementing
              regulations to their 1997 law to encourage more investment.

           ?  Jamaica:  For the second time in four years, the Jamaican
              government has proposed a partial privatization of PSC, which
              handles all of T&D and 75% of the island's generation.  And,
              for the second time, it is Southern who is in the forefront
              of privatization negotiations.  It is still not clear what
              percent will be sold, but it seems likely to be a marginal
              minority of 45%, without G-T-D first being spun-off.

           ?  Mexico: The new Fox administration plans to revive
              electricity reform, tabled last year, without which energy
              cannot keep pace with economic growth.  Fox says there will
              be no privatizations, but an opening of the market.  Private
              participation in the distribution sector would require a
              constitutional change.  Many believe that constitutional
              change will be necessary to achieve adequate reforms.
              Mexico estimates it needs investments of $25 billion in the
              power sector in the next five years to meet growing demand;
              reserve margins are at 6%, while consumption is growing at 6%
              - 8% annually.  Without a clear regulatory bill opening the
              market to competition, investment is inhibited.  IPPs have
              heretofore been built on a B-O-O basis.  Recent tenders have
              included the option to build either in the U.S. or Mexico,
              with power dedicated to Mexico.

           ?  Nicaragua:   The privatization of state-owned power company
              (ENEL) is underway, following its restructuring.  Assets were
              first split into G-T-D companies.  In September '00, Spain's
              Union Fenosa acquired 95% of two discos for $115 million in
              an auction in which it was the sole bidder. High oil prices
              forced the government to postpone the October sale of the
              three gencos; two of the three pre-qualified companies failed
              to submit final bids.  Also, the political opposition has
              challenged the legality of the privatization in the Supreme
              Court.

           ?  Panama: Privatization of government-held IRHE is now
              complete; 51% of distribution and generation was sold in
              1998. The government plans to retain control of transmission.
              Foreign investors are involved in building some generation.
              The big news is the Central American integrated grid, which
              should join Guatemala, El Salvador, Honduras, Nicaragua,
              Costa Rica, and Panama into a single market by 2006.  The
              IADB is running project.

           ?  Peru: The new Energy Minister, Chamot, favors re-starting the
              privatization program, stalled since September '99.  SOUs
              mentioned for privatization were six regional energy
              companies, as well as a 850MW Andean hydro complex, Mantaro.
              It was not clear what form privatization would take; nor is
              it clear what will happen now that Fujimori has resigned and
              fled.  Peru also announced bids for construction and
              operation of two transmission lines.  Currently, only large
              industrials, representing 10% of the market, have choice.
              There are no plans to expand this.

           ?  Trinidad and Tobago: While there has been a partial
              unbundling of the generation arm of T&TEC, the government
              utility retains control of T&D as well as of all of natural
              gas purchases.  There been neither much IPP nor privatization
              activity since the sale of 49% of T&TEC to Southern and BP
              Amoco in 1996 and the financing of one IPP in 1998.

           ?   Venezuela: The Chavez government imposed an electricity
              restructuring law in August 1999.  Industrials can choose
              their supplier, but there are no plans to open the market
              completely.  A wholesale market is proposed for 2002.
              Venezuela has the lowest tariffs in the Western hemisphere,
              due to high subsidization.  While the government dithered on
              privatization plans, AES jumped in with a surprise bid for
              the ADRs of Electricidad de Caracas.  The government recently
              announced a tentative sale date of early 2001 for 51% of two
              regional electric companies, Enelven and Semda.
              Privatization has oft been postponed, most recently because
              of unknown effects of Venezuela's new electricity law on its
              rate policy.

           ? Virgin Islands: In September '00, this U.S. territory's Senate
             quashed a deal in which Southern had privately negotiated for
             an 80% purchase of the Water and Power Authority.  The Islands
             could use the money, but the Senate objected to the lack of
             bidding or transparency.  It was in principle opposed neither
             to privatization nor to Southern.

      African and Middle Eastern governments are increasingly opening their
      power sectors to foreign investment, although most have not moved
      beyond allowing IPPs.  Many Gulf-States' IPPs are for water and
      power.   Increasingly, power sector forecasts include reliance on the
      private sector for generation capacity additions.  Five Sub-Saharan
      countries have privatized their power systems: C"te d'Ivoire, Gabon,
      Guinea, Mali, and Senegal.  A few countries are beginning to discuss
      partial privatization of the entire government-owned entity, rather
      than spinning off G-T-D and undergoing separate privatization.

      Heavy reliance on hydro power in some areas of Africa have put
      pressure on prices, due to sustained droughts, especially in East
      Africa.   Droughts are usually not conducive to advancing
      restructuring agendas in different countries.

      A notable regional trend in both Africa and the Middle East are the
      schemes for regional transmission links.   The Mozambique
      Transmission Company links South Africa, Mozambique, and Swaziland;
      the West African Power Pool will link 16 countries; there is a
      Six-Country link underway between Egypt, Jordan, Iraq, Syria, and
      Turkey, and later Lebanon.

           ?  Algeria: Interior minister Khelil, who as a World Bank
              official oversaw the restructuring of state oil companies in
              several countries, is committed to "a profound restructuring
              of Sonatrach (the NOC) and the power sector (Sonelgaz)."
              Legislation was introduced this summer that would unbundle
              G-T-D, end Sonelgaz' generation monopoly, and allow for IPPs
              on a B-O-T basis. Some of the IPPs are intended for domestic
              consumption, and some for export.  Algeria is keenly
              interested in sending power to deregulating European markets
              via a new undersea link to Spain.

           ?  Ghana:  With a vast hydroelectric station on the Volta River,
              98% of Ghana's current power needs are supplied by
              hydroelectricity. Ghana's planned privatization of its
              distribution company into 4-5 regional companies is possible
              in 2001.  It is implementing a series of power sector reforms
              designed to provide Ghanaians with universal access to
              electricity and to transform Ghana into a middle-income
              country within one generation.  It is moving to reduce its
              reliance on hydro-power by allowing IPPs to build deisel,
              gas, and light crude plants.  Regionally, Ghana is committed
              to building a West African Power Pool (WAPP) by expanding
              electricity generation and interconnections.

           ?  Morocco:  Two distribution concessions are due to be awarded
              for Tangiers and Tetouan.  The concession covers the
              provision of water, sewerage, and electrical services to
              these two northern areas. Two earlier power/water concessions
              (Casablanca, Rabat) were awarded.  Morocco has an active IPP
              program; one of the plants was even transferred to the
              builders after its completion.  No sale of transmission
              assets is planned.

           ?  Nigeria: The IMF has provided Nigeria a $1billion facility to
              encourage reform and to support civilian President Obasnjo.
              In November, the government announced plans to privatize

              ailing NEPA, the SOU. While a draft electricity policy has
              been prepared, no details have emerged.  They intend to send
              regulatory legislation to the parliament by the end of
              December, which should include a framework for foreign IPP
              investors.  It is also likely that NEPA will be broken up,
              prior to privatization. Enron is supplying 270MW via 9
              barge-mounted power facilties off Lagos to ease the power
              shortages in this oil-rich country.

           ?  Senegal: Showing how risky foreign investment remains, the
              new Senegalese government has asked Hydro Qu,bec and Elyo to
              leave, less than two years after they won a 34% interest in
              state EU S,n,lec.  The current government, while
              acknowledging the advances made in rehabilitating old plants,
              cited cronyism on the part of its predecssors.

           ?  South Africa: Eskom, South Africa's parastatal, generates 95%
              of the country's power, and transmits it over national lines
              to municipal distributors.  South Africa is moving slowly
              towards restructuring and unbundling of G-T-D.  The
              fragmented distribution system will be merged into six
              discos, while plants may be grouped into gencos. Last year,
              G-T-D activities were "ring-fenced" to evaluate costs for
              each business.  A new structure for the electricity supply
              industry is being discussed, and the possibility of
              privatizing 30% of Eskom's power stations has been raised for
              the first time. Electricity regulators announced in November
              that they were considering three bids for the first IPP
              license, to be offered next year. While South Africa needs
              new generation capacity by 2004, it now exports power to its
              neighbors, and is very active in the creation of a regional
              transmission network.  Eskom has ambitions to be a global
              player, while continuing to focus on its development agenda
              of rural electrification.  Eskom Enterprises, the unregulated
              business subsidiary, is considering an IPO.

           ?  Egypt: In July, the Egyptian Electricity Authority was
              converted into a holding company, although still state-owned.
              It intends to offer 49% stakes in seven or eight regional G&D
              companies.  The sale of Greater Cairo Electricity, valued at
              $2.1 billion, will be first, although it has been twice
              postponed.  All capacity additions will be solicited
              competitively as IPPs under the BOOT (build- own- operate-
              transfer) model. This allows developers to recover
              construction costs by running a plant, while the state
              eventually owns the project without affecting its debt
              profile.   Egypt is part of a planned Six-Country
              transmission link.

           ?  Israel: Israel has been discussing restructuring and
              privatization for a few years now, but no real progress has
              been made. An electricity law passed in March '96 extended
              the Israel Electric Company (IEC) license for 10 years in
              exchange for its accepting 10% of it power needs (900MW) from
              IPPs, and another 10% from foreign developers. So far, only
              one IPP has been built.  Recent offshore gas discoveries have
              been largely in Palestinian waters; further exploration will
              be necessary before Israel, which has no indigenous fuel
              sources, knows whether it will have an assured fuel supply.

           ?  Jordan: With virtually no indigenous oil or gas, Jordan has
              been highly dependent on Iraqi oil.  In early '98, NEPCO, the
              state utility, was corporatized, and G-T-D was unbundled.
              Jordan's first solicited IPP (450MW) was awarded to Tractebel
              in May.  There is talk of relying on IPPs for further
              generation and of privatizing existing assets.  Consultants
              were sought in August to advise Jordan on distribution
              privatization.  Jordan's transmission grid was linked to
              Egypt in '98; the link to Syria should be completed soon.

           ?  Kuwait: Lifting a freeze on large projects, the cabinet has
              allowed two new IPPs (1000MW, 2500MW) with possible private
              financing options.  Forcasts for power show 5500 new MW
              needed in the next 15 years.

           ?  Lebanon:  After years of war, Lebanon is now engaged in
              massively rebuilding its infrastructure.  In April,
              consultants were invited to bid on advising Lebanon on
              restructuring and eventual privatization of its power sector.
              Lebanon was admitted in May to the planned Six-Country
              regional transmission linkup.

           ?  Palestine:   The outlook for Palestine's energy independence
              changed in a moment this Autumn, with offshore gas fields in
              acknowledged Palestinian waters proving substantial.  It has
              been nearly totally dependent on Israel's IEC for power.

           ?  Qatar: Officials announced in February that they had invited
              five companies to submit proposals for an IPP.  Foreign
              developers would hold a 60% stake in a plant envisioned to
              begin at 200MW, rising later to 1100MW.  A decision would
              turn on a bid of less than 5.5 cents/kWh to generate power.
              Qatari nationals pay no power or water tariffs.

           ?  Saudi Arabia: Saudi Arabia's 5% demand growth has created a
              need for an additional 50GW of capacity by 2020, much of
              which will need to come from the private sector.
              Privatization of the sector is being considered, as is an
              unbundling of G-T-D.  As a first step, in February, the ten
              power companies were merged.  In April, the Saudi Electricity
              Company was created as a joint-stock company, 50%
              government-owned.  The consensus among potential investors is
              that much needs to be done on the regulatory system, the
              financial framework, and on tariffs before IPPs become
              feasible.  For instance, nationals pay only nominal amounts
              for power.  Early considerations of BOT projects to meet
              soaring demand were shelved.

           ?  Tunisia: The Parliament passed enabling legislation for
              independent power in April '96.  While the government will
              continue to control D-T and international trade, all new
              generation will be open to the private sector.  The first
              IPP, for 471MW, is scheduled to come online in 2001.  It will
              produce 20-25% of Tunisia's electricity.

           ?  United Arab Emirates: The UAE is a confederation of 7
              Emirates.  Political power is concentrated in Abu Dhabi; it
              and Dubai provide over 80% of UAE income.  In '98, the UAE
              called for comprehensive restructuring of the power/water
              authority, and for privatization through IPOs aimed at UAE
              nationals.  While privatization in Abu Dhabi is still
              anticipated, Dubai has decided not to privatize these
              sectors.  Several IPPs are underway in Abu Dhai and Dubai, as
              both BOO and BOOT. The UAE's need for additional power may be
              met by a grid linking several Gulf States' systems, which is
              under discussion between the UAE, Oman, Saudi Arabia, Qatar,
              Kuwait, and Bahrain.

                                    * * * * *

      As it is fairly difficult to track developments in countries around
      the world, the authors would appreciate any local amendments.
      Please feel free to send us comments, criticisms (not many),
      suggestions for exhibits, and updates.  If you would like to be
      removed from the mailing list, please let Carol Brotman White know.
      Likewise, if you know of someone who should be added.

      For additional country or regional information, please contact
      individual European EPNG R&Is for Europe; Pru Sheppard for Asia; and
      Carol Brotman White for Latin America, the Middle East, or Africa.
      More detailed spreadsheets are available for each country and region
      from the authors.

      The Financial Times, African Energy, East European Energy Report,
      Global Private Power, Power in Asia, Power in Europe, Power in Latin
      America

      IFR Newsletters, Privatisation International

      McGraw-Hill, Electric Power Daily, Global Power Report, International
      Private Power Quarterly

      McKinsey Private Power Database

      Morgan Stanley Dean Witter, International Investment Research
      (various)

      Target Research, Latin American Power Watch

      U.S. Energy Information Administration, Country Analysis Briefs

      Company and Country website

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(See attached file: Intlmail 3 exhibits.ppt)
 - Intlmail 3 exhibits.ppt