recent news ,
 I skipped your name on this one.  We are fully engaged on both these issues=
. =20
---------------------- Forwarded by Orlando Gonzalez/SA/Enron on 09/05/2001=
=20
16:26 ---------------------------


Orlando Gonzalez
09/05/2001 11:36
To: Rebecca McDonald/ENRON_DEVELOPMENT, John J Lavorato/Enron@EnronXGate,=
=20
James A Hughes/ENRON_DEVELOPMENT
cc: Joe Kishkill/SA/Enron@Enron, sergio.assad@enron.com, Keith=20
Miceli/Corp/Enron@Enron, Mark Metts/Enron@EnronXGate, Mitchell=20
Taylor/Enron@EnronXGate=20

Subject: recent news

Attached is the summary of Dennis Bakke's comments on AES investment plan f=
or
Brazil.  Apparently these were  on CNN.  These are the same positions we an=
d=20
the
Investors Group have been discussing with government officials.=20
=20
 The second article is on the rationing situation which will result in cuts=
=20
of over 20%
over the next 6 months.

We are preparing a summary of the impacts on our business for discussion=20
with =20
you this week.


AES Suspends Brazil Investments
US-based power company AES Corp. has put on hold plans to invest between
US$2 billion and US$2.5 billion on energy projects in Brazil, alleging that=
=20
the
government=01,s policy on pricing is jeopardizing its operations.
AES President Dennis Bakke, on a brief visit to Brazil, said the company
suspended indefinitely its plans to build as many as 10 thermoelectric powe=
r
plants.
Bakke criticized Brazil's electricity sector regulator Aneel for maintainin=
g=20
an
energy policy that charged what Bakke said were ``unrealistically low price=
s=20
for
consumers,'' forcing AES to carry the burden of rising costs.
He said investments would remain on hold until the government came up with
a solution.
AES has already invested US$6 billion in Brazil, primarily in electricity
projects, making it one of the country's top private foreign investors.

Energy Blackouts To Begin June 1
The government announced Tuesday that it will begin a policy of programmed
blackouts starting June 1 as part of its energy rationing plan.
Mines and Energy Ministry officials had at first hoped to delay any blackou=
ts
until August, concentrating first on a program to induce consumers to reduc=
e
energy use. The critical level of reservoirs in the country=01,s main=20
hydroelectric
plants, however, forced Tuesday=01,s decision to accelerate the blackouts w=
hich=20
will
last until the end of November when the rainy season begins.
The blackouts will occur in the Southeast, Central-West and Northeast regio=
ns
of the country. At the same time the government will introduce a program=20
providing
incentives to consumers to reduce their energy use. The goal of the plan is=
=20
to lower
electricity consumption by 20%.
Although the general outline of the rationing plan was announced Tuesday, t=
he
details have yet to be worked out due to differences between the government
ministers who compose the National Energy Policy Council (CNPE). A new
meeting of CNPE was set for May 23 by which time it is hoped that an agreem=
ent
will have been reached on how to implement the plan.
The initial proposal from Mines and Energy was for a 15% reduction for
industry, 20% for residences and between 18% and 20% for commerce. The
ministries of finance, planning and development, however, asked for more ti=
me=20
to
consider the impact of the energy cuts.
The principal concern among government officials is with the impact on the
economy of the proposed blackouts. According to a study to be released toda=
y=20
by
the Get?lio Vargas Foundation, a 20% energy cut would slow economic growth =
by
1.5% of gross domestic product and would have a direct impact on 850,000 jo=
bs.
Production costs for industry would rise 1.5%, government tax receipts woul=
d
decline by R$6.6 billion (US$2.9 billion) and Brazil=01,s trade deficit wou=
ld=20
increase
by US$1.6 billion, according to the study. The study=01,s authors also said=
=20
there was
no guarantee that the effects of the program would be limited to this year.
Business leaders reacted with apprehension to the prospect of obligatory
blackouts. Most defended a policy of separate reduction goals for each=20
industrial
sector, sparing industries that depend heavily on electricity. The S?o Paul=
o=20
State
Federation of Industries (Fiesp) said that sectors who are major consumers =
of
energy such as steel should be exempted from any rationing.
While details were lacking in the government=01,s plan, officials said that=
 the
administration of the energy cuts would be placed in the hands of local=20
utilities
which would determine the locations and schedules for daily blackouts.=20
According
to national energy secretary Afonso Henriques, a 20% reduction in consumpti=
on
would amount to a cut of six hours a day.
richard.shapiro@enron.com