reuters.com Fri January 31, 2003 06:46 AM ET By Carlos A. DeJuana and Todd Benson

SAO PAULO, Brazil (Reuters) - Brazil's new president, Luiz Inacio Lula da Silva, has spent his first month on the job doing everything he can to break protocol.

The burly, gruff-voiced former metalworker cries in public and drives his security detail nuts by jumping out of the car unexpectedly to chat with supporters outside the presidential palace. Recently he flew to Europe on a commercial flight to save his penny-pinching government some cash.

Lula, it seems, is surprising just about everyone, supporters and detractors alike.

"The critical question was always Lula's capacity to lead, and so far he has shown that he is quite adept and frankly better prepared than we thought for the presidency," said Riordan Roett, director of the Western Hemisphere Program at Johns Hopkins University in Washington.

Lula, 57, was elected Brazil's first working-class leader in October, winning a landslide in his fourth bid for the presidency. To get there, he had to overcome serious doubts that he -- a former left-wing union leader who never went beyond elementary school -- could aptly steer the world's fourth-most populous democracy and ninth-largest economy.

Spooked by Lula's radical past, financial markets plumbed to record lows before his victory, expecting him to default on the country's $250 billion public debt and drive Brazil -- and perhaps the rest of Latin America with it -- to ruin.

So far, he appears to be proving the skeptics wrong.

"On the economic front, the government has only put out positive signals," said Sergio Abranches, a political columnist and consultant based in Rio de Janeiro.

Lula's top economic chieftains, Finance Minister Antonio Palocci and Central Bank President Henrique Meirelles, have repeatedly stressed the administration's commitment to low inflation and austere fiscal policies, evoking cries of betrayal from the far left of Lula's own Workers' Party.

Investors took notice and sent Brazil's stocks, bonds and currency soaring in the first half of January before the threat of a U.S. war against Iraq cast a pall over global markets.

LULA SUPERSTAR

Brazilians too are rallying behind their new president who is mobbed like a rock star wherever he goes. A poll this week showed nearly 80 percent of Brazilians believe Lula will do a good or a great job of leading the country.

If anything, Lula has spent his first month in office trying to temper those hopes, saying it will take time to narrow Brazil's yawning income gap, create more jobs and get the economy running at a healthy rate.

Analysts say he is spending his political capital wisely.

While the finance ministry is busy cutting spending across the board, Lula spends the bulk of his time talking up social programs like his flagship "Zero Hunger" project. Some of his first acts as president were to suspend a $700 million fighter jet contract, arguing the money would be better used on social programs, and to take his entire Cabinet on a reality tour of Brazil's poorest ghettos to "look misery in the eye."

He has also been careful to cultivate allies in Congress, skillfully brokering the nomination of former President Jose Sarney to lead the Senate over a rival candidate who was more hostile to the president's agenda.

On the international stage, Lula has won praise from anti-globalization protesters and the world's financial elite alike, while leading a push among six nations to negotiate a peaceful end to Venezuela's political crisis.

"Both in terms of the political handling internally and the foreign policy initiatives, what we've seen so far is very encouraging," said Roett.

STRESS POINTS

But Lula, and Brazil, aren't out of the woods yet.

If the honeymoon is to last, analysts warn, Lula is going to have to move swiftly to pass much-needed economic reforms, like overhauling Brazil's costly pension and tax regimes.

Abranches, the political analyst, fears Lula's penchant for opening each policy initiative to debate with the public could hamper the reform efforts.

"Every time you allow more players in the game, the chances of maintaining the status quo increase violently," he said.

Lula will also to have to get even tougher on the fiscal front to reduce Brazil's crushing debt burden, now equivalent to 56 percent of gross domestic product.

One way to do this would be by pushing up the government's budget surplus above the current target of 3.75 of GDP -- something Finance Minister Palocci has said is in the works.

While raising the surplus would certainly win Lula and his economic team more points on Wall Street, fickle financial investors are unlikely to give the new president an easy ride.

"Lula is beginning to acquire credibility, but this process is far from being consolidated," said Paulo Leme, managing director of emerging markets at Goldman Sachs in New York. "The demanding part will come, which is delivering the goods."

www.theleafchronicle.com By JILL NOELLE CECIL The Leaf-Chronicle

GAS RATES

Natural gas rate comparison after local 20 percent increase (based on 100 cubic feet monthly usage)

• Clarksville -- $69.26
• Greater Dickson Gas Authority -- $79.76
• Springfield Gas -- $69.93
• Nashville Gas -- $83.50
• Knoxville Utility Board -- $95.33
• Middle Tennessee Natural Gas -- $70.10

Natural gas will cost an average of nearly $12 more per month in Clarksville after a 20 percent rate increase approved Thursday takes effect Feb. 1.

The city's cost of buying the commodity has increased 130 percent since a year ago, City Gas Manager Tae Eaton told members of the City Council's Gas, Water and Sewer Committee Thursday.

With the increase, Clarksville's natural gas prices will remain lower than other Tennessee cities, Eaton said.

The average household uses 100 cubic feet of natural gas in the month of February. The price for that amount in January was $57.71. In the coming month, the same amount will cost $69.26.

Many other cities change their rates monthly to follow commodity prices.

The committee reluctantly approved the increase, which does not require any further approval.

"Can we get by with 15 (percent increase)?" asked Councilwoman Margie Clark.

Based on current projections, the department would end the fiscal year with about a $300,000 deficit if the increase were 15 percent, said Barbara Harris, comptroller for the Gas, Water and Sewer Department.

Clarksville, along with utilities nationwide, is experiencing the highest natural gas prices since April 2001, said Gas, Water and Sewer General Manager Dwight Luton.

Luton said the department fended off raising rates as long as possible with the hopes that the commodity prices would stabilize.

"We can't control it," Luton said. "If we knew what the market would do, we'd probably work on Wall Street and make lots of money."

Fluctuation has led to two rate increases and two decreases during the last few years. The department raised natural gas prices 20 percent in July 2000 and again by 35 percent in December 2000. It lowered rates 10 percent in February 2002. In June, it restructured the billing tiers, creating a 6 to 8 percent decrease for customers, Harris said.

Luton said it is possible the rates will be decreased as early as the end of the fiscal year, June 30, depending on the natural gas market.

Eaton said several factors are responsible for the recent price spike. Demand for the commodity is higher now because of the bitterly cold winter.

Oil prices are also at play, Eaton said. A strike in Venezuela and concerns about a possible war with Iraq are driving up per-barrel prices.

Higher oil prices translate into higher natural gas prices because several industries switch to natural gas when other fuels get pricey, he said.

Councilman Marshall Ross, who is not on the committee, attended the meeting because of his interest in the market and its effect on the city.

After he studied a chart reflecting the climbing prices charged to the Gas Department, Ross said the rate increase is unfortunate but necessary

"The city's price went up 40 percent since Dec. 10," Ross said.

Jill Noelle Cecil covers city government and can be reached at 245-0262 or by e-mail at jillcecil@theleafchronicle.com.

www.nyjournalnews.com By RANDI WEINER THE JOURNAL NEWS

(Original publication: January 31, 2003) Rockland's public schools are expected to save an estimated $67,000 in fuel costs this month through a program that allowed districts to switch from natural gas to oil heating when petroleum prices plunged late last month.

Despite below-normal temperatures and the instability of the energy market, seven of the county's eight districts have been able to cut costs through a buying consortium they started nearly a decade ago to help control fluctuations in their budgets. The consortium locks in fuel prices in warm weather to protect members against the market-driven prices now expected to jolt home and business customers.

The consortium has been so successful that Orange County asked to join this year, said Marlene Riccobono, assistant superintendent for business for the Rockland Board of Cooperative Educational Services. BOCES coordinates natural-gas purchases.

"As a group, we put a tremendous amount of effort in this, and it's nice to see it pay off," she said. "If we can control the costs on noninstruction items and keep them as low as possible, it's more money for instruction."

For years, the public school districts have joined together to lock in both fuel-oil and natural gas prices to give them the option to shift from one system to the other to save money and to have a backup in case of emergencies. Generally, the districts heat their buildings with natural gas where possible because gas has consistently cost less than fuel oil in recent years.

But this year has been different. Temperatures are running colder than average, and the international oil market has been shaken by a strike in Venezuela that has cut off supplies from that country and by concerns about a war against Iraq, which may further constrict the amount of oil for export.

Michael Donovan, a spokesman for Orange and Rockland Utilities, which supplies natural gas to the districts through local dealers, said that "any time there are problems in the (Persian) Gulf — or in Venezuela — it affects the price of oil."

"If anything affects the supply source, it pushes prices up. There's a lot of anxiety, and that may be having an effect on price," Donovan said. "But the other (factor) is the weather — and if the weather is especially cold, that raises the demand. The more the demand, the greater the price."

Which makes local administrators even more pleased to belong to the consortium: Natural-gas prices were locked in last year, and fuel oil prices were locked in June, school administrators said.

Budgeting for heat at the more than 80 buildings owned by the county's eight public school districts and the Board of Cooperative Educational Services is not an exact science. It begins in March, when most school boards start figuring out their finances for the next school year.

Based on past fuel usage, weather predictions and ideas from consultants, district administrators try to estimate what's needed to keep thousands of children and staff members comfortable during cold weather.

"We have a consultant out of Pennsylvania whose predictions are based on the way the market runs and (who) came up with their best guesstimate," said Ed Dolan, director of facilities for South Orangetown schools. "They thought it was going to be a cold winter. I budgeted extra in oil, especially — like 50 percent more."

In order to make predicting fuel costs more reliable, Rockland's public schools belong to two fuel consortiums. One, through the state Office of General Services, allows the districts to purchase heating oil at a reduced rate. The other, through Rockland BOCES and O&R, does the same for natural gas.

O&R also can request that local schools switch from natural gas to oil in case home-heating requests skyrocket, although that hasn't happened this year, Donovan said.

Although the districts use the consortiums to control prices, each district budgets and pays for its own consumption costs. The contracts with suppliers often include a range of prices to allow for price fluctuations, with a cap on costs that is generally negotiated yearly.

Pearl River school district officials decided to purchase energy independently this year because they got a better deal on energy costs in the summer, although they had been part of the consortium for years.

"This year, we negotiated our rate back in June with Hess," said Sandra Cokeley-Pedersen, district spokeswoman. "We pay a lower rate — $4.15 per decatherm, and the current rate is $5.60 per decatherm. Then there's a $10,000 fee to participate in the consortium, and it just wouldn't have been cost-effective for us."

The dual-heating option has been particularly advantageous for the schools recently, since below-normal temperatures during the winter have followed the record-breaking warm winter of 2001-02.

"Between August and the end of November, our (natural) gas usage had risen 35 to 40 percent due to colder weather," said Clarkstown Schools Superintendent William Heebink. "However, we had been part of a countywide bid in October 2001 which locked in gas prices for us, so the actual per-unit gas cost had decreased 15 percent from 2001-02."

Peter Wichrowski, a meteorologist with the National Weather Service, said winter 2001-02 was the warmest on record, with an average temperature of 41.5 degrees, compared with the normal 34.7 degrees. Winter, he said, is December, January and February for National Weather Service calculations.

Since Dec. 1, temperatures have been slightly below normal, he said. December was 1.3 degrees below normal, and so far, January has been 2 degrees below normal. He said projections for February are for normal temperatures — the average for February is 34.6 degrees — but added that predictions of even a week in advance are only guesses.

Most Rockland districts voluntarily switched to heating oil for January after oil prices plummeted, administrators said. There have been exceptions, of course. Not all schools have the dual heating option, and not all buildings would save money by doing so because of age, size or oil tank capacity.

Dolan said his district's high and middle schools made the switch, while the three elementary schools remained heated by natural gas. If the low temperatures continue, he said, the district may be asked by O&R to switch to oil anyway.

"We're also bracing ourselves for O&R to hit us. I've got a feeling it's going to be a cold February," he said.

Most of the public schools already had budgeted more for heating costs this year because of predictions for both weather and fuel expenses, administrators said.

"We didn't decrease our budget simply because we had two mild winters," said East Ramapo Schools Superintendent Jason Friedman. "We don't like to see ourselves fluctuate on that. We would rather have a consistent funding level. We have protections in terms of cooperative bidding through BOCES for oil and gas. We feel we'll be fine."

Send e-mail to Randi Weiner

www.vheadline.com Posted: Friday, January 31, 2003 - 3:03:49 AM By: Robert Rudnicki

Movimiento Quinta Republica (MVR) deputy Nicolas Maduro, one of the government's negotiators in the Organization of American States (OAS) led peace talks, has rejected Coordinadora Democratica's call for a constitutional amendment that would see President Hugo Chavez Frias' term in office cut to four years from six years and permit a revocatory referendum before the current earliest possible date of August this year. 

"We will not accept any change to the Constitution ... at no point have we accepted to have this topic discussed in the negotiations."

However, the deputy said the negotiators will sit down and analyze the Coordinadora Democratica proposal to see if it is constitutional, warning that it could be thrown out for what it is trying to achieve, revoking the President's and the National Assembly's mandates. 

As for the amnesty that some of Petroleos de Venezuela's (PDVSA) workers have been calling for so they can give up support for the opposition's work stoppage and return to work, Maduro ruled out any such move, insisting that those involved should remain outside of PDVSA and face punishment for their actions.

www.vheadline.com Posted: Friday, January 31, 2003 - 2:50:54 AM By: Robert Rudnicki

Foreign (MRE) Minister Roy Chaderton Matos says that President Hugo Chavez Frias and his government will not accept a Coordinadora Democratica proposal for a constitutional amendment that would cut the President's term to four years from six years, which would allow early elections to take place, as under the current Constitution, the earliest a referendum can be held in mid-August, half way through the current term.

"Just because the government wants everything to happen constitutionally, doesn't mean we have to support the initiative."

Not only will the government not lend its support to the amendment, it will also not assist in activities necessary to bring the referendum about, such as the collection of signatures, of which in excess of 1.5 million are needed for the Constitution to be amended.

Opposition leaders have said they will propose the amendment during meetings with the Friends of Venezuela group which has now arrived in Caracas. However, before any vote can take place, a new National Electoral College (CNE) board will need to be appointed, which could take up to two months.