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Shaw Reaches Agreement on Harquahala and Covert Projects

BATON ROUGE, La., Apr 14, 2003 (BUSINESS WIRE) -- The Shaw Group Inc. (NYSE: SGR) ("Shaw" or "the Company") today announced that after extensive negotiations it has agreed upon terms with PG&E; National Energy Group ("NEG"), the project entities and their lenders for the settlement of claims related to the completion of the Harquahala and Covert power plant projects.

Under the proposed settlement, parties will enter into a new agreement, which provides for a fixed-price contract to complete the projects under revised schedules, and an increase of $65 million over the original target prices. As a result of the agreement, the Company will realize a $19 million after-tax charge relating to the settlement of claims for the completion of the Harquahala and Covert power plant projects.

Shaw, through its subsidiary Stone & Webster, Inc., is the EPC contractor on the two projects. The Company has been in discussions with NEG and its lenders since October 2002 regarding NEG's ability to assure payment to the Company on the projects. Shaw recently announced the termination of the contracts for these projects, but continued work while in negotiations.

"Over the last several months, the management teams of NEG and Shaw, along with representatives of NEG's lenders, have been working diligently to come to a mutually agreeable resolution," stated J. M. Bernhard, Jr., Shaw's Chairman, President and Chief Executive Officer. "While we have experienced numerous challenges on these projects due to NEG's financial difficulties, we are pleased to have reached an agreement that eliminates litigation risk for all parties involved and allows Shaw to complete these projects with reduced uncertainty."

The Company, NEG, the project entities and the lenders have executed a term sheet which is subject to definitive documentation. The parties are working diligently to that end and expect this settlement to be consummated before April 30, 2003.

Shaw expects to complete Harquahala by September 2003 and Covert by December 2003.

The Shaw Group Inc. offers a broad range of services to clients in the environmental and infrastructure, power and process industries worldwide. The Company is a leading provider of consulting, engineering, construction, remediation and facilities management services to the environmental, infrastructure and homeland security markets. Shaw is also a vertically-integrated provider of comprehensive engineering, consulting, procurement, pipe fabrication, construction and maintenance services to the power and process industries. The Company is headquartered in Baton Rouge, Louisiana with offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region and employs approximately 17,000 people. For more information please visit our website at .

For more information on The Shaw Group Inc., please contact Robert L. Belk, Executive Vice President and Chief Financial Officer, at 225-932-2500.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained herein that are not historical facts (including without limitation statements to the effect that the Company or its management "believes," "expects," "anticipates," "plans," or other similar expressions) and statements related to revenues, earnings, backlog, or other financial information or results are forward-looking statements based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions and are subject to change based upon various factors. Should one or more of such risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A description of some of the risks and uncertainties that could cause actual results to differ materially from such forward-looking statements can be found in the Company's reports and registration statements filed with the Securities and Exchange Commission, including its Form 10-K and Form 10-Q, reports and on the Company's web-site under the heading "Forward Looking Statement". These documents are also available from the Securities and Exchange Commission or from the Investor Relations department of Shaw. For more information on the company and announcements it makes from time to time on a regional basis visit our web site at

The Shaw Group Inc.
Robert L. Belk, 225/932-2500
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"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SHAW GROUP INC's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

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