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Domestic lenders to hold talks with parties keen on DPC

Santosh Tiwary
& Sidhartha

Domestic lenders led by the Industrial Development Bank of India will hold talks with the parties showing interest in taking over the controversial 2,144-mw Dabhol power project.

Top financial institution executives said that the lenders were currently working on two plans to save the project - with and without Enron.

Enron, which controls 65 per cent of the Dabhol Power Company equity, said it was willing to sell the project to either the government or the domestic lenders.

FI sources added the lenders would discuss plans with the interested parties to restart generation at the first phase, and complete and run the second phase. They also said that as both the government and the lenders were not in a position to takeover the project, the association of a third party had assumed significance.

Global power giant AES Corp, Tata Power and the Hindujas have so far evinced interest in taking over the project. FI officials said the revival plan for the project would be discussed with those with serious intentions to takeover DPC.

Sources added that the second phase of the project was almost over and only the testing part had to be completed when the work was stopped in June this year. They, however, added that $600-700 million investment was still required in the second phase.

The domestic lenders had asked the foreign lenders to the project to wait for the revival package being worked out currently by them before taking a decision on pulling out, he added.

According to sources, the revival package would focus on offtake of power from the project and lowering of tariff. States including Rajasthan, Gujarat and Madhya Pradesh have already shown interest in the purchasing power from DPC but have sought that the tariff be brought down to below Rs 3 per unit.

Sources added that all the areas concerning the project would be considered for lowering tariff. "The revival plan would outline the sacrifices to be made for this purpose by the concerned parties," a top FI executive said.

FI sources added that while the Maharashtra government would have to withdraw all pending litigations, the FIs would consider lowering the interest rate from the present 16-per cent level.

They also said that the Centre and the state government too would have to sacrifice some revenue on account of a reduction in customs duty and sales tax, respectively.

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