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Enron can't sell DPC till loans are settled: FIs

Taking a tough stand on recovery of their multi-billion loans from Dabhol Power Company, following its promoter, Enron Corp's, bankruptcy, IDBI led financial institutions have said the US multinational will not be allowed to sell its Indian arm unless their loans for the $3 billion project are settled.

"Enron is free to sell its stake in DPC to anybody, anytime and anywhere, but only after it settles the dues, running into billions, to the Indian lenders," a senior FI official said in Bombay on Thursday.

Following its bankruptcy, Enron Corp has either been pulling out of its worldwide operations or trying to reorganise them to raise funds.

Holding 65 per cent stake along with GE and Bechtel who have 10 per cent each in DPC, Enron has said it wants to exit India, but two potential Indian buyers -- power utlities Tata Power Company and BSES Ltd -- have not yet signed the confidentiality agreement to carry out due diligence for the distressed 2,184 mw project.

"The reason is clear. TPC, BSES and FIs are closely monitoring the developments. Of course, they will try a hand on hard bargain since the value of DPC was depreciating due to its distressed sale," he said.

The IDBI led FIs have an exposure of upto Rs 62.04 billion and unlike the foreign lenders who have pumped in $600 million in the vexed project, they would not be able to get their funds back in case of a default by DPC.

However, the official did not deny that the FIs would have to take a hit on their books in 2002 to the tune of over Rs 6 billion, if DPC does not pay interest for December 2001 and March 2002.

Enron Corp's bankruptcy would have a lesser impact on the Indian financial institutions, he asserted.

"If these loans remain unpaid, we have the right to exercise the option of taking over the plant as our funding has been on a non-recourse basis and DPC's assets and liabilities are already pledged with us," he added.

The IDBI chairman, P P Vora, had recently reiterated that DPC was not an 'NPA' and that the company had paid its quarterly interest for phase one loans by September 30.

The official said DPC's daily interest chargeable is upto Rs 30 million and another quarterly payment is due on December 30.

However, a senior analyst following Enron Corp's bankruptcy said that IDBI and others might need new capital as a result of their DPC exposure if the loans 'tresspass' into being non-performing assets.

"This could create a problem as FIs and banks should be able to meet minimum capital requirements and provisioning standards," he said.

The IDBI has an exposure of upto Rs 21.21 billion, ICICI-- Rs 14.73 billion, SBI--Rs 17.49 billion, IFCI- Rs 4.54 billion, Canara Bank-Rs 4.07 billion in the project which has stopped generating power since June, after Maharashtra State Electricity Board refused to offtake power, alleging that the multinational had misrepresented its capacity.

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