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Tatas, BSES set to bid for DPC, revive project

Indian power utilities BSES Ltd and Tata Power Company will bid to take over the $2.9-billion Indian power station of ruined energy giant Enron Corp within 60 days, bankers said on Friday.

The Dabhol Power Company, its Indian and foreign creditors as well as the two bidders agreed on the process to resurrect the stalled power project after two days of talks in Singapore.

Meanwhile, PTI reported that a confidentiality agreement for the sale of DPC will be signed next week by the energy major with Tata Power Company and BSES Ltd, as talks ended on a positive note in Singapore.

"Enron, GE and Bechtel have agreed for carrying the due diligence of their $3 billion plant and will sign the confidentiality agreement to be finalised by the lenders, early next week," PTI quoted a senior financial institution official as saying on Friday.

"The two companies have agreed to complete due diligence and make their final offers in 60 days. All the parties will work towards that end," said P P Vora, chairman and managing director of the Industrial Development Bank of India, one of the lead lenders to the project.

Enron owns 65 per cent of Dabhol, which has an almost complete 2,184 megawatt electricity project in the western Indian state of Maharashtra.

Besides Enron, General Electric Co and construction firm Bechtel Corp each own 10 percent and the Maharashtra State Electricity Board, a state-owned utility, holds the remaining 15 per cent.

Indian newspapers have reported that Enron wanted $1.0 billion for the foreign stake, but that the Indian bidders were only prepared to pay half of that.

Asked if more bidders would be allowed to bid for the project, a banker who attended the meeting said it was a "hypothetical question".

IDBI's Vora said there were only two offers as of now.

Dabhol stopped work on the second phase of the power plant, which is India's biggest foreign investment, following a dispute with the state electricity board, the plant's sole customer.

The plant has been idle since June, and Dabhol has laid off all of its employees. Enron has said it wants to exit the project, which would involve sales of the stakes of all three foreign shareholders.

Indian financiers -- led by state-run term lender IDBI, ICICI Ltd and the State Bank of India -- have exposure of about $1.4 billion in loans to the project.

Foreign lenders -- which include Citibank, Bank of America and ABN AMRO -- have lent about $500 million to the project.

The meeting was the first since Enron Corp filed for Chapter 11 bankruptcy protection in the United States last week.

PTI, meanwhile, said that Enron India managing director K Wade Cline, however, said the multinational had assured both the Indian and foreign lenders that he would apprise the other two shareholders, GE and Bechtel, which hold 10 per cent stake each in DPC, before coming to a final decision.

He said that Enron "will communicate its final decision to the financial institutions once the other two shareholders concur for a due diligence."

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