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AES keen to take over Dabhol Power

Santosh Tiwary

Global power giant AES Corporation is interested in taking over the Enron-promoted Dabhol Power Company. The $6.69 billion power major has already held discussions with the lenders of the project on the modalities of the takeover, top AES executives told Business Standard.

Sources said the AES brass in US is expected to visit India next month to hold detailed discussions with the government on a possible takeover of the $3 billion Dabhol project.

They added that AES, at a recent meeting with the domestic lenders led by Industrial Development Bank of India, discussed the modalities of the takeover. When contacted, a DPC spokesperson, however, refused to comment.

According to AES sources, the move was part of its global strategy to increase the company's presence in India. At present, AES holds 49 per cent stake in Orissa Power Generation Company and owns Cesco, the distribution company in Orissa.

Interestingly, AES too has encountered problems in recovering dues to the tune of Rs 2.09 billion from the state-run transmission company, Gridco. The company is considering various options to recover its dues. Sources said AES was keen on resolving the payment tangle and had no intention of withdrawing from the state.

Enron, however, in line with its global strategy to focus more on energy trading, has now appointed Arthur Andersen to value the business worth of all investments in the country. Having already exited from announced plans like the broadband venture, the US major's move insinuated its intention to wind up the Indian operations.

The company has also asked real estate consultants Jones Lang La Salle to undertake valuation of all its real estate investments in the country.

While Enron holds 65 per cent equity in DPC, Bechtel and General Electric hold 10 per cent each with the balance 15 per cent held by MSEB.

The project has a debt equity ratio of 2:1 with Enron's equity contribution in the $1 billion paid-up capital at $650 million. Dabhol Power Company, which has completed the 740 mw first phase of the project, had recently served a pre-termination notice to the Maharashtra State Electricity Board. The 1,444 mw second phase of the project currently hangs in limbo with the state-appointed negotiating committee working on lowering the overall tariffs.

AES has stake in 166 plants totalling over 58,000 mw in 25 countries worldwide. It has assets in excess of $35 billion, having placed over $18 billion of financing with commercial banks, export credit agencies, multilateral institutions and the public market.

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