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DPC lenders look at options to get contractors back

BS Banking Bureau

Lenders to the controversial $3 billion, 2,184 mw Dabhol Power project is looking at various options of reviving phase II of the project which has come to a grinding halt as three construction contractors -- Bechtel, GE and Enron Engineering and Construction Company -- have walked out.

"They can be brought back if the payment is made," said sources close to financial institutions. In other words, the lenders may seriously consider disbursals of money to pay off the contractors.

The fate of the power project, which was to be decided by the report of the lenders' engineer -- Stone and Webster -- has taken a different turn, and lenders are now deliberating on the best alternatives available.

The recent development of the three construction contractors could see the lenders' strategy of completing the construction of phase II hitting a road block.

The S&W report is very brief and domestic financial institutions propose to use their in-house expertise to see what best alternatives are possible, said sources. Concerned over the contractors pulling out of the project, lenders view the importance of seeing the project through construction.

"If the project is mothballed today and not completed, when we approach the government for power offtake, they will question the existence of the project," said sources.

There is much at stake with lenders having already disbursed $1.6 billion towards phase II of the project, with 92 per cent of the project completed. "Of the total project cost, 60 per cent goes towards EPC costs. If payment is made to these contractors, they can be brought back," sources said.

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