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May 9, 2001
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Money > Business Headlines > Report May 9, 2001 |
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Dabhol lenders willing to back PPA terminationBS Banking Bureau The Maharashtra government's tough stance, combined with the Centre's silence on honouring its counter-guarantee for December last year which has been invoked by the Dabhol Power Company, has left the lenders to the project with no choice but to say yes to DPC's plan of serving the power purchase agreement termination notice. "If the governments (Centre and state) do not come forward to resolve the crisis, it will be difficult for the lenders to convince the company to keep the decision of terminating the PPA in abeyance. We had got a three-week reprieve and we will not be in a position to stretch it further," said a source among the lenders. The deadline expires on May 15. At the DPC board meeting in London in the last week of April, the resolution on PPA termination was passed by a 7:1 vote. The lone voice of dissent was that of the representative of the Industrial Development Bank of India on the DPC board. The three Maharashtra State Electricity Board representatives were not allowed to vote since they were an interested party. "At best, the lender's representative will abstain from voting at the next meeting. We have no moral rights to oppose the move," said another source. The only positive development for which the lenders can claim credit for is MSEB's payment of Rs 1.34 billion, that too, under protest. "The escrow account with Canara Bank has not yet been activated. A string of clearances has been pending with the state government. The Centre is also not willing to honour its counter-guarantee. The lenders have not been able to achieve any thing," sources added. DPC had invoked the political force majeure clause in its contract with the board. MSEB is now arguing that the invocation of this clause has absolved DPC of all its liabilities. The DPC board authorised the managing director of Enron India to issue a notice for terminating the power purchase agreement to MSEB and the state government. Serving of the notice requires backing of the lenders who have an exposure of about $2 billion in the project. Powered by YOU MAY ALSO WANT TO SEE:
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