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DPC sale to be decided mutually by Enron, Tatas and BSES: IDBI

The Industrial Development Bank of India on Monday said the selling price of the erstwhile US energy major Enron's troubled Dabhol Power Company will be decided by the two city-based utilities Tata Power and BSES Ltd with the multinational through 'mutual negotiations'.

"It is expected that further steps in this regard will be initiated by DPC, BSES and Tata Power in the next few days to begin the due diligence, after signing a confidentiality agreement with DPC," IDBI chairman and managing director P P Vora said in a statement in Bombay.

He said Indian financial institutions including IDBI, ICICI, State Bank of India and IFCI, who have an exposure of over Rs 60 billion in DPC, along with the Centre, MSEB (Maharashtra State Electricity Board) and Maharashtra government, could consider certain incentives to prospective new sponsors with a view to make the project more attractive and bring down the tariff to a reasonable level.

"Brief features of an incentive package prepared by a committee appointed by the Centre were also discussed," Vora said.

DPC officials also clarified various technical and operational issues, which will need to be resolved for smooth management transfer and successful operation of the plant by the new sponsors, it said.

The three day Singapore meeting of the FIs with DPC and the private utilities also included officials from National Thermal Power Corporation and Central Electricity Authority to to provide technical advice, the chairman informed.

The issues discussed included completion of the 1,444 mw phase-II of the project and the cost thereof, sale of Enron, Becthtel and GE's shareholding in DPC (aggregating 85 per cent of total capital) to either of the prospective new sponsors like BSES and Tata Power.

"Based on these discussions and clarifications provided by IFIs and DPC, both BSES Ltd and Tata Power have expressed deep interest to purchase the 85 per cent shareholding of DPC subject to certain conditions, inter-alia, on price of shares and other related technical and operational issues," Vora said.

After their return from the three-day Singapore meet, a senior FI official had confirmed that "the road map was now clear. Tata Power and BSES will formally look into the financial books of DPC, its loans, sponsors and other assets and most importantly the legal wrangles and then make a final bid for the distressed company".

Interestingly, the erstwhile energy major had informed the FIs a few days ago that it was ready to take a 30 per cent hit on its equity at around $850 million from the initial offer price of $1.2 billion.

However, both Tata Power and BSES have demanded a 50 per cent reduction in Enron's offer. In fact, the Tatas are believed to have put forward an amount of $600 million for the $3 billion power plant in Guhagar, Maharashtra.

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