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DPC will not default on FI interest payments

US energy major Enron's Dabhol Power Company on Thursday assured the Industrial Development Bank of India led consortium of Indian lenders that it would not default towards half-yearly interest payment of the project's phase-I due on September 30.

"DPC managing director K Wade Cline has informed us that the multinational will not default on the phase-I interest loans," financial institution sources told PTI in Bombay on Thursday.

The FIs have an exposure of approximately Rs 12.5O billion, including fund-based and guarantee wise loans, for the 780-mw phase-I project.

The fund-based loans amounted to Rs 2.07 billion and guarantee exposure worth Rs 10.43 billion, they said.

"DPC has said though there were initial apprehensions about the payment, it would be able to do so as the energy major has invoked letter of credit provided to phase-I by the shareholders -- Enron, GE and Bechtel," sources added.

They said as per the agreed arrangement with the FIs, DPC has entered into a 'waterfall arrangement' covering the interest exposure of the institutions.

"Our money is safe in their trustee retention account system," sources added.

In its annual general meeting Wednesday, DPC shareholders discussed the annual accounts for 2000-01 in which the energy major has made a net profit of Rs 2.06 billion.

However, Cline explained to the members that this profit was a 'mere paper profit and on an accrued basis'.

DPC has defaulted towards interest payment worth $20 million to its foreign lenders.

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