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Lenders refute Enron may halt India plant sale

Indian lenders to bankrupt energy giant Enron Corp's Indian power project on Wednesday said that due diligence by two potential buyers will start soon, refuting a news report saying the process of selling the $2.9 billion plant could soon grind to a halt.

"The due diligence by both interested parties could start in the next 10 days," an official of one lender, who requested anonymity, told Reuters.

Indian power utilities BSES Ltd and Tata Power Company have expressed interest in acquiring the giant 2,184 MW power plant.

State-run gas marketing firm Gas Authority of India Ltd has also shown interest, possibly as part of a joint bid with Tata Power.

Financial daily The Economic Times, in an unsourced report on Wednesday, said "the Houston-based company has told overseas lenders that it would stop co-operating in the due diligence process to sell its stake if they take action to call in their loans."

No official at either Enron or at Dabhol Power Co, the Indian subsidiary created to build and operate the plant, were available to comment on the report.

The Dabhol power plant, located about 250 km (155 miles) south of Mumbai, has lain idle since June due to a tariff dispute with its sole customer, the Maharashtra State Electricity Board, the government-run monopoly distributor of electric power in the area.

Enron owns 65 per cent of Dabhol. General Electric Co and construction firm Bechtel Corp each own 10 per cent and MSEB the remaining 15 per cent.

The plant was almost complete when construction on the 1,444 MW second phase was halted after the MSEB fell $240 million behind in payments for power provided. The 740 MW first phase began operating in May 1999.

The official of the Indian creditor dismissed the The Economic Times report, saying both Indian and foreign lenders were keen to quickly sell the project to prevent their loans from turning bad.

"A delegation from the Overseas Private Investment Corporation is in India and even they want the issue to be solved amicably," the official said.

The US-based OPIC is one of the many multilateral funding agencies that have lent money to Dabhol.

The lenders have said a final valuation of the project will be arrived after the due diligence. Indian newspapers have reported that Enron wants $1.0 billion for the foreign stake, but Indian bidders were prepared to pay only half that amount.

Indian financiers -- led by the state-run Industrial Development Bank of India, ICICI Ltd and the State Bank of India -- have an exposure of about $1.4 billion in loans to the project.

Foreign lenders -- which include Citibank, Bank of America and ABN AMRO -- have lent about $500 million.

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