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Dabhol may be sold in two parts

Hemangi Balse & S Ravindran

The Dabhol Power Company may be sold into two parts - the near complete 2,184 mw power plant and the 2.5-million-tonne LNG facility.

"This is the thinking that is prevalent among the lenders at present but no final decision has been taken on the issue," said a source in the domestic lenders consortium.

This sale could take place through two routes. First, assets comprising the power plant and the LNG facility could be sold separately. Second, these assets could be transferred to two separate companies and then sold. DPC would then be a shell company with only the liabilities devolving upon it.

The prospective bidders would prefer the sale through the splitting up route instead of plain vanilla sale of DPC, sources said. This is because the core competence of some companies is power and that of others is gas.

For, instance BSES and Tata Power are power companies, while the four others which have shown interest in the project - GAIL, Shell, Gaz de France and TotalFinaElf are focussed on gas. Such a split may also help in better price realisation.

Another major plus is that the new owners of the company will not have to contend with the slew of legal cases that DPC is currently embroiled in.

The argument against a separate sale is that DPC enjoys a number of domestic tax concessions.

Such sops will not be automatically available to the new owners. Also, LNG can be imported at concessional customs duty only if it is used for supplying power. A final decision will be made taking into account all these issues, said sources.

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