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DPC likely to be split if bid succeeds

BS Corporate Bureau

Reliance Industries is most likely to split the assets of the Dabhol Power Company if either BSES or the special purpose vehicle set up by RIL emerges successful.

Answering queries on why RIL had put in a second bid, when RIL has always maintained that BSES will spearhead all its interests in the power sector, RIL managing director Anil Ambani said the decision was based on the "array on bidders who seemed interested in either DPC's gas business or its power business".

"We therefore decided to bid through two firms. The gas business is in RIL's domain whereas the power business is BSES's domain," Ambani said, adding, "BSES has the best skills in the power business." RIL has a 34 per cent stake in BSES.

While Ambani refrained from outlining his strategy, assembled analysts said Ambani's gameplan was clear in that if either company gets DPC, the two RIL arms will split the company along the domain knowledge which they excel in.

"In all likelihood, BSES will retain DPC's power business, which adds substantial muscle to its own generating capacity, while the gas business which includes the landing jetty, liquefaction facilities and the like at Dabhol will be of tremendous interest to RIL," an analyst present at Ambani's presentation said.

"I think RIL has a very clear strategy of focusing on areas where they are confident and have the skills," another analyst said at the sidelines of Ambani's presentation.

"It is quite clear that RIL doesn't want to get into power on its own nor would it want BSES to be dabbling in the gas business. So it is quite clear that they will split the company into two, which gives them the leverage to run two businesses in two diverse markets," he said.

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