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Lenders may take over DPC assets

S Ravindran

Lenders to the beleaguered Dabhol Power Company will take over the assets of the company if the US promoters - Enron, General Electric & Bechtel - refuse to sign the contentious sponsors co-operation agreement, sources in the lenders consortium said.

Lenders and the US-based promoters of DPC have to ink such an agreement before disposing the 85 per cent equity held by them.

At present, the sponsors agreement is dogged by how proceeds from the sale would be utilised.

"Enron, General Electric and Bechtel are keen to know right away how proceeds from the sale would be utilised. More importantly, they want to know how much of the sale proceeds will accrue to them," sources said.

"Lenders, on the other hand, want to discuss the utilisation of sale proceeds only after the sale goes through. Whatever, the two sides decide will have to be incorporated in the sponsors co-operation agreement," sources explained.

The lenders are awaiting a formal communication on the matter from Enron, General Electric and Bechtel.

"If they decline to sign the sponsorship agreement, we will have no choice but to take over the assets of the power project," sources in the lenders consortium said.

A number of companies, including BSES, Tata Power Company, Reliance, Gas Authority of India, Gaz de France and Shell have submitted expressions of interest for the stake.

And though the companies have already inked confidentiality agreements, the due-diligence process is yet to be kicked off.

The primary reason for this is the disagreement over the sharing of sale proceeds.

The US companies decided to exit the $3 billion, 2,184 mw power project following a payments dispute with the Maharashtra State Electricity Board, the sole buyer of power generated by DPC.

Financial institutions and banks, led by the Industrial Development Bank of India, have a combined exposure of about Rs 62 billion to the project, facilitating the sale.

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