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FIs trying to seize Dabhol assets, says Enron

S Ravindran

Enron Corporation has accused domestic financial institutions of attempting to seize its entire equity in the Indian subsidiary, Dabhol Power Company.

A senior Houston-based Enron executive told Business Standard this had delayed the process of selling its stake in Dabhol Power Company.

John Ambler, vice-president, international press relations, Enron Corp, said in response to Business Standard queries, "For some time, it has been clear to Enron that the Indian financial institutions would attempt to seize all of our substantial equity value in the Dabhol power project, leaving Enron and its stakeholders without an opportunity to recover any of our very substantial investment."

Enron holds a 65 per cent stake in the Indian arm, and two other US-based multinationals, General Electric and Bechtel, hold 10 per cent each. The Maharashtra State Electricity Board holds the remaining 15 per cent.

Enron Corp has said the latest action of the institutions in moving the Bombay high court was in line with the alleged move to usurp control of Enron's interests in Dabhol Power Company.

The startling accusation comes at a time when the lenders to Dabhol Power Company are trying to find a buyer for the 85 per cent foreign equity stake in the company.

Enron has also said that since assurances from lenders were not forthcoming on seizure of the equity, the company was reluctant to proceed with the due diligence and sale process.

Ambler said with the recent filing of Chapter 11 bankruptcy in the US by various Enron entities, further decisions were subject to inputs from creditors and court approval.

"Consequently, rather than continue to debate these points, we intend to devote our attention to developing a restructuring plan and preserving value in the estate for Enron Corp creditors," Ambler further explained.

A senior official of a financial institution, however, rebutted these allegations.

"There was never any question of taking over the equity. We obtained an injunction from the Bombay high court for appointing a receiver for the limited purpose of care and preservation of the assets," the official said.

The Bombay high court ruled last week on a suit filed by the institutions that none of the claims relating to DPC should be transferred to New York courts, where the companies holding the Enron stake in DPC, Enron Mauritius and Enron India, filed for Chapter 11 bankruptcy. The domestic lenders also obtained permission to appoint a receiver.

The financial institutions led by Industrial Development Bank of India have a combined exposure of about Rs 62 billion to the 2,184 mw Dabhol power project and are trying to find a buyer for the equity.

A number of companies like Reliance, Tata Power, BSES, Gas Authority of India, Shell and Gaz de France are in the race for acquiring this stake.

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