The empowered group of ministers on restarting the 2,184 Megawatt $2.9 billion Dabhol power plant is scheduled to meet on Thursday to discuss the proposed buyout of foreign lenders by Indian financial institutions for $300-350 million.

"The estimated payout by the government will be in the range of $300-350 million," said an official.

Indian banks and institutions, led by the State Bank of India [Get Quote], ICICI Bank [Get Quote], Industrial Development Bank [Get Quote] of India and Canara Bank [Get Quote], have an exposure of over $1.3 billion in the utility company. Over 20 foreign lenders, including Bank of America, Citicorp and ABN Amro, lent $600 million for the two phases of the project.

The ministerial group had earlier finalised the broad roadmap for the revival of the company, specifying that after settling claims and other outstanding issues and restructuring the DPC, it would be transferred by the Debt Recovery Tribunal to a project special purpose vehicle owned by National Thermal Power [Get Quote] Corporation, Gas Authority of India Ltd and Indian financial institutions.

NTPC and GAIL will pitch in with Rs 500 crore (Rs 5 billion) each in equity and will also operate and manage the facility. Indian FIs will also have equity participation in the SPV. If required, additional funds will be raised on commercial terms.

DPC had shut the plant in May 2001 after a dispute with the Maharashtra State Electricity Board. There have been over two dozen court cases and arbitration proceedings, as the stakeholders, including DPC's majority shareholders, General Electric and the Bechtel Group, as well as the foreign lenders, have been trying to recover their investments.