Financial Daily from THE HINDU group of publications
Tuesday, Apr 23, 2002
Industry & Economy
Corporate - Corporate Disputes
Dabhol: GE won't budge on surety
MUMBAI, April 22
THE Dabhol power project is likely to remain mothballed for many more months with the equipment supplier and stakeholder, GE Power Systems, refusing to co-operate in the sale process without a surety on its investment and equipment cost.
According to sources, the company has categorically told lenders that it cannot be likened to or treated like the bankrupt Enron.
Bechtel too has, along with GE, reportedly taken a firm and consistent stand that their interests should be safeguarded and investments recovered.
GE, the sources said, also possesses certain software without which the plant cannot be operated. The company is understood to have told IDBI, leader of the lenders' consortium, in no uncertain terms that the plant "will remain shut until its interests are protected."
GE officials could not be contacted despite repeated attempts. The company also did not respond to an e-mailed questionnaire.
The companies that had shown interest in buying the project appear to be frustrated by the delay. Enron's bankruptcy proceedings in US have muddled the DPC sale further and has already prompted IDBI to get a receiver appointed by the Mumbai High Court, mainly to "protect jurisdiction." A three-day-long conclave of all lenders, domestic and foreign, to DPC here a few days ago remained inconclusive with just a decision for fresh appointment of financial and technical advisors.
According to an official of a company that had expressed interest to buy DPC, the plant is decaying and after some time may be of no use. One prospective bidder, on condition of anonymity, told Business Line that it could take months or even years before the issue is resolved. Another interested party also concurred saying he did not see the issue getting resolved in the near future.
IDBI had tried to involve NTPC to re-start the plant so that some cash flow is generated. The plan, however, appears to be stillborn as the primary issue of purchase of power remains unresolved. The Maharashtra State Electricity Board (MSEB) is no mood to oblige IDBI which has been trying to persuade it to re-start power purchase. MSEB has told the financial institution that it would not purchase DPC power unless it gets certain written assurances from IDBI.
The State Government, with its precarious financial position, is unlikely to help. In fact, the State Pollution Control Department wants to levy a penalty of Rs 100 crore on DPC for certain environment protection norms violations.
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