The Hindu Business Line : Dabhol lenders to discuss debt options for revival

BANKS and financial institutions that have given loans to Dabhol Power Company (DPC) will meet in Singapore early next week to discuss restructuring the company's finances, including the extent to which they might have to forego interest to revive the project.

Indian lenders, who have an exposure of around Rs 6,200 crore to the 2,100 MW, twin-phase power project and five-million-tonne LNG terminal, will meet foreign lenders in Singapore on April 26, according to an institutional source.

The project has been lying idle since May 29, 2001. The 658-MW phase one is complete while only seven per cent of the 1,444-MW phase two remains incomplete.

GE and Bechtel, which recently became majority owners of DPC when they bought out Enron's stake in some overseas holding companies in a US bankruptcy court proceeding, have already made it clear that they will accept $260 million as equity compensation.

Before Enron went bankrupt, it had valued its 65 per cent ownership in DPC at $1.2 billion. A court had admitted GE and Bechtel's request to buy 49 per cent equity in DPC for $20 million (around Rs 95 crore) from Enron as part of a comprehensive settlement between the three companies and OPIC, a US political risk insurer, including mutual releases of claims, share purchases and inter-party agreements.

Of the $260-million equity, $20 million will be towards Enron's shares while $120 million each would be for the stakes of GE and Bechtel. They have also asked to be paid $140 million as contractor charges.

"Lenders will now have to decide how much debt they would want to pass on to new buyers when the project is restructured," said a source.

Indian lenders have been in talks with the Reserve Bank of India (RBI) for permission to treat DPC as a special case which would keep it from being classified as a non-performing asset and having to provide for it.

While ICICI Bank, SBI and Canara Bank have reportedly provided for their exposures, IDBI has not yet provided for the DPC loan, the institutional source said.

According to another source, this is one of the reasons why Indian lenders chose not to enforce the pledge under which they could take over DPC's shares.

As per loan agreements, DPC's equity is pledged with Indian lenders. Invoking the agreement would have meant that they would have to treat the non-operational project as an NPA and hence provide for it.

When contacted, Mr Phiroze Nagarwala, Managing Director, Bechtel Enterprises India, said: "None of these developments change our fundamental desire to negotiate a fair settlement with the Government of India. We are continuing our discussions with the Government of India."

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