Domestic creditors to foreclose DPC assets

Mumbai: The domestic creditors of the troubled Dabhol Power Company (DPC) are planning to foreclose the assets of DPC. Industrial Development Bank of India (IDBI), the main creditor to the power project, will move the Bombay High Court to seek its permission for seizure and sale of the beleaguered project soon.

Senior financial institutional (FI) officials say the recently-formed committee, comprising both domestic as well as foreign creditors like IDBI, ABN Amro, Bank of America and Citibank, has failed to find out any final solution for the long-pending DPC crisis. “The domestic lenders have no other way but to approach the high court to foreclose DPC’s assets for the sale of foreign equity holding in the project.”

Says IDBI executive director A K Doda: “The final decision has not been taken, but asset foreclosure is the most likely route. By foreclosing the assets, the creditors hope to speed up the sale of DPC’s 85-per cent foreign stake.”

Sources close to the development say though the domestic creditors had plans to approach the high court seeking its nod to take over DPC by foreclosing its asset, US assistant secretary for states Christna Rocco and Overseas Private Investment Corporation (OPIC) president Peter Watson forced the domestic creditors to stop the foreclosure procedures and advised them to form a special committee, consisting of members of the domestic and foreign lenders, to solve the crisis.

The FI sources say the committee’s discussion did not reach anywhere and the equity sale is nowhere in sight. “Currently, the domestic creditors are in the process of convincing OPIC to go for the foreclosure of DPC’s assets. The domestic lenders need OPIC’s support to foreclose the asset as the US risk cover agency had given a $200-million political risk cover to DPC.”

The sources add that the domestic lenders, who have an exposure of Rs 6,200 crore in the project, have to protect their interests and since the court receiver has been appointed to take care of the day-to-day operations of the company, the high court might allow the creditors to take over DPC’s assets and sell it to a third party.

Bechtel Corporation, which holds 10 per cent equity in the doomed power project, has, in the meantime, said it will stay on if they are given a fair deal. Say Bechtel’s representatives in India: “We would like to take care of the completion of the plant and work with the banks and the new owners provided we are treated fairly.” Ask them what them mean by ‘fairly,’ and they say: “They would have to sit at the table with us and discuss the value of our holdings.”