DPC assets depreciate due to stalemate

Mumbai: As the uncertainty of the fate of the Enron-promoted Dabhol Power Company (DPC) continues, the assets of the 2,184-mw power plant at Dabhol, Maharashtra, are depreciating.

DPC's promoters have invested $800 million, while Indian financial institutions, primarily IDBI, ICICI, IFCI and SBI, have sunk in close to Rs 6,000 crore at an average coupon rate of around 12 per cent. "The lenders are the ones who will be the major losers if the plant condition deteriorates — their stakes are much higher than that of the promoters. Due to the delay in solving the Enron crisis, the institutions are losing money every passing hour," says an institutional source.

IDBI, ICICI and SBI have advanced Rs 2,300 crore, Rs 1,400 crore and Rs 1,700 crore, respectively, to DPC. The amounts are 25.1 per cent, 16.8 per cent and 12.6 per cent of their respective net worth. While the plant is spread over 400 acres, equipment like turbines and rotors of the plant have been kept idle for the last 10 months. The chances of corrosion and damage to the equipment are increasing day by day.

As time goes by, the cost of procuring spare parts will go up and the company may face difficulty in procuring some critical components for the plant when required. A few critical parts, like chips and documents, are said to have been illegally removed by Enron before they packed up and left the country.

Officials representing a qualified bidder for DPC say there is little or no hope of getting the missing parts back, considering the attitude and credibility of Enron. With the existing plan and maps it would not be difficult for an experienced power utility to map out the entire process after surveying the entire plant.

Till a suitable long term solution is found, the officials say, one of the bidders, or a pool of companies, should be allowed to operate the plant on mutually agreeable conditions, which will ensure that the operational capabilities and equipment installed in the plant do not deteriorate. "The due diligence process of DPC, which was to begin in London from 25 February 2002, has also been indefinitely postponed due to the dispute between the promoters and domestic lenders."

"We are losing interest and our concern for the proper functioning of the plant gets doubtful with each passing day. Tonnes of ferrous metal used in the plant carry a high probability of catching rust and becoming useless, as the plant is close to the sea. The joints, screws, nuts and bolts… all across the machinery gather dust and become stiff due to remaining idle for a long time," they say.

The most critical part of DPC is the LNG terminal, which is highly prone to rust if left unused for a few more months. If that happens, then no LNG carrier in the world will agree to fuel the plant, which effectively means Rs 3,000 crore will get translated into junk, the officials say.