DPC promoters consider earlier stand

Mumbai: With the three offshore promoters of the 2,184-mw Enron-promoted Dabhol Power Company (DPC) thinking of revising their earlier stand of selling their 85-per cent stake in the Dabhol power project, the DPC sale has reached a stalemate — again.

Sources close to the domestic lenders cite irreconcilable differences of opinion on various issues that have emerged between the domestic and overseas lenders and the promoters of the project. "The promoters of the project — Enron Corporation, Bechtel and GE — want the IDBI-led domestic lenders’ consortium to foot a $3-million bill for housing the Data Room at London to carry out the due diligence process."

But the domestic lenders are not in favour of investing further in DPC. It is learnt that DPC’s due diligence process, which was to begin in London from 25 February 2002, has been postponed indefinitely. The data room will carry 1,050 sets of documents — the availability of which is still unknown, the sources say.

The domestic lenders insist that the entire sale proceeds of DPC should go into the Trust and Retention Account, operated by Bank of America. The funds in this account provides for debt-servicing, outstanding guarantees, bank charges and defaults, before distributing the balance between the owners.

But the offshore equity-holders have strongly protested the move to transfer the sale proceeds to the Trust and Retention Account. In that event they would probably end up having only a few million dollars from the sale, which is a fraction of the actual costs. While Enron, Bechtel and GE have written to the lenders disapproving any such move, the domestic lenders are insisting on implementing it.

The sources say the promoters feel that debt-servicing, outstanding guarantees, bank charges and defaults will cumulatively run into a few hundred million dollars. "By paying these charges to various domestic as well as overseas institutions, the promoters are unlikely to receive a decent amount."

Confirming this development, officials with a qualified bidder for DPC say this dispute between the offshore promoters and the domestic FIs has led to a deadlock and halted the entire equity sale process. "The power plant, closed since June 2001, might not generate any power in the future if the present callousness of the promoters persists."

When contacted, an Enron spokesperson said unresolved issues are pending between the promoters and the domestic FIs. "Representations have been made to resolve the issues." He was, however, reluctant to give more details.