TPC-BP talk with GAIL to bid for DPC in advanced stage

Nisha Das
31 August 2003

TPC and BP Global Investments have already formed a special purpose vehicle (SPV) for the bidding process and now the energy majors are trying to rope in GAIL as an equity partner in the SPV. TPC and BP have already concluded a few rounds of serious talks with GAIL.

Sources close to the development say the TPC-BP move is based on the recent decision taken by the lenders to DPC led by IDBI, to invite global bids for the sale of assets. NM Rothschild & Sons (India), the financial advisor appointed by the lenders, has already come up with a blueprint for the sale of the project. Top officials from the Indian lenders and the advisor company had met both the power and finance ministry officials recently to seek the government nod.

The sources add that the government officials advised them to go ahead with the DPC asset sale and consider the DPC case as a pure commercial deal rather than a political one. The move to initiate the sale of assets is a complete departure from the lenders'' earlier attempts to sell Enron''s equity in the project, which is around 65 per cent. The other stakeholders are Maharashtra State Electricity Board (15 per cent), Bechtel (10 per cent) and GE (10 per cent).

Though the earlier international bidding processes drew many interested parties including Tata Power, BSES, Reliance and BP, the lenders had subsequently called off the process following various legal and commercial issues involved in the project. The lenders had also returned the earnest money deposit of $100,000 to all the interested parties.

The sources say NM Rothschild, on behalf of IDBI-led lenders, has already completed the groundwork for calling bids; it will be an open, transparent process. It will involve an expression of interest, information memorandum, due diligence, request for qualifications and technical and financial bids.

Tractabel, the technical consultant appointed by NM Rothschild, has concluded that the plant, which is lying idle for over two years, will require around $15 million for the restart of phase I. The technical consultant has said that GE participation in restart of the plant is vital, while Bechtel as engineering, procurement and construction contractor, is dispensable. GE supplied various turbines to the project.