Centre wants Dabhol project salvaged
New Delhi Its clear that the central government wants the Dabhol project salvaged. It has directed the Indian financial institutions led by Industrial Development Bank of India (IDBI) to work out a package for saving the controversy-ridden $2.9 billion Dabhol power project. This comes close on the heels of Enron’s decision to pull out of India’s power sector. Senior FI officials said that as against the requirement of $550 million for completing phase-II of Dabhol project, lenders were ready to pump in around $320 million. It is the balance $230 million that has to be arranged.
They said that as Enron does not want to put in any fresh money in the project, FIs would have to scout for a new investor for the project or pump in this sum themselves.
Power ministry officials said since it will be difficult to find a buyer until the project is complete, FIs can ask the Maharashtra government to pay this money as part of its equity to complete this project.
This makes it clear that the government wants Enron to complete the project and then withdraw since all the contracts are with them. Power ministry officials confirmed that Enron has agreed in principle to finish the project if the sum of $230 million can be arranged either by the FIs or brought in by an investor.
On the tariff front, which has become the major bone of contention, officials said Enron had finally offered a tariff of Rs 3.59 per unit after various tax concessions were offered to it by the Centre and state governments and after separating the LNG terminal from the main project. In contrast to this, the central government wants Enron to bring the tariff down to about Rs 2.80 per unit.
Another vital area being looked into by the FIs is whether the LNG suppliers can also take a lower the price by about 5-10 per cent to reduce the tariff further. FIs feel that with all these concessions, the tariff could be brought down to a level acceptable to the state electricity boards (SEBs) willing to buy power from Dabhol project.
Meanwhile the Maharashtra government is going to ask the Madhav Godbole renegotiations committee to submit its interim report in view of US multinational’s desire to pull out of the 2,184-mw Dabhol project.
Top sources said that Maharashtra state was not in a position to absorb power from the Dabhol phase-II and wanted the Centre to immediately intervene in the matter.
Meanwhile, the tussle over Dabhol between the state energy minister Dr Padmasinh Patil and the Maharashtra State Electricity Board chairman Vinay Bansal has taken a new twist with the latter planning to go on indefinite leave. Mr Bansal has been largely responsible for launching various initiatives for MSEB’s revival and is outspoken about his anti-Enron stand.
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RBI for capital infusion in IFCI
New Delhi--The Reserve Bank of India wants an immediate infusion of Rs 850 crore into IFCI Ltd to meet the stipulated capital adequacy ratio of 9 per cent against the 6.7 per cent level at the end of March this year.
IFCI has, however, sought a Rs 1,000 crore bail-out package either through convertible bonds, direct equity or long-term preference shares.
However, the stakeholders the financial institutions and State Bank of India are not agreeing to a capital infusion to bolster IFCI’s capital adequacy ratio. Thus, a meeting convened by finance secretary Ajit Kumar here today proved inconclusive. RBI also attended the meeting.
IFCI had been seeking an infusion of Rs 400 crore since September 1998 as it is facing liquidity problems in meeting its redemption and interest payment obligations to the tune of Rs 1,100 crore this month. The government so far has not agreed to it’s demand so far. While expenditure secretary CM Vasudev has been opposing the move for a budgetary support, the stakeholders have repeatedly voiced their opinion against any capital infusion.
In wake of the liquidity and cash flow problems, rating agencies are closely monitoring the institution for a possible downgrade.
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