BHEL set to join Dabhol revival process

As things stand, National Thermal Power Corp (NTPC) and GAIL are part of the SPV. A final missive on the issue is awaited.

Incidentally, discussions are underway in London between the Government of India’s lawyers and those representing GE-Bechtel on the ‘‘term sheet’’ that lays down how GE-Bechtel’s stake would be bought out. Both GE-Bechtel own 86 per cent stake in Dabhol Power Company.

While officials did not want to comment on record, it is learnt that BHEL’s involvement would prove crucial in reviving and running the 740 MW power plant in Maharashtra that has been shut for close to five years now.

It needs to be mentioned that BHEL has a long-term collaboration with GE. Therefore, instead of dealing with GE directly, sources said BHEL would be in a better position to meet the requirements once the process of restarting the plant begins. The union ministry of power is working towards restarting the plant by June-July next year.

Sources also said, ‘‘When engineers from NTPC and GAIL visited the plant site earlier this year, they found rusting on the external surfaces of the equipment.’’ However, as per court orders, they are not allowed to open up the equipment and check/assess what additional material would be required to run the power plant.

Pending lifting of that order, BHEL would be needed for ‘‘replacement of material’’ during the restarting phase as well as when the plant is fully operational.

Though there are also no indications on the quantum of investment, BHEL’s financial resources would be used to reduce the burden on NTPC and GAIL while making the initial investment in the SPV.

While the amount and procedure for raising money by the SPV is yet to be finalised, sources said $305 million (close to Rs 1,200 crore) is needed to buy out GE-Bechtel’s stake in the company.

This is only part of the amount that the SPV needs to raise in order to just restart the plant. The total tab for restarting the plant inclusive of the amount needed to pay the foreign lenders is in the region of Rs 10,000 crore.

There are as many as 16 cases being fought in various courts and tribunals. It is expected that all these cases will be dropped once the foreign lenders and both GE-Bechtel are paid their share.