Local, foreign lenders differ over DPC sale

The sale of Enron’s subsidiary Dabhol Power Company (DPC) has hit another roadblock. Foreign lenders to the $2.9 billion Indian power p...

The sale of Enron’s subsidiary Dabhol Power Company (DPC) has hit another roadblock. Foreign lenders to the $2.9 billion Indian power plant are against a plan by domestic lenders to seek court approval to seize the idle asset. While Indian lenders prefer an asset sale, foreign lenders want sale of equity held by Enron, GE and Bechtel.

If the lenders seize the plant, Enron and its equity partners would lose the ability to influence the price received and how the proceeds are distributed. “There is complete unanimity among Indian lenders to enforce our rights, which includes asset seizure,” said an official after a lenders meeting here, adding, “But we have to take the foreign lenders with us. Hopefully, some sort of common strategy will be reached and action will be taken soon in the best interest of the lenders.”

“All of us wear different hats and as government agencies they too have their concerns. We have explained our position to OPIC, but since the project is part of US government, they don’t seem to be in favour of an asset sale,” he said.

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“Our first priority is to protect our interests as lenders to the project. OPIC is not been able to comprehend our situation that taking over DPC’s assets and then selling is the next prudent step over resolution of this long-pending matter,” a senior FI official said. The 2,184 MW Dabhol power plant, Enron’s largest Asian asset, has been idle since last June.

Indian lenders are led by the IDBI, SBI and ICICI Bank, while the foreign lenders include Citibank, ABN-AMRO Bank and Bank of America. The high court in March granted a request by the creditors to appoint a receiver to ensure the idling plant is properly maintained. It also barred the plant from becoming part of any US court supervised Enron’s bankruptcy proceedings. “Hopefully the foreign lenders understand this point of view.”

The lenders to the $2.9-billion DPC met on Monday here to discuss the future course of action in resolving the DPC imbroglio, which ended without any decision over the issue.

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