The Hindu : IDBI clears way for DPC asset sale

Online edition of India's National Newspaper
Wednesday, Jan 01, 2003

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Business

IDBI clears way for DPC asset sale

MUMBAI DEC. 31. Paving the way for an asset sale of the Dabhol Power Company (DPC), its lead investor Industrial Development Bank of India (IDBI) has refunded $100,000 deposit amount to seven companies which were in the fray for picking up the 85 per cent foreign equity in the idle power project.

"The amount was refunded to the seven parties without any interest, due to severe time overrun. We had earlier taken the equity sale route but now with that returned money, we may call separate bids for selling the assets of the plant, after it restarts generation," a senior IDBI official told PTI here today.

On January 30 last IDBI had invited EOIs from Indian and foreign corporates to submit their interests by February 7. Companies such as Tata Power Company, BSES, Reliance Industries, Royal Dutch Shell, Gaz De France and GAIL signed on the dotted line and were waiting for due diligence process scheduled for commencement in early March.

"This invitation was merely an interest discovery mechanism seeking only serious bidders interested in the incomplete power plant and LNG regassification terminal," he said. When contacted Tata Power managing director, Firdose Vandrevala, confirmed the receipt of the amount. "We received the cheque in the second week of December. The question of charging interest did not arise as it was not part of the agreement," he said. Earlier, sensing delay in the sale process, BSES had demanded a refund of its deposit, but was later convinced by IDBI that it would soon start the due diligence process, which never happened. The Indian lenders and the Union Power and Finance ministries have been mulling over the prospects of an asset sale instead of an equity of DPC for quite sometime now, but this move has been strongly opposed by foreign banks and institutions, especially the<243> U.S. government agency Overseas Private Investment Corporation.

The foreign lenders in this project have been opposing asset sale tooth and nail as all three equity holders Enron, GE and Bechtel would have to forego their investment of around $800 million in the project.

PTI

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