No additional stake in DPC equity, says Enron

By Our Staff Correspondent

MUMBAI, JAN. 25. Enron is not picking up any additional stake and is not investing any additional amount in equity of Dabhol Power Corporation (DPC) over the amount previously agreed.

The Cabinet Committee on Wednesday had permitted the Enron Corporation to increase its stake in the Dabhol power project in Maharashtra since the other partner, the Maharashtra State Electricity Board (MSEB), had expressed its inability to pick up equity in the second phase of the project.

However, the Cabinet had incorporated a clause allowing the MSEB or its nominee to pick up the additional stake at a later stage if is so desired at a mutually agreed price.

According to a press release issued here by Dabhol Power Corporation, the application made to the Foreign Investment Promotion Board (FIPB) and forwarded by it to the CCEA was a procedural matter designed to allow Enron to sell down some of its equity interest.

Technically, Enron is simply splitting its existing equity ownership into two separate Enron-owned companies - one holding 50 per cent of DPC equity and one holding about 15 per cent of surplus equity, to facilitate the sell down. In effect, this process will allow Enron to reduce its total equity exposure in Dabhol to 50 per cent by selling down approximately 15 per cent, or $136 million, of its equity interest in DPC consistent with the terms of the financing agreements.

Out of the total phase II project cost of $1,869 million, the equity portion amounts to $454 million and the debt $1,415 million. These have been fully tied up.

As per requirement, an application to this effect was submitted to the FIPB and Government approval accorded yesterday as announced by the CCEA.

The overall project (phase I & II) equity investments in DPC by its sponsors now stand at Enron 65 per cent, MSEB 15 per cent, General Electric 10 per cent and Bechtel 10 per cent.

Enron was allowed to increase its equity contribution to the project from $ 886.9 million to $1,119.9 million, of which $434.2 million would be for the first phase and $685.75 million for the second stage. Earlier, Enron held a 50 per cent satke in the first phase while the MSEB had 30 per cent. Bechtel Enterprise and General Electric each held 10 per cent.

The MSEB had earlier expressed inability to contribute a further share in the equity for the second phase at this juncture. Therefore, a fresh Cabinet clearance was sought for Enron to hold additional equity.

Enron's equity was to have been contributed through its subsidiary, Enron Mauritius Company.

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