Indian financial institutions sue DPC

Mumbai: Worried about their outstanding and advances, Indian financial institutions have sued the Dabhol Power Company (DPC) in the Bombay High Court. The four institutional lenders that have sued DPC seeking to protect their assets are IDBI, ICICI, SBI and IFCI.

The total amount lent to DPC by the institutions is said to be of the order of Rs 6,100 crore, equal to about 70 per cent of the total cost of the 2,184-mw power project. IDBI leads the pack, having lent Rs 2,300 crore, followed by SBI and ICICI, both of which have lent Rs 1,800 crore each. IFCI and Canara Bank account for the rest of the debt, amounting to Rs 200 crore.

Financial institution sources said they were interested in enforcing their agreements. They merely wanted the work on the first phase to resume so as to ensure a proper cash flow, enabling lenders to recover their dues in time. The suit has been filled on DPC, the Maharashtra State Electricity Board, the Indian government and the Maharashtra state government.

Apparently the whole idea is to continue to exercise pressure on Enron to come out with a settlement on the issue as early as possible. Earlier, various attempts were made to settle the DPC issue.

One method being employed was to sell the project to some other power company. In the recent past Tata Power and BSES had shown interest in buying out Enrons equity stake in the DPC. But the proposed offer of Rs 630 crore or thereabouts fell far short of Enrons expectations of Rs 1,000 crore. Soon after this there were talks that Enron may sell its equity stake in DPC to one or a consortium of financial institutions, which would later sell the same to a power-utility company. In fact, the lenders to DPC are scheduled to have a close look at the offer of Tata Power and BSES on 9 and 10 November in Singapore. Therefore, the suit, coming at this stage, has indeed taken Enron by surprise.