FIs for consortium bidding in DPC
04 January 2002
Mumbai: The domestic lenders of the troubled Dabhol Power Company (DPC) are planning to propose a consortium bidding method to the three bidders for Enron's 85-per cent stake in DPC. The FIs feel the three bidders — Tata Power, BSES and the Gas Authority of India — may not be in a position to pick up the entire stake in DPC individually, so the consortium method will be a viable solution to resolve the crisis.
FI officials say either the three bidders together can bid for the DPC stake or they can rope in new partners. "Few other domestic power companies have also shown interest to join in the race to pick up a stake in DPC. But, considering the huge investment required, we feel individual bidders will face difficulties to mobilise the funds, so the consortium bidding is the only viable option."
They say the FIs will make a proposal to the bidders in this regard soon. US $1.2 billion was the official figure quoted by Enron for selling its stake in DPC. But reports hint that during the Singapore meet with the FIs, Tata and BSES, Enron had agreed to reduce the equity prices by between $800 to $900 million.
The officials say for mobilising this huge amount, an individual bidder will have to approach the FIs, and basically the FIs' exposure in DPC will go up again. "We are not in favour of this; we already have around Rs 6,000 crore exposure in DPC."
Earlier, they say, NTPC, which was approached to take over Enron's stake, declined by saying it would create high-debt burdens to the corporation and substantially reduce its market borrowing capacity. "It would also adversely affect all the ongoing and future projects of NTPC." Subsequently, NTPC backed out from bidding for DPC.
The officials say IDBI has favoured bringing down DPC's equity by 50 per cent and had approached concerned stakeholders, asking them to reduce the equity besides offering various other incentives like reducing shipping charges and lowering customs duty on LNG imports. In between GAIL is understood to be shown interest only in DPC's LNG facility and may shortly begin negotiations with other bidders for joining its bid to manage the project.