FIs may up exposure to DPC by
$483 mn to salvage project
Even as the Industrial Development Bank of India-led consortium of Indian financial institutions engaged in discussions to increase their exposure to Enron's troubled Dabhol Power Company, Enron chief Kenneth Lay asserted that he had not asked the American government to consider imposing sanctions against India.
In a letter to Prime Minister Atal Bihari Vajpayee, Lay said "I have not asked anyone in the US government to consider imposing sanctions."
Earlier in an interview to Financial Times, Lay was reported to have threatened India with new US sanctions unless the company and its partners got back the full $1 billion in costs incurred on the DPC project.
The preferred approach continued to be resolving the issue amicably by selling the stake to Indian governmental and financial institutions, Lay said.
He said that pending agreement on that they had little choice but to follow the termination procedures jointly agreed under the Power Purchase Agreement (PPA).
Meanwhile, Indian FIs continued discussions to salvage the DPC project.
"We have several proposals at our behest, but nothing has been finalised yet. The Indian lenders are into marathon discussions with individual proposals and a road map will be ready with in a week," FI sources said in Bombay on Sunday.
As per a particular restructuring proposal, the FIs are exploring the possibility of enhancing their exposure to DPC's $3 billion project by way of an upfront arrangement 'to take over the offshore equity by investment institutions and utilities 12-18 months after completion of phase-II'.
The equity would be negotiated at a 25 per cent discount to its face value.
If this proposal was accepted by the joint committee of FIs, then IDBI's revised exposure would be at Rs 2,742 crore ($583 million) from the existing Rs 2,121 crore, ICICI - Rs 1,904 crore ($405 million) from Rs 1,473 crore, SBI - Rs 2,261 crore ($481 million) from Rs 1,749 crore, IFCI - Rs 587 crore ($124 million) from Rs 454 crore, Canara Bank - Rs 526 crore ($111 million) from Rs 407 crore, the sources said.
The total exposure would increase by about Rs 2,270 crore ($483 million) from the current Rs 6,204 crore ($1320 million).
"Even in the best case, the exposure requirements from domestic institutions exceed the prudential exposure norms," they said adding subsequent participation by all other FIs and banks like IDFC, PFC, PNB, Union Bank, Bank of India among others would be accrued through syndication.
FIs may also seek a guarantee from the centre as a backup for their exposure, sources said.
Last week, the FIs had made a detailed presentation to the Union finance ministry over a possible bailout package for DPC.
The current proposal envisages several key concessions from the stakeholders, like the Centre. The FIs are mulling over demanding around 22.38 per cent concessional duty on the energy major's Liquified Natural Gas plant, a mega power project (MPP) status and offset of custom duties on LNG supply.
"Dabhol project will qualify as MPP on all key conditions except for ICB, site identification and other issues. Since the project preceded the policy, duties payable on LNG import can be offset against duties and taxes paid during the project implementation," sources explained.
"A Central Board of Direct Taxes clearance for lease of three boilers costing Rs 1,000 crore ($212 million) would also be sought," sources said adding that DPC would pay the minimum alternative tax without interest after 10 years.
The sponsors (Enron, GE and Bechtel) would have to place the equity with FIs or other utilities at a discounted price with payments to be structured on a deferred basis.
"As far as the lenders are concerned they will have to reduce the interest rates by 10 per cent, increase moratorium of rupee loans by three years and extend repayment period to 13 years," sources said.
The multinational's estranged partner Maharashtra State Electricity Board would have to subordinate equity fully and pay fixed charges incurred during phase one in the interim period, they added.
EARLIER REPORT:
Govt asks Dabhol to complete 2nd phase
Enron Saga: Complete Coverage
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