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Tata Power appoints consultants for Enron project

Tata Power, a Bombay-based private sector power utility, has appointed JM Financial and Ernst & Young as consultants to undertake a due diligence of Enron Corp's Dabhol Power Company, a business daily said Monday.

Tata Power, which has emerged as a potential buyer of the troubled 2,184 MW Enron project in Maharashtra, will start negotiations with the US-based energy giant after consultants submit reports, The Economic Times said.

"We will definitely demand Enron to scale down the (selling) price to make it a viable proposition," Adi Engineer, managing director of Tata Power, told the daily.

He said Tata Power officials had a preliminary round of negotiations with senior officials of Enron, which owns 65 per cent in Dabhol Power Company, and the state-run Industrial Development Bank of India, the lead domestic lender of the $2.9 billion power project.

"This is just the first round of talks. We have now appointed two consultants for due diligence and valuation. We will have to wait for their reports to come in," Engineer said.

Enron has decided to quit India by selling its 65 per cent stake in Dabhol Power Company, citing payment defaults by its sole buyer, the Maharashtra State Electricity Board (MSEB) and non-co-operation from the federal and state governments.

Dabhol is owed Rs. three billion by MSEB for power supplied in December and January.

The board refuses to pay the bills and has stopped buying power from Dabhol, saying that the plant's rate is more than double that billed by other Indian generators. The board charged Dabhol a penalty of Rs 8 billion for not supplying power at full capacity on three days between January and March.

Indo-Asian News Service

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