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FIs' plan for Dabhol revival may get government's nod

Santosh Tiwary

The government is likely to give its green signal to the domestic financial institutions' plan for reviving the Dabhol power project at a crucial meeting called by finance secretary Ajit Kumar on Friday.

The meeting to be attended by secretaries of the power and petroleum ministries and senior finance ministry officials besides the FI heads would dwell upon the blueprint prepared by the institutions led by Industrial Development Bank of India.

Sources said the report would focus on the sacrifices to be made by all the concerned parties for re-commencement of the 740 mw phase I and completion of the 1,444 mw phase II of the project.

While the FIs will be required to effect a further cut in the interest rates on their lendings to DPC, Enron along with its foreign partners Bechtel and General Electric might have to agree to offload their stake at a discount to face value.

The FIs are likely to suggest that the Centre provide some duty relief on equipment imported which would help Dabhol bring down the tariff to a level acceptable to Maharashtra and other interested states. The Godbole committee had suggested that the tariff be brought down to Rs 2.40 per unit.

Taking a cue from the Godbole committee report, the FIs are also likely to suggest a restructuring of the $ 3-billion project which would include separation of the LNG terminal and conversion of the project exposure from dollar to Indian rupee.

Sources said the Indian lenders are also likely to ask Enron to complete the phase II of the project before exiting the country. They added that once the roadmap prepared by the FIs is approved by the government, the institutions would initiate negotiations with private players. Already, AES, Tata Power and the Hindujas have evinced interest in taking over the company.

At a similar meeting exactly a fortnight back, the FIs were asked to submit a roadmap for resolving all the vexed issues including completion of the second phase of the project and transfer of equity of existing foreign players to the new promoter(s).

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