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Court receiver to take control of Dabhol plant

An official appointed by the Bombay high court will take control on Tuesday of bankrupt US energy giant Enron Corp's most valuable asset in Asia, a senior official of one of the project's lenders told Reuters.

A court-appointed receiver will take control of Enron's $2.9 billion power plant at Dabhol on India's west coast to ensure the idling asset is maintained properly, the official said.

"A team of IDBI officials and the receiver have gone today (Tuesday) to take control over the assets," the official said, referring to the Industrial Development Bank of India.

"We are not seizing the assets as yet," the official added.

Lead financier IDBI and other financial institutions directly and through guarantees provided the bulk of the $1.9 billion in loans outstanding to the Dabhol Power Co, which runs the project.

The high court granted a request by Indian creditors last month for the appointment of a receiver to ensure the rusting plant is properly serviced. It also barred the facility from becoming part of bankruptcy proceedings overseen by a New York court.

A Mauritius-registered holding company through which Enron owns a 65 per cent stake in Dabhol filed for bankruptcy protection in a New York court in the third week of March.

Dabhol, the largest-ever plant fuelled by liquefied natural gas, is located about 250 km south of Mumbai. It is one of Enron's largest assets still left on the block.

The 740 MW first phase started operating in May 1999. The 1,444 MW second phase was nearly complete when construction was halted last June after its sole customer, a nearly bankrupt local utility, the Maharashtra State Electricity Board, fell $240 million behind in payments.

In recent months the plant has begun to rust due to inadequate maintenance as money ran short at Dabhol.

GE and privately held Bechtel Corp each own 10 per cent stakes in Dabhol, and the MSEB the remaining 15 per cent.

LENDERS MEET NEXT WEEK

Domestic and foreign lenders to the 2,184 MW power plant, India's largest foreign direct investment, will meet next week in Mumbai to find ways to revive the project's stalled sale.

"We have to carry out the sale process as fast as possible now that Enron's Indian subsidiary has shut," the official at the lender said.

Media reported over the weekend that Enron India's managing director Mohan Gurunath has resigned and the firm is closing its skeletal office.

Spokesman Jimmy Mogal told Reuters that he has quit and had no comments.

Indian and foreign lenders had hoped to sell the plant by March after receiving expressions of interest in January from seven multinational and Indian companies.

The process was delayed when the three foreign stakeholders demanded at least $550 million for their 85 per cent stake, and asserted the money should be paid directly to them and not channelled through lenders overseeing the sale.

Now, with the company's operations folding up in India and Enron refusing to sign a cooperation agreement to enable the sale, the process had "indeed become very complex", the official at the lender said.

In all 26 financial institutions lent money for the project, including foreign banks and multilateral agencies.

Indian lenders include State Bank of India, the country's largest commercial bank, and ICICI Ltd, a financial services firm listed on the New York Stock Exchange.

The potential multinational bidders include British Gas, Royal Dutch/Shell and French utility Gaz de France.

The Indian companies in the race are Reliance Industries Ltd, BSES Ltd, Tata Power Co and Gas Authority of India Ltd.

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