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DPC: FIs prefer sale of assets to equity

Financial institutions led by Industrial Development Bank of India have proposed sale of assets of $2.9 billion Dabhol Power Company instead of sale of equity of foreign promoters, the Lok Sabha was informed on Thursday.

The FIs have initiated the selection process for identifying new sponsors to replace the present offshore sponsors, who have desired to exit from the project, so that the project can be completed and operations restarted, Minister of State for Power Jayawanti Mehta said in a written reply in the Lower House of Parliament.

"The new sponsors of the project are "proposed to be inducted" by way of sale of assets rather than by sale of equity," she said.

Bankrupt energy trader Enron has 65 per cent equity in the 2184 MW project, which has been shut for over a year now following payment problems with its sole customer Maharashtra State Electricity Board.

Mehta said that Maharashtra government has informed that the MSEB could be asked to start buying power if it is priced at Rs 2.50 per unit (all inclusive) while absolving the stae utility of any liabilities relating to the 1444 MW Phase-II of the project.

"FIs who have substantial stake in the Dabhol power project, have been discussing the matter with all concerned parties to restructure and revive the project. Among other things, the financial institutions are trying to re-start (740 MW) phase-I of the project," she added.

On the request of the Maharashtra government and the FIs to take over the project, Mehta said, "the proposal was considered by the government as well as by National Thermal Power Corporation and the same has not been found to be a feasible option."

She cited high tariff as the main problem associated with the project.

"NTPC, while disagreeing to take over the Dabhol project, has suggested to the Government of Maharashtra that it would be a better proposition to use NTPC's services on hands-off basis on payment of fees to technically advise/supervise the completion of the project and, if required, for the operation thereof," she added.

Mehta said the primary responsibility for finding an amicable solution to the various issues presently surrounding the project lies with the two parties to the power purchase agreement - MSEB and DPC as also with the Maharashtra government, who have guaranteed the payment obligations of MSEB to DPC.

The Centre has agreed to facilitate the revival/restructuring of the project, she said adding that IDBI has informed that the bankruptcy proceedings relating to Enron Corp of USA would have no impact on DPC or its assets.

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