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Three DPC bidders sign confidentiality pact

Three prospective bidders for the Dabhol Power Company have signed the confidentiality agreements to carry due-diligence for the buy out of the troubled project, IDBI chairman and managing director P P Vora said on Friday.

"Three parties have signed the pact and fourth will follow suit by evening," Vora told reporters in Mumbai.

He, however, refused to name the bidders and said few others have telephonically expressed interest to sign the agreement.

Meanwhile, quoting un-named sources UNI said while Tata Power, BSES and GAIL inked the agreements on Friday, Shell is likely to sign the agreement tonight.

The entire process was scheduled to be completed in six to eight weeks with the first batch of bidders proceeding to the London data room for conducting due diligence, he said, adding final bids would be invited next month.

The lenders' consortium would soon appoint a financial advisor to assist the bidding and financial restructuring process of DPC, IDBI executive director A K Doda said.

Some investment bankers have already made a presentation, and, "we would select advisor soon," he added.

Vora said the lenders were working on a package to bring down the cost of power "at an affordable level" and this would include restructuring of loans by the financial institutions and reduction in the interest rate.

"We will examine the feasibility of converting foreign currency loan into rupee loans to avoid currency depreciation risk," Vora said.

He said as part of the restructuring package there has to be some assurance from Maharashtra for offtake of power, and added, "the state government's response is conducive."

"Part of the power will have to be offloaded outside the state to make the project viable," he said.

While the 740 mw first phase of the project was ready, the second 1,444 mw phase with the Liquified Natural Gas facility is 80 per cent complete, Vora said.

He said post-restructuring, it would take 14 months for the project to recommence operations.

IDBI has invited expression of interest for acquisition of 85 per cent stake in the troubled project from domestic as well as international corporates to be submitted on or before February seven.

The contenders would have to first submit the EOI, deposit a non-refundable amount of $100,000 (approximately Rs 485,000) and then sign the confidentiality agreement for carrying out due diligence, the official said.

Indian financial institutions have an exposure of over Rs 62 billion in the Enron-promoted project and has over Rs 50 billion credit locked in it.

Houston-based bankrupt Enron Corporation currently holds a majority 65 per cent stake in the project while 15 per cent is with the state electricity board. The remaining 20 per cent has been split between Bechtel and GE.

Tata Power Company, BSES Ltd and Gas Authority of India Ltd are pegged as serious bidders for the project.

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