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DPC lenders to meet in Singapore next week

Foreign and domestic lenders to collapsed Enron Corp's $2.9 billion Indian power plant will meet next week in Singapore to discuss the process for selecting a buyer for the project's 85-per cent foreign equity stake, a senior official at one of the lending institutions said.

Eight companies have made preliminary bids or "expressions of intent" for the foreign stake in Dabhol Power Co, the company set up to build and operate the 2,184 MW power plant, Enron's most valuable asset in Asia. They will now have to submit financial bids.

"We are meeting on February 20 or 21 to take stock of the situation and sort out the nitty-gritties of the bidding process," the official, who is employed at one of the domestic lenders, told Reuters on Thursday.

"The data room in London is yet to be set for the bidders to carry out due-diligence. Also, we may set dates when each company can carry out the valuation process separately."

Enron owns 65 per cent of DPC, General Electric Co and US-based contractor Bechtel Corp each own 10 per cent of DPC. The remaining 15 per cent is held by the Maharashtra State Electricity Board, which is the plant's sole customer.

The Industrial Development Bank of India, the project's lead creditor, invited preliminary bids on January 30 for the entire 85 per cent foreign stake in DPC.

Among the international bidders are British Gas, Royal Dutch/Shell, European oil major TotalFinaElf and French utility Gaz de France.

Indian bidders include Reliance Industries Ltd, the country's largest petrochemicals maker, private power utilities BSES Ltd and Tata Power Co, and state-run Gas Authority of India Ltd, the country's largest natural gas distributor.

The power plant, located about 250 km south of Mumbai on the coast of the Arabian Sea, has lain idle since June 2001 following a payment dispute between with the MSEB, the nearly bankrupt state power distribution monopoly.

The 740 MW first phase began operating in May 1999 and the 1,444 MW second phase was nearly complete when construction was halted in June after the MSEB fell $240 million behind in payments for power already supplied.

FINANCIAL BIDS

Setting up the data room is crucial as it will give bidders access to non-public information prior to submitting financial bids.

"While we set up the data room, the bidders can go to the site and carry out the valuation process," the official said.

Earlier this month, IDBI officials told Reuters they are keen to complete the sale in six to eight weeks.

More than 20 lenders, including both Indian and foreign banks, have a combined exposure of nearly $1.9 billion to the project.

Domestic financiers led by state-run term lender Industrial Development Bank of India, ICICI Ltd and State Bank of India have an exposure of about $1.4 billion.

Foreign lenders, which include Citibank, Bank of America and ABN AMRO, have lent about $500 million.

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