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Reliance seeks joint bid with BG for Dabhol plant

British oil and gas major BG Group Plc has been asked to join Reliance Industries Ltd, the flagship of India's powerful Reliance Group, in bidding for bankrupt Enron Corp's $2.9 billion power project near Mumbai, an industry source said on Tuesday.

But BG is unlikely to agree as it is inclined to bid independently for the project, which includes a gas-fired 2,184 MW power plant and adjoining liquefied natural gas jetty and storage depot.

"Reliance has approached BG for bidding jointly. But BG is keen to go solo," the source, who asked not to be identified, told Reuters.

The industry source said BG's interest was not limited to the five million tonne LNG terminal. It was also interested in buying the massive, LNG-fired power plant.

"BG has a couple of large power plants in Asia. So the power plant would very well gel into its plans," the source said.

A Reliance spokesman refused to comment on the matter.

Both Reliance and BG were among eight companies which earlier this month submitted expressions of intent to bid for the 85 per cent foreign stake in Dabhol Power Co, Enron's most valuable asset in Asia.

France's TotalFinaElf, one of those eight companies, on Monday said it had withdrawn from the race.

Other global bidders left in the race are Royal Dutch Shell and Gaz de France.

The Indian bidders include 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 lenders to the project will meet on Wednesday and Thursday in Singapore to discuss the sale process and set dates for each bidder to carry out due-diligence.

More than 20 lenders, including Indian and foreign banks, are collectively owed $1.9 billion.

BG's INDIAN ASSETS

Last Thursday BG bought Enron Oil and Gas India Ltd, a unit that operated three oil and gas fields off the west coast of India for $340 million.

With that purchase BG acquired a 30 per cent stake in the Tapti gas field and the Panna/Mukta oil and gas fields, two of India's most valuable production fields.

It also temporarily suspended plans to develop a 5.3 million tonne-per-year LNG import terminal on India's west coast.

But the industry source said the delay in getting that $550 million project under way due to high taxes and lack of buyers had now prompted BG to look for a completed project in India.

"Power plants will underpin the LNG project, so the issue of finding buyers becomes less important," the source said in explaining BG's interest in Dabhol.

Dabhol is 65 per cent owned by Enron, the Houston-based energy trader that filed for bankruptcy on December 2 listing some $40 billion in debt, making it the largest US business failure ever.

General Electric Co and US-based contractor Bechtel Corp each own 10 per cent of Dabhol, while the remaining 15 per cent is held by Maharashtra State Electricity Board, a nearly bankrupt government-run power distributor and the plant's sole customer.

The power plant, located about 250 kilometers south of Mumbai on the coast of the Arabian Sea, has lain idle since June 2001 following a payment dispute with the MSEB.

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 MSEB fell $240 million behind in payments for power already supplied.

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