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IDBI to invite bids for Dabhol

S Ravindran & George Smith Alexander

The wheel has turned a full circle. About a decade back, when Enron entered India directly through negotiations with the state and the central governments, the manner of its entry kicked off a controversy, forcing the Centre to adopt a competitive bidding process for all future projects.

Now, Enron's exit from India will also be through the competitive bidding route.

The financial institutions - led by the Industrial Development Bank of India - have decided to formally hawk the 85 per cent combined stake of Enron, General Electric and Bechtel in the $3-billion, 2184 mw Dabhol Power Company through the competitive bidding route.

A formal announcement will be made next week through newspaper advertisements, asking bidders to submit their expressions of interest.

IDBI chairman and managing director P P Vora said: "We want to make the process completely transparent and give a fair chance to anyone who wishes to bid."

The mandate for finding a buyer is being given to three merchant bankers. The list includes the Rothschilds and DSP Merrill Lynch. The third name could not be confirmed. Sources said it was a Kolkata-based foreign investment bank.

The institutions are not appointing any of the merchant bankers that recently did deals for companies like Tata Power and BSES which are bidding for DPC.

Six companies have already shown interest in buying the stake in DPC. These are Tata Power, BSES, Gas Authority of India, Shell, Gaz de France and TotalFinaElf.

"None of them has told us that they are opting out. When the new bidders come, we will have a uniform set of guidelines for all the bidders, making the process transparent," said an institutional source.

The contentious issue of the confidentiality agreement which has delayed the sales process will be resolved over the next few days. The bidders are expected to kick off the due diligence process in the first week of February after depositing $1,00,000 earnest money.

The confidentiality agreement is likely to be signed in London, sources said. The three US majors -- Enron, GE and Bechtel-- which hold a combined stake of 85 per cent in DPC decided to exit the company following a payments dispute with the MSEB. DPC and MSEB are now embroiled in a legal battle.

The domestic financial institutions and the banks have a combined exposure of over Rs 60 billion to the power project at Ratnagiri district of Maharashtra. The second phase of the project is yet to be completed.

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