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DPC lenders plan to spot buyer by June

P Vaidyanathan Iyer & Anil Sasi

Even as the finance ministry is working out the concession to be granted to the troubled 2,184 mw Dabhol Power Corporation, the domestic lenders, led by IDBI, hope to finalise a buyer for Enron's 85 per cent in the project by June 2002.

As per the lenders' schedule, bids will be invited by end-March and sponsors would be identified by June, government officials said.

Phase-I of the project will be operationalised by March 2003, while Phase-II will commence by March 2004, as per the lenders' estimates.

The institutions are negotiating on the Centre's behalf with DPC's promoters for carrying out the sale of foreign equity.

Tata Power, BSES, GAIL, Gaz de France, Reliance Power, British Gas and Royal Dutch Shell submitted their expression of interest for the foreign stake on February 7.

Meanwhile, the issue of evacuation of power generated at the plant is yet to be resolved. Even as the lenders are trying to work out a viable tariff, potential buyers of power generated at the facility, once the sale is through, have still not been identified.

While the Maharashtra government continues to stick to its stand that the Maharashtra State Electricity Board has rescinded the power purchase agreement signed with DPC, and thus there is in no legal obligation to buy power from the project, other states may not buy power unless the cost is brought down to Rs 2.8-2.9/mw.

What, however, could derail the proposed tariff plan, is that the power ministry has ruled out any project-specific concessions to the $3 million project, except a reduction in customs duty on liquefied natural gas imports and roping in of central power utilities for facilitating wheeling of power from the facility.

The power ministry's response came in wake of repeated requests by the Maharashtra government to provide a series of sops including mega power status, waiving of minimum alternate tax, refund of duty already paid on import of capital equipment and also roping in the National Thermal Power Corporation into the project.

The ministry has sent its recommendations to the finance ministry, which is expected to take a final decision on the possible concession to lenders and MSEB.

According to the Centre, the risk of evacuation of power has to be borne by the bidders. For concluding the sale of foreign equity in the project, they have to work out a plan for evacuation of power with the lenders and MSEB, which is the signatory to the PPA, power ministry officials said.

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