Dabhol lenders meet in Singapore on 26th April
Now that General Electric and Bechtel have increased their stake in the Dabhol Power Company from 20% to 69%, you might ask whats happening in the lenders camp, both domestic and international The answer is: nothing.
Its business as usual. Indian and foreign banks continue to indulge in mud slinging, hurling allegations and counter allegations against each other, reinforcing an image of complete confusion in resolving the problem.
With some luck this might change when both sides meet in Singapore on 26th April to discuss the latest developments in the Dabhol saga. We cant do much to stop GE and Bechtel from acquiring Enrons stake, a nervous Indian lender tells PETROWATCH.
According to an inter-creditor agreement, DPC lenders have a right to stall any move by sponsors GE, Bechtel and MSEB to acquire 100% stake in DPC. We can block this only if Enrons equity falls below 26%, which is not the case.
In Singapore, the Indian side led by IDBI, will offer an exit option to 25 foreign banks and financial institutions in the presence of US government agency OPIC. We will offer to buy out the foreign lenders at 60 cents per dollar for their exposure in Phase-I and 30 cents per dollar for Phase-II.
Dabhol is worth $2.9bn of which $1.9bn is debt and $1bn is equity. Of the $1.9bn debt, foreign banks have pumped in $600m while Indian lenders have sunk in $1.3bn.
The foreign banks have lost interest, adds our source. All of them have marked DPC exposure as a loss in their account books.
All they want is to recover as much as they can and show the amount as realisation on account of losses incurred. Conspiracy theorists have a different story.
According to one Indian lender, the Indian finance ministry has put pressure on foreign banks with interests in India like Citibank, ABN Amro and Bank of America. We hear the government has indirectly told these banks that their lack of cooperation in the DPC sale process could spell doom for their Indian subsidiaries.