No nearer selling the Dabhol power plant

Vol 7, PW 9 (16 Jul 03) Midstream & Downstream

BAD NEWS for companies hungry for information on the beleaguered Dabhol power plant.

Contrary to industry perception, N.M Rothschild has not yet set a date to invite bids for the sale of equity or the $3bn assets of the Dabhol Power Company.

On 4th April, Industrial Development Bank of India, DPCs lead lender, appointed Rothschild to advise Indian lenders on how to dispose of the asset. Rothschild has drowned itself in a plethora of complex issues ranging from several legal tangles to multi-crore payment problems, says a source.

We understand that Rothschild has been trying to discuss the prospect of restructuring and sale of the project with interested multinationals. But like everyone else, even Rothschild is confused and is unable to set a deadline for resolution of this imbroglio, said an official from an energy major.

We understand that senior Rothschild executives have approached companies with two options to carry out the sale: with or without the 5m t/y LNG regassification facility. Only two companies - Tata Power and Reliance Energy (formerly BSES) - are interested in the entire 2,184-MW power project with LNG facility.

Says a top TPC official, We explained to Rothschild that given the baseload nature of the power plant it does not make sense to hive-off the LNG facility. He argues that it should be left to the future owner of the plant to take a call on the facility.

The separation will be a new headache. The owner of the power station will have to sign all kinds of agreements with the LNG facilitys owner, which means more complications and zero solutions.

Will Rothschild ever succeed in selling the plant Ask Dabhol's embittered contractors General Electric and Bechtel and the answer is a firm 'No'! Reason: If they plan to sell equity, it will have to be on our terms and conditions, reveals a source. If its the assets, then foreign lenders will have the first call on the payments.

The money will flow into foreign pockets and not IDBIs." On 29th May, the Dabhol power plant 'celebrated' its second year of forced shutdown when the Maharashtra State Electricity Board its sole buyer - stopped buying power.

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