Lenders unhappy at government snub to visiting team

Vol 6, PW 26 (12 Mar 03) People & Policy

RARELY DO investment bankers use such strong language; they can't afford to, given the nature of their business.

But when they do, it normally means they have had enough and are unwilling to put up with any more. Such sentiments resonate in the firmly worded Dabhol letter sent last month by ABN Amro to finance secretary Subbaram Narayan.

In short the banks feel Delhi is taking them for granted. "We were disappointed that you (Dr Narayan) were unable to meet our representative along with representatives of OPIC earlier this month in order to discuss the project." ABN reminds Narayan: "Offshore banks are major stakeholders in the project.

We have substantial outstandings and through our intercreditor and security rights, the right to approve any restructuring. The failure to involve us in any meaningful way seriously prejudices the prospects of resolving the difficulties affecting the project." The banks also tell Narayan they are unwilling to wait any longer for the government of India to get its act together and revive the project.

"Given the lack of progress over the last 18 months and the extensive costs already incurred by us, we are no longer able to support a restructuring of the project." The banks make it clear there is little chance of them reversing their present decision, even though Delhi is now taking some steps to address their concerns. "We understand the government of India is now seeking to resolve the difficulties affecting the project.

We welcome such an initiative but the history of the project prevents us from reviewing our decision to pursue our legal rights at this stage."