All quiet at Dabhol as IDBI prepares asset sale

Vol 6, PW 8 (19 Jun 02) Midstream & Downstream

YOUD BE FORGIVEN for thinking plans to sell Enron's stricken Dabhol power plant and an associated LNG liquefaction plant have been abandoned.

In the last few weeks there's been hardly any news about Dabhol and this has raised serious questions about the commitment of Indian banks. We learn for example that lenders led by Industrial Development Bank of India - the biggest Indian lender - have yet to appoint a financial adviser, despite interviewing several bankers, among them DSP Merrill Lynch, Salomon Smith Barney, PriceWaterhouseCoopers and N.

M Rothschild & Sons. Yet IDBI assures this report it has "not forgotten" Dabhol, and that "contrary to general impression" a financial adviser will be appointed this month and that a steering group of 30 lenders is busily working on a plan to restructure the project.

"It should be ready in about three weeks," a source tells us. "It'll contain all the key milestones of the sale." IDBI assures us it will then prepare bid documents and issue them to the seven companies who have submitted an 'Expression of Interest'.

Due diligence and submission of financial bids will then follow. "We think we'll have the preferred bidder in sight by the end of December".

An earlier deadline to have a new buyer in place by March this year came and went unnoticed. One industry analyst tells us this is because US investigators still don't understand Enron's complex web of transactions.

"No buyer will touch Dabhol unless everything is crystal clear."