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Prepare plan to restart DPC: HC
April 08, 2003 20:57 IST
The Bombay high court on Tuesday told domestic lenders to bankrupt Enron Corp's $2.9 billion Dabhol power plant to prepare a feasibility plan to restart the stalled project, which would help them recover a part of their loans.
Harish Salve, lawyer for the Indian creditors, told reporters the high court gave them three months to make the report to enable state-run National Thermal Power Corp to get the plant running.
"The expenses for preparing the report will be borne by the Indian lenders," he said.
The high court was acceding to a request by the domestic lenders to revive the plant which has been idle since June 2001, and the development comes just days after foreign lenders said they wanted to exit the venture.
Nearly 30 Indian and foreign financial institutions lent $1.9 billion to build the 2,184 MW gas-fired power plant at Dabhol and an adjacent liquefied natural gas facility.
Its first 740 MW phase was generating power and a 1,444 MW second phase was nearly ready when construction was halted after the sole customer, loss-making local utility the Maharashtra State Electricity Board, fell $240 million behind in payments in May 2001.
Last week the foreign lenders which are owed $339 million in dues from the first phase wanted to scrap a power purchase agreement between Enron's Dabhol Power Company and the MSEB.
Termination of that agreement, which the foreign lenders are entitled to demand under the terms of the loan, would pave the way for creditors led by ABN AMRO Bank to invoke guarantees given by the governments of India and Maharashtra for the project's first phase.
The lenders would also be able to lay claim to the state utility's unpaid dues.
The domestic lenders oppose the move, however, and the row could end up in international arbitration.
The Bombay high court had appointed a receiver in March last year to ensure that the idle plant was well maintained. That followed a request by the Indian creditors, who extended 70 per cent of the loans to the project.
The Indian lenders said in their affidavit on Tuesday they had spent Rs 500 million ($10.5 million) so far in maintaining the plant, which according to them was losing an estimated Rs 1 billion a month in revenues.
India's largest power utility NTPC agreed in September to run the plant at Dabhol, but endless bureaucratic delays and disputes between the lenders and foreign equity holders have held up the plan.
Enron owns 65 per cent of Dabhol, General Electric Co and privately held Bechtel Group Inc each own 10 per cent, while MSEB owns the remaining 15 per cent.
Salve said the Maharashtra government had indicated it would be willing to buy power at Rs 2.80 a unit. The MSEB utility had stopped paying Dabhol for power two years ago, claiming that the electricity was too expensive.
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