The Centre is considering a proposal to extend its guarantee to the exposure of foreign lenders in Dabhol Power Company. On September 30, 2002, the total dues of the foreign lenders stood at $339 million.
According to government sources, the finance ministry was apprised of the fact that foreign banks and institutions had lent funds to the Enron-promoted Dabhol Power based on their independent assessment of risks.
However, with the lenders threatening to exit the project and demanding repayment of dues in March this year, the proposal to cover their exposure was being deliberated upon by the government.
Over a dozen foreign banks and institutions, including ABN-Amro, Bank of America, the Overseas Private Investment Corporation, JBIC, BNP Singapore and CSFB, have extended dollar loans to Dabhol Power.
The amount sanctioned by foreign lenders for the first phase of the project was $545 million.
The banks had written to the former finance secretary S Narayan in March expressing their intent to exit the project, and cited lack of progress in the last 18 months as their reason. Four months later the plant continues to remain idle.
Government sources said repayment of the dues had been ruled out. They pointed out that the Indian financial institutions and banks too had lent to the 2,144 mw project.
Rupee loans of Indian banks and financial institutions tied in the project on September 30, 2002, were close to Rs 1,500 crore (Rs 15 billion).
While the government is awaiting a report of Rothschild -- which was appointed by the Indian lenders to the project -- it is also exploring options to restart the project through negotiations with GE and Bechtel, the key stakeholders in Dabhol Power.
Total offshore funding sanctioned by the Indian and foreign lenders to the project was a little over $1 billion, of which about $890 million has been disbursed. The amount outstanding in September last 2002 was about $860 million, the sources said.
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