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GAIL says in race for Enron's Dabhol project, appoints KPMG for due dilligence

State-run gas marketing firm Gas Authority of India Ltd said on Tuesday it was interested in acquiring a stake in ruined energy giant Enron Corp's beleaguered Dabhol Power Company.

"GAIL has communicated its expression of interest to IDBI, DPC and MSEB for taking equity in Dabhol Power Company which may also involve a strategic partner," the firm said in a statement.

The Industrial Development Bank of India is one of the lead lenders to the project while the Maharashtra State Electricity Board is the state-owned utility that buys DPC's power.

"GAIL intends to adopt a broad-based approach while undertaking due diligence as it has already made an entry into the power sector through equity participation in a gas-based power project in Gujarat."

The company said the petroleum ministry had approved its plans to carry out due diligence of the project which it planned to complete soon.

With GAIL's entry into the race, the number of companies vying to take over the $2.9-billion power project has gone up to three -- Indian power utilities BSES LTS and Tata Power Company have also indicated their interest in the firm.

Enron owns 65 per cent of DPC, which has an almost complete 2,184-megawatt project in Maharashtra. General Electric Co and construction firm Bechtel own a 10 per cent stake each, while MSEB holds the remaining 15 per cent.

Work on the second phase of the power project, for long projected as a showpiece of foreign investment in India, has been grounded following a payment dispute with MSEB.

The plant has sat idle since June and Dabhol has laid off all its employees. Enron has said it wants to exit the project, which would involve sales of the stakes of all shareholders.

GAIL said it estimated the project's buyer to be able to complete it in about 18 months, during which time the new management could renegotiate the power purchase agreement for its first phase, find buyers for the second phase and complete the unfinished parts.

The gas marketing firm added that the power sector was one of the business areas identified by it for integration into the energy value chain.

GAIL said it had already taken equity in Gujarat State Energy Generation Ltd, which is building a 156.1 megawatt combined cycle gas-based power project in Gujarat.

GAIL's shares ended Tuesday 1.4 per cent higher at Rs 63.90 on the Bombay exchange whose 30-share benchmark index closed 0.5 per cent down.

APPOINTS KPMG FOR DUE DILLIGENCE

GAIL has appointed KPMG as consultants for doing due dilligence to acquire the offshore equity in DPC.

GAIL CMD Prashanto Banerjee said the company would be signing the confidentiality agreement for doing the due diligence by the month end. "The whole process of due diligence may take anywhere between two to three months. We have hired KPMG as consultants for the same."

While GAIL is interested in the 5.5 million tonnes LNG import terminal and regassification facilities, it would take over the power project through induction of a strategic partner, he said but refused to give details.

(With additional inputs from PTI)

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