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Tata Power may raise $1.7 billion, Enron plant eyed

Tata Power Co Ltd, India's largest private-sector utility, is seeking shareholder approval to borrow up to $1.7 billion, which could be used to buy bankrupt Enron Corp's most valuable asset in Asia.

The company, part of the Tata group, India's second-largest conglomerate by sales, said in a notice sent to shareholders this week that it would seek borrowing approval at an annual general meeting next month.

Shareholders will be asked to authorise raising Rs 54 billion ($1.1 billion) and $600 million by issuing debentures, bonds or other instruments, the notice said.

Tata Power is one of six companies that in January indicated interest in bidding for the $2.9 billion Dabhol power plant built near Mumbai by Enron.

"This is an enabling resolution to raise money to fund investment spending and take advantage of any opportunities that come along," the company's vice president for finance, A Charan, told Reuters on Wednesday.

Charan declined to clarify whether that included buying the massive Dabhol plant once formal bids are called, but said Tata Power had no need now to borrow money to finance any pending project.

The company's long-term debt stood at Rs 27.9 billion ($572 million) as of March 31, and its debt-to-equity ratio at a low 0.6 to one, its annual report shows.

FOR SALE

Enron owns a 65 per cent stake in Dabhol Power Co, the company it created to build and operate a 2,184 MW power plant and LNG storage facility on the Arabian Sea coast, about 150 km south of Mumbai.

GE, which made the plant's turbines, and US contractor Bechtel Corp, which oversaw construction, each own 10 per cent stakes, with the remaining 15 per cent owned by the Maharashtra State Electricity Board, the sole buyer of the plant's output.

Construction of the plant was nearly completed when work was halted in May last year after MSEB defaulted on payments.

The 740 MW first phase of the plant, which began operating in 1999, was shut down in June last year and the entire facility has since sat idle.

Some 20 domestic and foreign financial institutions lent $1.9 billion to build the plant, and have made little progress trying to sell it since Enron filed for bankruptcy last December.

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