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Foreign, local lenders spar over Enron Dabhol asset

Foreign lenders to Enron Corp's $2.9 billion Indian power plant have not yet decided whether to back a plan by domestic lenders to seek court approval to seize the idle asset, an official at a local lender said on Monday.

The 2,184 MW Dabhol power plant, Enron's largest Asian asset, has been idle since last June. The bankrupt US energy trader had shut it down when its sole customer, a loss-making provincial utility, fell $240 million behind in payments.

Should the lenders seize the plant, Enron and its equity partners would lose the ability to influence the price received and how the proceeds are distributed.

"There is complete unanimity among Indian lenders to enforce our rights, which includes asset seizure," the official, who declined to be identified, told Reuters after a meeting of both sets of lenders.

"But we have to take the foreign lenders with us. Hopefully, some sort of common strategy will be reached and action will be taken soon in the best interest of the lenders."

Officials from the foreign lenders who attended the meeting were not immediately available for comment.

Nearly 30 banks and foreign government-run financial agencies, including the US based Overseas Private Investment Corporation, have lent $1.9 billion to build the plant, which is 65 per cent-owned by Enron.

GE and privately held Bechtel own 10 per cent each, while the remaining 15 per cent is held by the Maharashtra State Electricity Board (MSEB), the provincial utility and sole customer of the power plant.

The Indian lenders are led by the Industrial Development Bank of India, the State Bank of India and ICICI Bank, while the foreign lenders include Citibank, ABN-AMRO Bank and Bank of America.

An Indian court in March granted a request by the creditors to appoint a receiver to ensure the idling plant is properly maintained. It also barred the plant from becoming part of any US court supervised Enron's bankruptcy proceedings.

"We are concerned about the plant, and the more we delay the process of enforcing our rights, the more we stand to lose," the official said. "Hopefully the foreign lenders understand this point of view, " he said.

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