NTPC, Gail spanner in Dabhol revival plan

The revival plan for the Dabhol power project has hit another roadblock with both National Thermal Power Corporation (NTPC) and Gail (India) Ltd refusing to put money on the table before they formally buy out the assets of the company from the debt recovery tribunal in Mumbai.

NTPC and Gail have to give Rs 500 crore each for buying out the stakes of GE and Bechtel. The Maharashtra State Electricity Board (MSEB), the third equity partner in the special purpose vehicle, which will own the Dabhol assets and run the power plant, has already committed Rs 495 crore.

"If NTPC and Gail do not give the funds, the plan to buy out GE and Bechtel's 85 per cent stake in Dabhol at $305 million will fall flat. The deadline, which expires on June 30, can be extended, but it will be difficult to stick to the plan once the arbitration process kicks off on July 7," said a source.

A senior banker said NTPC and Gail were willing to deposit Rs 1,000 crore with the State Bank of India without giving the bank an authority to use the money to buy the stakes. "Without a formal understanding, if the bank uses the money, it could be interpreted as an act of embezzlement," the banker added.

ICICI Bank, Industrial Development Bank of India (IDBI) and SBI have already put in close to Rs 600 crore while the Centre is willing to offer guarantee to raise around $300 million long-term funds to clear the dues of the overseas lenders, risk insurance agency Overseas Private Investment Corporation (OPIC) and export credit agencies.

"This money will be enough to buy the debt exposure of foreign lenders, OPIC and other agencies and part of Bechtel's equity. Unless NTPC and Gail put in money upfront, we cannot seal the deal," said a government source.

According to the plan, 19 overseas lenders will get $230 million (at 20 per cent discount to their debt exposure); OPIC $225 million for general and political risk cover; export credit agencies $390 million, and GE and Bechtel $305 million.

ABN Amro and ANZ had earlier wanted more money to settle their debt. Subsequently, the bank fell in line and ANZ asked for an additional $3 million.

Bechtel had some reservations about selling off its equity and wanted indemnity against all liabilities, However, it is now willing to drop its demand and follow the GE line to sell its stake.