Consortium paves way for Dabhol foreign debt final price

The IDBI-led consortium for the troubled Dabhol power project, slated to meet foreign lenders once again in Mumbai in the first week of June, appears to have sorted out its differences and is likely to decide the final price at which the foreign debt would be handed over to the domestic financial institutions.

"We have sorted out almost all issues that was acting against transfer of the debt from the foreign lenders to Indians and would decide on a mutually agreeable price in the next meeting," informed, M Damodaran, chairman and managing director, Industrial Development Bank of India (IDBI) while speaking to Business Standard at the sidelines of a press conference in Kolkata today.

"We have met twice, in London and Singapore, to discuss the issue and talks are at a very advanced stage. We have sorted out other finer issues in the previous meeting and have reached a consensus regarding the transfer of debt to us at a mutually agreeable price," he explained.

There was no question of referring the matter to international arbitration because talks are likely to be concluded in the next meeting, Damodaran explained, when asked on the possibility of such proceedings.

Damodaran however declined to name the price at which the foreign institutional investors would hand over the debt to the domestic ones.

Foreign lenders like OPIC, Citibank, ABN Amro, CSFB, ANZ Investment Bank, Bank of America, and 19 others have a total outstanding due of over $340 million.

Sources have indicated they were likely to provide some discount on the amount owed, to which the Indian lenders appear to have agreed. Damodaran however declined to name the discount the foreign lenders were willing to offer.

The development assumes significance because this will allow domestic lenders to proceed with the sale of DPC to a new sponsor.

Once the outstanding dues are taken over, the lenders can negotiate for the 85 per cent equity in DPC held by GE and Bechtel.

Meanwhile, Indian lenders were assured of counter guarantee for taking over the outstanding dues of foreign lenders but it will have to be decided by the new government sources said.

DFI's have firmed up plans of setting up a special purpose vehicle to take over the outstanding dues of foreign lenders of the 2,184 MW power project estimated to cost $3 billion.

Although lenders are eager to resolve the outstanding debt issue with foreign lenders, moves are also on to look into the technical aspect of Dabhol that is lying idle for over a year.