Dabhol restart to fetch GE $110 mn

Foreign lenders' dues likely to be cleared next week.

The special purpose vehicle (SPV) for restarting the 2,184 Mw Dabhol power plant in Maharashtra could start functioning soon.

By next week, dues of the foreign lenders, including the Overseas Private Investment Corporation (Opic) and General Electric, a stakeholder in Dabhol Power Company, are expected to be cleared. This will leave only Bechtel's dues outstanding.

"The agreement between the Maharashtra Power Development Corporation Ltd (MPDCL) and GE is expected to be signed and a payment of $110 million (Rs 484 crore) made by Monday," said a source, adding that by the end of the next week, foreign lenders would also be paid off.

After Bechtel's dues are cleared, Indian lenders intend to approach the debt recovery tribunal for recovery of their debt and enforcement of security.

Since all stakeholders in the project are to be bought out, the Indian financial institutions are planning to file applications for the DRT to approve the 'consent terms' agreed between them and DPC for the sale of assets to the SPV.

As the sale could be on "consent terms", it would be by way of a private treaty with an identified purchaser. The DRT process is expected to take four to six months.

Assets would then be sold to the SPV, which will work on restarting the plant that has been lying shut since 2001. The government has set itself a target of restarting the plant by 2006.

The claims from overseas lenders total Rs 1,012 crore while Opic's claims are to the tune of Rs 965.9 crore. GE-Bechtel had made claims in the range of Rs 1,276 crore to Rs 1452 crore.

The total cost of restarting the plant has been estimated at Rs 10,000 crore, which is to be shared among the government, the Indian lenders, National Thermal Power Corporation and Gail (India) Ltd.

Dabhol Power Corporation (DPC) shut the plant in May 2001 after a dispute with the Maharashtra State Electricity Board (which fully owns MPDCL).

There have been over two dozen court cases and arbitration proceedings, as the stakeholders, including DPC's majority shareholders, GE and Bechtel, as well as the foreign lenders, have been trying to recover their investments.

GE and Bechtel now own 86 per cent of DPC after buying Enron's 66 per cent stake. The MSEB owns the rest.