The Enron-promoted Dabhol Power Company (DPC) is heading for a serious cash flow problem. Once the showpiece of Indian power sector reforms, the company which has invested close to $3 billion in India, is now left with barely $8-10 million in its kitty.
Senior officials of DPC's lending consortium told Business Standard: "DPC has less than $10 million in its bank accounts. Its cash flow situation has severely deteriorated over the last few months." A DPC board member too said: "The company is facing cash flow problems." He, however, refused to elaborate any further.
Sources in the lenders' consortium said that the paltry amount was parked with Bank of America, one of the lenders to the project. The lenders have first charge on this.
On the other hand, DPC has liabilities of $25-30 million, most of which is due to vendors. It also has to service a part of its $1.86-billion debt incurred for the project, and the next instalment of repayments to domestic lenders is due by end December.
DPC's woes have been compounded by an additional burden of $2-2.5 million a month as legal payments for the ongoing court cases. DPC is at present involved in litigation with domestic lenders, the Maharashtra government, the Union government and the Maharashtra State Electricity Board (MSEB).
Canara Bank has opened a letter of credit for $ 23 million on behalf of MSEB. DPC has invoked the letter of credit but MSEB has successfully stalled this by going to court. The issue is slated to come up for hearing next month in the Supreme Court.
"Even if DPC were to gain a favourable verdict in this case, it would still be saddled with cash flow problems," sources in the lenders consortium said.
A DPC spokesman declined to comment on the issue. DPC's cash flow situation has been severely affected ever since MSEB stopping purchasing power from it in May this year following a payments dispute.
Last week, DPC laid off its entire 200-odd staff and re-hired a core skeletal team. The primary and the only source of revenue for the company is the payment it receives for its power. This has dried up since May, 2001 after MSEB stopped buying power.
The Houston-based Enron Corp which holds a 65 per cent stake in DPC has filed for bankruptcy under Chapter 11. Enron, along with two other US-based companies -- General Electric and Bechtel -- holds a 85 per cent stake in DPC.
The three US companies have already announced their plans to exit the project. IDBI is playing the role of a facilitator and trying to find a buyer for their stakes. Two Mumbai-based power companies, Tata Power and BSES, are in the race to buy them out.
Reliance wants BSES to take over Dabhol
The Maharastra-based power major BSES Ltd, which has bid for Enron
