DPC lenders to meet next month

Lenders to the Dabhol Power Company (DPC) will meet in Mumbai next month to thrash out differences on pricing of the proposed buyout of foreign debt by domestic lenders.

"The London meeting went off well with both sides coming close to an understanding. The Mumbai meeting may seal the deal," said an institutional source.

DPC has invested around $3 billion in setting up the 740 mw first phase and the near-complete 1,444 mw second phase of the Dabhol power project in Ratnagiri district of Maharashtra.

The plant has been lying idle since mid-2001 following a dispute over payments between DPC and the Maharashtra State Electricity Board.

Foreign lenders' exposure to DPC is pegged at about $90 million for the first phase and $272 million for the second phase.

The lenders have had two rounds of meetings in London and Singapore over the last few weeks.

While the Singapore meeting failed to make any headway, the meeting in London last week made progress as the foreign lenders have shown willingness to bite the bullet.

The Indian lenders have offered to buyout the foreign lenders' debt exposure at a 30 per cent discount.

Sources said the foreign lenders are not averse to the idea of a discount, provided the local lenders revised the offer.

"There will be hard bargaining in Mumbai. The eventual outcome will depend on to what extent the two sides are prepared to compromise," a source said.

The London meeting came close on the heels of the lenders' meeting in Singapore around three weeks back.

The latest flurry of meeting comes in the wake of the two US companies "" General Electric and Bechtel "" acquiring the bankrupt energy company Enron Corp's 65 per cent stake in DPC through a complex three-tiered deal.

The two US companies now hold a combined stake of about 85 per cent in Dabhol Power Company and along with the lenders hold the key to resolving the Dabhol tangle.