FIs to buy OPIC out of Dabhol

Indian lenders and us agency to finalise buyout

Indian lenders to the 2,184 Megawatt Dabhol power project are set to buy out the over $200 million debt exposure of the US Overseas Private Investment Corporation (Opic) to the Dabhol Power Company.

The norms for the buy out will be finalised at a two-day meeting of lenders with Opic in Washington beginning on March 7. "The single-point agenda of the meeting is to buy out Opic's exposure," an institutional source said.

Opic, a US government agency, directly lent $140 million and insured another $200 million provided by US banks. The Indian lenders will buy out Opic's exposure at a discount, though the exact discount is not known.

State Bank of India Managing Director TS Bhattacharya, ICICI Deputy Managing Director Kalpana Morparia and Industrial Development Bank of India (IDBI) Executive Director Jitender Balakrishnan will represent the Indian lenders at the Washington meeting.

At a meeting in Singapore in the third week of January 2005, a major roadblock to finding a solution to restarting the Dabhol Power Company's gas-fired power project was cleared. The meeting succeeded in making DPC's 20 foreign lenders, including Opic, agree to sell their $600 million debt at a discount.

The operational 694 Mw Phase I of the project was shut in May 2001 following a dispute with its sole customer, the Maharashtra State Electricity Board.

The Indian lenders have lent $1.3 billion to the power project. The foreign lenders include Bank of America, Citicorp and ABN Amro.

The Indian lenders plan to set up a special purpose non-banking finance company, Gas and Power Investment Company (GPIC), for buying the loans of the foreign lenders.

The foreign lenders have agreed to sell their debt at a discount after a series of meeting in Singapore and in the US over the last few years.