The finance ministry has refused to issue a $230-million government guarantee for settling the dues of Dabhol power project's foreign lenders until all the 17 foreign banks issue comfort letters assuring withdrawal of each and every pending case. |
Officials involved with restructuring the project told Business Standard today that multinational banks ABN Amro and ANZ were the only foreign lenders that had still not issued the letters. |
This, they said, was holding back the guarantee. The two financial institutions have sought an additional amount to settle their dues with Indian lenders. |
The finance ministry had sought the comfort letter as an interim measure till the final settlement agreement was signed. |
A guarantee from the Centre is crucial to Indian lenders' plans of floating 20-year bonds to raise funds for the settlement. |
The lenders "� IDBI Ltd, State Bank of India, ICICI Bank and IFCI Ltd "� have floated a special purpose vehicle for settling the dues. The SPV will issue the bonds, which will be subscribed to by the Life Insurance Corporation of India. |
"The government does not intend to issue a guarantee till the comfort letter is received since we have already burnt our fingers once. We are hopeful that the issue will be resolved in a few days as Indian lenders are negotiating with the two remaining entities," an official said. |
Restructuring and revival of the Dabhol project was discussed by a committee headed by the Cabinet secretary on Monday. The meeting was also attended by Indian lenders. |
Officials said the lenders had not approached the Centre for a guarantee to issue bonds for settling GE's and Bechtel's dues. They have settled the dues for an amount of $305 million. |