22 Jan 2002 – The Dabhol Power Corporation in which Enron has a 65 per cent stake is to be put up for sale by the group of lenders to the power project and is expected to attract interest from six groups, according to an anonymous inside source quoted by the Reuters news agency yesterday.
The bidding process will be overseen on behalf of the interested investors and due diligence will commence at the beginning of February with a deadline of 14 March set for bids, said the source.
“I would say there’s probably an 80 per cent chance that it will happen. There is a high probability that the due diligence process will get underway, if not on February 1st certainly by early February,” the source said. An office is due to be set up in London where documents will be available to potential bidders.
The Dabhol Power Corporation (DPC) was set up to be the vehicle for the $2.9bn power project in the state of Maharashtra, located 250 km south of Bombay. The high profile development is India’s largest foreign investment with General Electric Co and construction firm Bechtel Corp each owning 10 per cent along side Enron’s interest. The Maharashtra State Electricity Board owns 15 per cent.
The power project includes a power plant which, when complete, will be capable of generating 1440 MW. Phase II of the project was halted last year when a dispute between Enron and the Maharashtra State Electricity Board came to a head, after the utility fell $240m behind in payments for power provided.
The sale would include the power plant, landing jetty and storage depot, which is to be sold as a package.
The three interested foreign companies are Royal Dutch/Shell, European oil major TotalFinaElf and French state-owned Gaz de France.
The potential Indian bidders are power utilities BSES Ltd and Tata Power Company, and Gas Authority of India Ltd, a state-run gas marketer.
The Industrial Development Bank of India and the Overseas Private Investment Corporation, a US agency that provides insurance to American companies investing in “risk areas”, head the group overseeing the bidding process.