8 Feb 2002 – Eight companies or consortia had, by Thursday, expressed interest in bidding for Enron’s 65 per cent stake in the high-profile Dabhol Power Company, according to a source close to the group of lenders – led by the Industrial Development Bank of India (IDBI).

Of the eight, only two, Tata Power and BSES and have furnished the required $100 000 deposit which entitles them to access documents in London as part of the due diligence process.

The other groups who met the deadline for a formal expression of interest are the Gas Authority of India (Gail), Reliance Industries, British Gas, Royal Dutch Shell, TotalFinaElf, and Gaz de France. It is expected that they will pay their non-refundable deposits next week.

The source confirmed that both TPC and Gail had signed confidentiality agreements although TPC were not willing to comment on the matter.

BSES chairman and managing director R V Shahi confirmed signing the agreement.
“BSES signed the confidentiality agreement two days ago and we expect to commence due diligence by mid-next week. The process would be undertaken by in-house experts,” Shahi said.

Separately, US Treasury Secretary, Kenneth Dam was speaking about the collapse of the Dabhol project and US policy towards investment in India at the Confederation of Indian Industries forum.

Dam said, “US policy is that we want to see contractual difficulties faced by US companies resolved promptly in a manner that is fair to all parties.” He said that an equitable resolution would have the effect of assuring US investors that India honours the sanctity of contracts and the rights of investors. “The sooner these difficulties are resolved, the better it will be for both the countries,” he said.

Pointing to media reports, Dam said “The debate about Dabhol Power Company has focused on only one US shareholder when there were three. And, it has largely ignored its Indian debt holders. Unfortunately, lingering investment disputes have cast a dark cloud over foreign investors attitudes towards India,” he said.

The failure of the high-profile undertaking is an embarrassment to the Indian government, which had hoped to attract more foreign investment on the back of the $2.9bn project. It is also worrying Indian lenders including the IDBI which has a Rs62bn exposure to the project.