16 July 2002 – Domestic and foreign lenders to Enron’s stalled Dabhol power plant in India are at odds over whether to back a plan to seek court approval to seize the idle asset.
An official from one of the local lenders revealed the rift following a meeting of lenders on Monday. “There is complete unanimity among Indian lenders to enforce our rights, which includes asset seizure,” said the official, who declined to be identified.
“But we have to take the foreign lenders with us. Hopefully, some sort of common strategy will be reached and action will be taken soon in the best interest of the lenders.”
Nearly 30 lenders are involved in the $1.9bn Dabhol Power Company project which was constructed and is 65 per cent owned by Enron. GE and privately held Bechtel own 10 per cent each, while the remaining 15 per cent is held by the Maharashtra State Electricity Board (MSEB), the provincial utility and sole customer of the power plant.
Enron and the other equity partners would lose the ability to influence the price received for the plant or the allocation of funds were the lenders to seize the plant.
No power has been proceed since June 2001 after the MSEB fell 240m behind in payments for power. A number of parties have expressed interest in taking on the plant but legal wrangles have prevented any deal being struck.
Last week the MSEB had its offer to take 50 per cent of the output from the plant rejected by the lenders led by the Industrial development bank of India, as the rate being offered was regarded as uneconomic.
The 2184 MW Dabhol power plant is Enron’s largest Asian asset and is the largest single foreign investment in India.