Dpc, Bses, Tata Power Draft Selloff Roadmap

The Dabhol Power Company (DPC) and its two possible new owners -- BSES and Tata Power -- have chartered an elaborate roadmap for taking forward the process of sale.

At a meeting convened in Singapore by the lenders with the power project, Tata Power and BSES have agreed to ink separate confidentiality agreements with DPC in around a fortnight.

After this, they will kick off the due diligence process. A sub-committee of lenders will also be constituted to oversee the upkeep of the 2,184 mw power project and also suggest whether fresh funds should be disbursed to the project, which is 90 per cent complete.

P P Vora, chairman, the Industrial Development Bank of India, said, "Tata Power and BSES will have to submit price bids within 60 days of the signing of the confidentiality agreement. DPC representatives have agreed in-principle to this. However, this is subject to the approval of the offshore sponsors of DPC."

The three offshore sponsors of the company are the US-based companies Enron Corporation, General Electric and Bechtel, which hold a combined stake of 85 per cent in DPC.

Enron holds a 65 per cent stake in the company with General Electric and Bechtel holding 10 per cent each. The balance 15 per cent is held by the Maharashtra State Electricity Board through a special purpose vehicle.

The DPC spokesman confirmed the move towards signing a confidentiality agreement.

"We are writing to the offshore sponsors today and will seek their approval. We can go ahead only after this. Last month, at a meeting in Singapore, we had voiced certain concerns to the lenders which have been partially addressed," the spokesman said.

He however declined to elaborate further. Tata Power managing director Adi J Engineer termed the meeting as positive, while BSES chairman and managing director R V Shahi said that they were now permitted to visit the site of the 2,184 mw power plant at Ratnagiri in Maharashtra.

"We made it clear that we had the requisite expertise in running gas-based plants as we have commissioned about 8 such plants in Malaysia, Dubai, eastern Asia besides the ones at Dadri near New Delhi and Uran in Maharashtra," said Engineer.

It is learnt that BSES was initially soft pedalling on the issue of due diligence but senior executives of Tata Power pointed out that any further delay will result in the modern power plant not only gathering dust but actually sustaining damages. This had a significant bearing on the decision to draw out the roadmap.

Shahi said that his demand that the confidentiality agreement being governed Indian law and not US law as demanded by DPC had been agreed to. Earlier, BSES had attached a string of riders to a draft confidentiality agreement including this.