Dvc Board To Meet On Bses Deal

The 3-member board of the Damodar Valley Corporation (DVC) will meet in early June to examine the implications of Reliance becoming the single largest shareholder of BSES Limited, with which DVC plans to set up the Rs 4,000 crore 1,000 mw Maithon Right Bank thermal power project.

Reliance currently has a nearly 15 per cent share in BSES. If it acquires another 20 per cent, it will become the single largest BSES shareholder.

The DVC management, which had been negotiating with BSES, for the joint venture project, was taken aback by the latest corporate development. The reaction is mixed with the feeling that Reliance will now have direct control in the affairs of BSES. So, DVC will now actually have to deal with Reliance.

 

The two promoters will each have 45 per cent equity in the joint venture project while the remaining 10 per cent will be held by financial institutions. The posts of the chairman and the managing director are expected to be held by DVC and BSES nominees by turn.

BSES, some senior DVC officials felt, has been basically a power distribution company and its real generation experience is restricted to the recently commissioned Dahanu power plant with two units of 250 mw each. In contrast, Reliance has more power generation experience.

However, some DVC officials feel the corporation will now have to deal with a much stronger joint venture partner in the Maithon power project.

The two partners have so far exchanged three drafts for the new company's articles of memorandum and the promoters' agreement. They have failed to agree on some of the crucial issues. Some DVC officials feel the corporation will be a poor match for the mighty Reliance.

The corporation has recently appointed S R Batliboi as a consultant to examine its agreements with BSES. Since DVC has little experience in company law matters, it is seeking professional advice from a chartered accountancy firm.

The areas of disagreement between DVC and BSES are:

* BSES wants to name the joint venture `Maithon Power Company' while DVC prefers `Maithon Right Bank Power Company'. Since DVC has plans to set up another power station on the left bank of the Maithon dam (on the Bengal side), it prefers to identify the joint venture according to the bank of the dam where it will be located

* BSES has suggested that Patna be selected as the headquarters where the company should be registered. DVC prefers one of the metropolitan cities

* DVC desires that its chairman should enjoy the privilege of a casting vote in the joint venture company's board. Since it was actually DVC's own power project, the corporation has strong feelings about the project's ownership and would like a final say in matters of disputes

DVC has identified 1,200 acres of land for the power project, for which Rs 1 crore is to be paid to the Bihar government. DVC has so far paid Rs 10.5 lakh to Bihar. But it does not have any land in its possession so far.

Forest clearance has been pending for three years. It involves taking over 73 acres of forest land. DVC has also applied for the environment clearance.