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Tata Power may ask lenders for loan write-off in DPC

Archana Chaudhary

MUMBAI, Nov. 6

LENDERS to Enron's Dabhol Power Company (DPC) may have to write off ``part of'' their loans for potential buyers to remain interested in acquiring the project.

Officials at Tata Power told Business Line that the company may ask lenders at a multilateral meeting to be held in Singapore to write off ``part of'' the $1.9-billion in loans to the 2,184-MW project. Tata Power had given an expression of interest to fi nancial institutions last month. Mumbai-based power utility, BSES Ltd, is the only other company which has publicly expressed interest in buying the project, albeit, at a substantial discount.

According to the sources, while the Tatas have asked for writing off loans in addition to the earlier demand for increasing the moratorium on loan repayments and slashing of interest rates. Rupee loans constitute over 65 per cent of the debt. Domestic FI s would be most affected if the loans were to be written off.

Senior Tata Power officials, including Mr Adi Engineer, Managing Director and Mr Phiroze Vandrevala, Deputy Managing Director, are leaving for Singapore on Wednesday to attend the negotiations. Senior bureaucrats from the Union Ministries of Finance and Power are also expected to attend, apart from State and MSEB officials.

According to sources, Tata Power will ask for a complete debt and equity restructuring for it to buy a stake in DPC. This also includes asking Enron Corporation to take a 50 per cent hit on its equity in DPC.

Enron had earlier quoted a price of $1.2 billion for its stake. ``The Tatas are looking at a figure of $600 million,'' sources said.

Another matter of contention in the price quoted by Enron includes the $0.22-billion which account for ``retained earnings'' which have been added to the cost. According to the Tatas, they are willing to pay only $0.8 billion of these ``retained earnings '' which include Enron's much-talked about `education charges'.

The company will push for separate negotiations for the LNG terminal and the power plant. Enron had earlier said that it would not consider selling the project piecemeal and that the company picking up a stake in the project would have to buy the power p lant along with LNG terminal.

The company plans to negotiate the debt and equity factors to bring down power tariffs to an ''ideal price'' of Rs 2.70 per unit to Rs 2.90 per unit, sources said.