DPC: Will there ever be light again?

Hiral Vora

The sordid saga of bankrupt energy trader Enron's Dabhol Power Company is no less than that of a daily soap opera on Indian television with no plausible solution in sight to restart generation of the power plant, despite continuous attempts by the Centre and IDBI.

For last 19 months Asia's marked infrastructure asset, the 2,184 mw twin cycle gas-fired power plant, has not generated even a single unit of electricity braving a summer and two monsoons and winters, ever since its sole customer Maharashtra State Electricity Board stopped buying power on May 29 2001 accusing the multinational of fraud, deceit plus overcharging.

A plethora of reasons, both political and financial have marred the project since its inception in 1991, but by 2002 end, the ground reality is that DPC witnessed its massive self destruction despite several attempts by all interested parties, including the lead creditor IDBI.

Apart from appointing a court receiver, a care and preservator, Maharashtra's agreement to buy DPC's "costly" power finally at Rs 2.80 per unit (the same offered by DPC in March 2001 before Godbole Committee) and resignation of Union Power Minister Suresh Prabhu, several crucial issues remain unresolved like fiscal restructuring of the project and its physical completion, by the IDBI and the finance ministry.

Year 2002 started on a promising note with advanced level of negotiations for selling Enron, GE and Bechtel's 65 per cent equity at $1.1 billion to Tata Power or BSES Ltd.

But the collapse of the mighty Enron Corp in US prompted the Indian lenders to seek protection from the Mumbai High Court, which in turn appointed a court receiver for DPC.

A separate bitter battle was fought in the High Court, which ruled that Maharashtra Electricity Regulatory Commission had jurisdiction to adjudicate the dispute between DPC and MSEB.

DPC could not sustain this blow and further sunk into oblivion as High Court also stayed its efforts for international arbitration in London against MSEB and state government.

Around the same time, an anonymous letter surfaced in a leading daily alleging that the code CDs and e-chips from the project were missing and "the foreigners" had taken them away, crippling the future functioning of the $30-billion project.

When questioned by IDBI, the wafer thin DPC management said the components were removed for security reasons.

Simultaneously, after Enron's collapse in US, DPC was losing ground as lenders had blocked funds required for its day-to-day expenses.

There was no money left to repay its multi-million dollar loans, not even to pay employees' salaries, right from high flying executives to the office boys.

DPC's managing directors, K Wade Cline followed by Mohan Gurunath, resigned and except GE and Bechtel, all the stake holders like IDBI, ICICI and MSEB recalled their directors from the board.

DPC is now almost defunct and bankrupt lock, stock and barrel. Media too encashed upon DPC's collapse with a lesser known business editor claiming that the fallen energy major had tried to buy him by offering $1 million per year in a bid to silence his criticism of the company's plans to build a plant in India.

On the sale front, not much progress envisaged. Lack of cooperation from the promoters for selling their stake well below $1.1 billion, forced IDBI to call for bids from interested parties.

It received an overwhelming response with companies like Tata Power, BSES Ltd, GAIL Ltd, Royal Dutch Shell, Gaz de France and the Reliance Industries Ltd with a last miniute bid, throwing themselves in the ring.

At every public meeting or a conference IDBI chief P P Vora assured reporters that the financial institution would commence the due diligence process for stake sale by March end, but even as the year draws to an end, there is no sign of it.

While the Tatas and the mighty Ambanis (with BSES in tow) are interested in the entire facility, multinationals are eyeing the lucrative five million tonne LNG regassification facility.

Tatas also offered to run and maintain the deteriorating plant for "free" for a three month period, but IDBI turned down its request stating that it was an "interested" party.

Situation at the plant site in the scenic Guhagar too was grim as over five thousand migrant labourers, contractors and engineers had left the region empty handed, leaving the once thriving economy into a shambles.

PTI

2002: The Year That Was