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May 16, 2001
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Money > Business Headlines > Report May 16, 2001 |
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Dabhol lenders to vote on May 16 on PPA terminationBS Banking Bureau The 25-odd lenders to the Dabhol power project will vote on Wednesday on whether the Enron-promoted Dabhol Power Company should be allowed to serve a preliminary PPA termination notice to the Maharashtra State Electricity Board. The voting will take place through conference calls criss-crossing the globe at 1830 hrs, Indian Standard Time. Even though the three Indian lenders- the Industrial Development Bank of India, the State Bank of India and ICICI- have decided to vote against the proposition, they will not be able to block the move. Technically, the proposal can be passed if four per cent of lenders are in favour of the termination notice. In effect, it will be passed if one of the 25 lenders casts its vote in favour of it. So, it's almost a foregone conclusion that DPC will be asked to issue its termination notice. Multilateral agency J-Exim, which has provided guarantees, will not participate in the exercise. Barring J-Exim, other financial intermediaries including global arrangers ABN Amro, Citi, ANZIB, CSFB and other banks and OPIC will cast their votes on Thursday. "In the first round, Indian lenders put their foot down and refused to give clearance to the termination notice. This time around they will not be able to block the move any more. The Indian lenders alone cannot save the controversial $3 billion as some of the foreign lenders are in favour of issuing the termination notice," said a source. The Indian lenders are in favour of completing the project without any time and cost over-run. They have disbursed about 80 per cent of their Rs 15 billion worth of loan commitments to phase II of the project, 93 per cent of which is complete. The trial run is expected to commence in June. The board of the Dabhol Power Company has already authorised Enron India managing director, K Wade Cline, to serve a termination notice as and when he deems fit. At a meeting of the lenders last month in London, the foreign lenders were keen that the termination notice be served in the face of defaults by the Maharashtra State Electricity Board and the Union government's refusal to honour the counter-guarantee of Rs 1.02 billion for the December bill. The domestic lenders are not covered by the counter-guarantee if the contract is terminated. The foreign lenders are covered by the counter-guarantee. Powered by YOU MAY ALSO WANT TO READ:
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