Domestic lenders to bankrupt Enron Corp's $2.9 billion Indian power plant have asked a local court to allow them to restart the stalled project so they can recover part of their loans, officials said on Monday.
Their plan is to get India's largest power firm to restart the plant, which has been idle since June 2001, and generate revenue that can be used to pay off some of the debt, they said.
"We moved the Bombay high court late last week to appoint National Thermal Power Corporation to start generating power from the first phase," an official at Industrial Development Bank of India, the lead lender, told Reuters.
"We see the restart of the first phase as the only solution to the problem and it will help lenders to get back their dues," said the official, who declined to be identified.
He said the court was likely to hear the case on Tuesday.
Nearly 30 Indian and foreign financial institutions lent $1.9 billion to build the 2,184 MW gas-fired power plant and an adjacent liquefied natural gas facility.
Its first 740 MW phase was generating power and a 1,444 MW second phase was nearly ready when construction was halted after the sole customer, a loss-making local utility, fell $240 million behind in payments in May 2001.
The domestic lenders' move comes days after foreign lenders said they wanted to exit the project entirely by scrapping the power purchase agreement between Enron's Indian unit, Dabhol Power Company, and the local utility, the Maharashtra State Electricity Board.
The foreign lenders, led by ABN AMRO Bank, could then recover their loans by
invoking guarantees that the governments of India and Maharashtra have given them for the project's first phase. The lenders would also be able to lay claim to the state utility's unpaid dues.
The domestic lenders oppose such a move, and the row could end up in international arbitration.
Restart plant
The Bombay high court had appointed a receiver in March last year to ensure that the idle plant was well maintained. That followed a request by the Indian creditors, which extended 70 per cent of the loans to the project.
In September, state-run National Thermal Power Corp agreed to run the plant situated at Dabhol, 250 km south of Mumbai, but endless bureaucratic delays and disputes between the lenders and foreign equity holders prevented it from doing so.
Enron owns 65 per cent of Dabhol, General Electric Co and privately held Bechtel Group Inc each own 10 per cent, while MSEB owns the remaining 15 per cent.
"By getting a court to direct NTPC to restart the plant, we will hopefully see all parties come to an understanding and the first phase start generating power," said the official at the domestic lender.
Indian lenders said the Maharashtra government, which owns the loss-making utility, had indicated it would be willing to buy power at Rs 2.80 a unit.
The utility had stopped paying Dabhol for power two years ago, claiming that the electricity was too expensive. The cost of power was calculated by a formula and depended on the amount of power the utility bought.
Dabhol, in turn, said the utility had reneged on its contractual obligations.
The dispute has dragged on since then, with matters further complicated by Enron's bankruptcy in the United States.
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