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Enron bankruptcy may hit Dabhol sale

If the US energy giant Enron files for protection under Chapter 11 of the US Federal Bankruptcy Code, it may send sale of Dabhol power plant into a new holding pattern.

As creditors lined up in bankruptcy court, the Indian project would be "just another thing in that mess," media report said quoting Abhay Mehta, author of a book on the power project.

It could take a minimum of six months to a year for a sale to proceed, he said, adding in the meantime interest payments may stop and banks that would need to start listing Dabhol debt as "non-performing" be hit hard.

Enron's plight, the Wall Street Journal said, is casting a shadow over Dabhol Power Co generation project in India, ahead of a planned meeting this weekend of the Indian company's board in London.

It also is causing headaches for lenders with total exposure of $1.4 billion to the troubled project.

Board members were expected to take a major step in Dabhol's long-running feud with its only customer, the Maharashtra State Electricity Board, issuing formal notice that Dabhol would cancel the contract with the MSEB, observers said.

Meanwhile, Dabhol's lenders, who also planned to meet this weekend in London, had canceled their gathering, an official at one lending institution was quoted as saying.

The Industrial Development Bank of India, has around $625.2 million in direct and indirect exposure to Dabhol, including loans and guarantees to other lenders, the paper reported quoting analysts.

Analysts in India were quoted as saying that Enron should not expect to get more than $500-700 million, a calculation based on what might be competitive market prices for power in the region where the plant operates.

Potential buyers include BSES Ltd. and Tata Power Corp, a spokesman for Tata Power told the Journal that the company is expected to start due diligence "around mid-December or earlier, and see what price it can offer them only after it gets completed."

DPC will be affected if Enron files for bankruptcy: MSEB

The future of Enron's Dabhol Power Company will definitely be affected if its parent company files for a bankruptcy suit in the US, Maharashtra State Electricity Board chairman, Vinay Bansal said on Saturday.

"If Enron Corp files for bankruptcy under Chapter 11, then it is bound to have some repercussions on DPC," Bansal told reporters in Pune.

However, he said DPC would not be 'bankrupt' like its parent company as its finances were already pledged with the company's financial institutions.

Bansal also expressed confidence that MSEB would recover its dues up to Rs 12 billion from DPC for the troubled major's 'material misrepresentation of the capacity of its power plant'.

"Our claims are not frivolous. Hence, we have the confidence that we will get back our dues," he said.

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