Enron may sell DPC stake at discount

Mumbai, Oct 3: US energy giant Enron Corp might be willing to sell its holding in a troubled $2.9-billion Indian power unit at a discount, a source at one of the lenders to the project said on Wednesday.
The source said that Tata Power Company was negotiating to buy Enron’s stake in Dabhol Power Company at a discount.

“We feel Enron might be willing to sell at a small discount,” the source said. A spokesman for Dabhol declined comment. Tata Power has acknowledged that it has held preliminary talks over Dabhol.
In August, Houston-based Enron said it and its other foreign partners were ready to sell their stakes in Dabhol for no less than $1.0 billion, an amount said to be sufficient only to cover their costs and direct financial investment in the project.

Enron owns 65 per cent of Dabhol, while the US conglomerate General Electric and construction firm Bechtel each owns 10 per cent. The remaining 15 per cent is held by the Maharashtra State Electricity Board (MSEB), the nearly bankrupt power distribution monopoly.

On Wednesday, British gas and oil producer BG Plc said in London it had agreed to buy Enron’s stake in another oil exploration joint venture in India for $388 million.

Dabhol has been facing problems for nearly a year over high tariffs and payment defaults by MSEB, its sole customer. It was forced to shut down its 740 mw plant on the West coast of India in June after MSEB stopped buying power.

The shutdown has stalled an expansion programme that was almost complete and would have raised capacity to 2,184 mw.

The managing director of Tata Power said his company had held preliminary talks to buy Enron’s Dabhol stake, and newspaper reports indicated BSES Ltd was another suitor.

Officials at BSES, a leading distributor of electricity to Mumbai and also a power producer, were not immediately available.

The source said Tata Power officials met PP Vora, chairman of Industrial Development Bank of India, the biggest lender to the project, last Thursday to start negotiations.

— Reuters