Dabhols Indian, Foreign Lenders Near Deal

Updated: Aug 27 2004, 05:30am hrs
Overseas and local lenders to the idle $2.9-billion Dabhol power plant set up in India by Enron Corporation are close to agreeing how much debt each side will write off, officials close to the negotiations said on Thursday.

The government is keen to restart a project once showcased as an example of Indias ability to attract top-quality foreign investment, and has been pressing the lenders to agree on who should take the pain for over $1.5 billion of debt.

Wrangles between lenders, equity owners, and contractors have left it offline for more than three years. "Differences between Indian and foreign lenders have narrowed to an extent that is now bridgeable," said a Federal government official, adding: "Its a matter of a couple of weeks."

Indian banks, including state-run Industrial Development Bank of India (IDBI), State Bank of India and private-sector lender ICICI Bank, lent $1.3 billion to Dabhol, founded by bankrupt US energy giant Enron.

Two dozen overseas creditors, including Bank of America Corporation, Citigroup Inc and ABN Amro, lent about $600 million, though an official at IDBI said half of that has already been recovered. The question of either side recovering outstanding interest payments does not arise, the government official said, declining to provide further details.

But IDBI official said foreign banks were likely to agree to a write-off of up to 45 per cent of the outstanding principal of $310 million. Because state-run banks are so heavily involved, the government has been closely linked with the negotiations. Officials at foreign banks declined to comment.