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Tuesday, Jan 06, 2004

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Dabhol sale process to begin this month

Archana Chaudhary

Mumbai , Jan. 5

THE Union Government plans to begin the process of selling Dabhol Power Company or its assets, before the end of January. The Finance Ministry plans to issue an information memorandum to parties interested in buying a stake in the project, a source said.

According to a corporate source, the Ministry has informed potential buyers it would expedite the sale process and bids for DPC's phase-one sale would be called for by this month-end.

Information memorandum is compilation of facts related to the project based on which interested companies will conduct due diligence. It could not be determined if the Government was looking for an asset or equity sale in the project.

"There has been considerable pressure (on Union Government) to resolve the long-pending problem. Especially since the Overseas Private Investment Corporation (OPIC) may claim damages worth millions from the Union Government, citing `national expropriation' of the project by the Indian Government and lenders, as per the bilateral trade agreement between the US and Indian Governments," a senior official from one of the companies interested in buying the project said.

OPIC stepped into the picture after an independent arbitration panel in New York ordered an award of $28.57 million each to GE and Bechtel for claims they brought against the political risk insurer.

OPIC is a government agency that finances US companies' overseas investments through insurance and loans. In addition to OPIC financing, the US government is owed $202.5 million for a loan the Export-Import Bank made to Dabhol Power.

The 2184-MW plant has been lying idle since May 2000 following a payment dispute between Enron-promoted DPC and the Maharashtra State Electricity Board.

The Tata Power-British Petroleum consortium and Reliance Industries are said to be top contenders for buying the project.

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