The Hindu Business Line : GE, Bechtel allowed to buy 49% stake in DPC

AMERICAN multinational corporations, GE and Bechtel, partners of ruined US energy major Enron in the controversy-ridden Dabhol Power Company (DPC) will now have a superior position against Indian stakeholders while negotiating sale or restart of the mega power project.

A US bankruptcy court has admitted the two companies' request to buy 49 per cent equity of DPC for $22 million (around Rs 95.6 crore) from the fallen Enron, according to reports.

It also reportedly rejected a $25-million (around Rs 108.6 crore) bid for the 49 per cent stake from Reliance Energy, the only Indian party present at the hearing. The higher bid was perhaps rejected because OPIC, a US Government-owned political risk insurer, backed the offer made by GE and Bechtel, according to an official at an Indian institution that has lent money to the company.

"In a sense the order of the US court is only an approval of the agreement arrived at in February-March between OPIC, GE, Bechtel and Enron. OPIC's backing to GE and Bechtel's bid was perhaps the deciding factor," the official said.

GE, Bechtel had earlier this year agreed to drop certain insurance claims against OPIC in return for its support for buying the stake, the official said.

A GE press release today said that the actions are part of a "comprehensive effort to reach a responsible settlement" with various DPC stakeholders. However, Enron India had pledged DPC shares with the Indian lenders, including IDBI, ICICI and State Bank of India among others, who together have an exposure of more than Rs 6,000 crore to DPC.

"The shares are still pledged with us. We can invoke that pledge and attach the shares if we want to. However, we have to see what the process (lenders' approval for transfer of ownership) is," the official said.

"The two companies have always said that the new buyer selected by Indian lenders should settle their contractor claims and equity dues of $1.2 billion (around Rs 5,214 crore) and also take over Enron's stake for $22 million. So except for consolidating their negotiating position, this move does little else," a State Government official said.

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