The Hindu Business Line : Govt backs buyout of Dabhol foreign lenders

THE Government has finally drawn up its strategy to tackle the Dabhol project imbroglio. On Thursday, the Cabinet decided to constitute an empowered group of ministers (GoM) to resolve the issue.

The 2,184-MW project switched off supply and sale of power two years ago following a dispute over despatch schedules and payment liabilities.

The fate of the idling project is currently torn between domestic lenders and the erstwhile power purchaser, Maharashtra State Electricity Board, on the one hand, and foreign lenders and equity holders GE and Bechtel on the other.

As a first step, the Cabinet has decided to back the domestic lenders' efforts to buy out the foreign lenders.

To aid this process, the GoM will finalise and provide a set of fiscal incentives required to mitigate the cost of buying out the offshore lenders.

The next step would be that of the domestic lenders buying out the foreign equity sponsors, GE and Bechtel.

The Finance Ministry is looking at providing guarantees of the order of Rs 3,000 crore to a special purpose vehicle, which will be floated by domestic lenders to buy out the foreign lenders and equity sponsors.

This will pave the way for the sale of asset by the domestic lenders, which in turn will lead to the restarting of the project.

While the Finance Ministry is looking into the entire issue, the Finance Minister, Mr P. Chidambaram, has excused himself from the matter on the ground that he had represented the interests of GE and Bechtel in the past.

Cabinet nod for ONGC, Cairn blocks equity swap

The Cabinet also approved the acquisition of participating interest by Oil and Natural Gas Corporation (ONGC) and Scottish explorer Cairn Energy in each other's two oil and gas blocks.

ONGC has made an investment of $135 million for acquiring participating interests in two blocks — KG-DWN-98/2 in the deep water offshore regions of the Krishna-Godavari basin and the CB-OS/2 block in Cambay offshore area in Gujarat — from Cairn Energy, according to the Petroleum Minister, Mr Mani Shankar Aiyar.

Addressing press persons here after a meeting of the Cabinet Committee on Economic Affairs, Mr Aiyar said ONGC will acquire 90 per cent participating interest in the KG basin block. In the Cambay basin block, ONGC will acquire a 15 per cent stake in the exploration area and another 10 per cent in the discovered areas of the block.

Cairn Energy, on the other hand, will buy 30 per cent participating interest in two exploration blocks — GV-ONN-97/1 in the Ganga Valley basin in Uttar Pradesh and CB-ONN-2001/1 in Cambay basin in Gujarat — for a consideration of $0.165 million.

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