This story is from July 14, 2005

Dabhol SPV will go for commercial borrowings

Arup Ratan Lala / TNN / Jul 14, 2005, 01:10 IST

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KOLKATA: Ratnagiri Gas and Power Private Ltd, the SPV formed to run Dabhol plant, will go for commercial borrowing.

Dabhol SPV will go for commercial borrowings

KOLKATA: Ratnagiri Gas and Power Private Ltd, the SPV formed to run Dabhol plant, will go for commercial borrowing to repay the $380 million (about Rs 1500 crore) dues of Export Credit Agency (ECA), a consortium of foreign lenders headed by JBIC of Japan.
The SPV's commercial borrowing programme will not be backed by any government guarantee. Sources disclosed that ECA's claims are expected to be settled by December 2005.Sources said the SPV might float bonds to raise requisite funds to pay back ECA.
The overseas equity of Dabhol, held by GE and Bechtel, has now been transferred to Maharashtra Power Development Corporation Ltd (MPDCL) with Bechtel's claim of $160 million (over Rs 700 crore) being settled on Tuesday. The claim of GE ($145 million) had been settled earlier.
Sources disclosed that both GE and Bechtel have agreed for an settlement only after extracting an indemnification arrangement from the Union government against any future claims by LNG suppliers and the carrier company -- Greenfield Shipping. It is learnt that the government conceded the demand of GE and Bechtel as it was confident that the claims of LNG suppliers would not hold much ground.

Sources familiar with the development disclosed that MPDCL paid back Bechtel after being funded by the lenders of DPC. They disclosed that lenders themselves had borrowed funds from other banks to fund MPDCL in settling Bechtel's claims. The lenders mobilised funds on the basis of a "comfort letter"by the Union government on repayment of money.
The lenders - Industrial Development Bank of India (IDBI), State Bank of India (SBI), ICICI Bank, IFCI and Canara Bank - had to borrow from other institutions as their respective boards refused permission to enhance any further exposure in Dabhol.
With Bechtel's claim now being settled, the only claimants left are the ECA and the LNG suppliers of DPC. While the LNG suppliers have raised a claim of $1.3 billion, ECA's claim is about $380 million. The LNG suppliers include Oman LNG and AdGas of Abu Dhabi.

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