Terms set for sale of Enron's Indian plant

MUMBAI, India -- Terms have been set for selling off bankrupt U.S. energy trader Enron Corp's $2.9 billion Dabhol power project in India, according to Reuters.

The terms include a March 14 deadline for submission of bids.

Six major companies so far have expressed interest in bidding for the 2184-megawatt gas-fired Dabhol power plant and an adjacent liquefied natural gas (LNG) facility, a source close to the planning group told Reuters Monday.

They include three potential foreign bidders: Royal Dutch/Shell, European oil major TotalFinaElf and French state-owned Gaz de France.

The potential Indian bidders are private power utilities BSES Ltd and Tata Power Company, and a state-run gas marketer, Gas Authority of India Ltd.

Holds 65 percent of Dabhol project

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Enron holds 65 percent of the Dabhol project, which is about 250 kilometers (155 miles) south of Mumbai, in the western state of Maharashtra.

Other stakeholders are General Electric Co and construction firm Bechtel Corp, each with 10 percent, and Maharashtra State Electricity Board (MSEB), with the remaining 15 percent.

MSEB is the government-run monopoly distributor of electric power in Maharashtra state. It was in dispute with Enron over unpaid bills and the cost of power from Dabhol when the plant was mothballed in June 2001.

In early November, Enron's Indian subsidiary, the Dabhol Power Company, served an asset transfer notice on the MSEB, as a step towards termination of their power purchase agreement.

The Dabhol power plant was almost complete when construction on the 1444-megawatt second phase was halted after the MSEB fell $240 million behind in payments for power provided.

The 740-megawatt first phase began operating in May 1999.

Bids 'to be opened March 15'

A source, speaking on condition of anonymity, said bids for Dabhol would be opened on March 15.

"After that who knows what will happen. Post March 15 nothing has been decided. Who knows if there will be a clear winner or if they'll be further bidding," said the source, a high-ranking official of a lender to the project.

He said the intention was to sell the facility as a whole, instead of accepting separate bids for the power plant and LNG landing jetty and storage depot. But he added interested parties may form consortia to bid jointly for an operation they planned to split up later.

Bidders must pay a $100,000 non-refundable "earnest money deposit" and sign a confidentiality agreement, he said.

London data room

A data room will be set up in London where each qualified bidder will be given three days to carry out due diligence, followed by probably a two-day onsite visit to the plant by each bidder, the source said.

Operating data, information on the status of the nearly completed second phase and historical records detailing construction of the plant will be provided through the data room, he said.

There will be one pre-bid conference, probably in the second half of February, to give "greater clarity that would affect the bid price," he added.

The Industrial Development Bank of India and the Overseas Private Investment Corporation, a U.S. agency that provides insurance to American companies investing in "risk areas," head the group overseeing the bidding process.

Dabhol is the single biggest foreign investment in India, but the Dabhol Power Co.'s bitter and protracted dispute with the MSEB has left it with an unhappy legacy.