It is unlikely that DPC will achieve financial closure in the next three months and will need to apply for extension, sources said. Under the present circumstances, the board will grant the extension, they added.

The mode of financing for phase one, which will involve US Exim and OPIC, will not be applicable to the second phase as a result of the sanctions. The company is now evaluating other options to raise the debt.

Although Enron officials have denied that the sanctions will not affect the Dabhol project, analysts believe that besides the delay in financial closure, the cost of the debt raisedfrom other sources will also be high.DPC is preparing a preliminary information memorandum (PIM), officials said, after which the date of financial closure can be estimated. The report would be submitted to all the developers and prospective landers.

The implications of the delay on project cost and the tariff too are not clear, said sources. There have been significant changes in forex rates and other costs since September 1997, the earlier projected date for financial closure, sources said.

DPC is at present executing phase one of the project which will be commissioned by the end of this year. Financing was relatively simple as it had the counter guarantee of the Centre and the state besides the escrow facility. Absence of the counter guarantee will be another obstacle while arranging the debt, said sources. The state government, which has taken a decision to pick up a 30 per cent equity stake in phase two as well, is not clear what the outgo for this commitment will be.