DPC was represented at the meeting by managing director Sanjay Bhatnagar and general manager Rahul Basu. Financiers close to the company pointed to "the total departure from the funding pattern of the Dabhol power project's first phase". The project cost incurred on phase-1 was $1.079 billion, while the same on phase-II is projected at $1.8 billion.

"While the debt-equity ratio is expected to be maintained at 70:30, the same as in phase-I, reliance on foreign currency loans is sought to be reduced," bankers close to DPC said.

DPC declared its intent on Friday to increase local currency financing frominstitutions for its phase-II. This comes close on the heels of a proposal pending before the government which seeks to raise the existing 40 per cent cap on rupee debt that these power projects can raise. A policy announcement on the issue is awaited.

The overwhelming shift to local institutional funding for phase-II of its project is surmised to have been prompted by the economic situation following the imposition of sanctions against the country, and a general downswing in investor appetite in the overseas loan markets in the aftermath of the south-east Asian financial crisis.

DPC had raised foreign currency loans aggregating $548 million for setting up phase-I. The break-up being $298 million from US Exim, $100 million from the Overseas Private Investment Corporation (OPIC) and another $150 million from a consortium, which included Bank of America and ABN Amro Bank.

The 2,450mw Dabhol power project is the country's first and largest project to put up by an independent power producer. It's promotersinclude Enron, Bechtel and General Electric. A 30 per cent stake has been offered in DPC to the Maharashtra State Electricity Board.