Mumbai, Dec 5: Close on the heels of controversy over the review of Dabhol phase-II (1,444 mw), the board of directors of Dabhol Power Company (DPC) will give a formal approval for increase in foreign equity up to $685.7 million from $452.7 million and take up to 30 per cent of the paid-up equity share capital of phase-II through a new Enron affiliate company to be established in Mauritius.The DPC board meeting in Mumbai, slated for December 7, will be chaired by its chairman and chief executive officer (CEO) Sanjay Bhatnagar.DPC sources told The Financial Express that the company had already approached the Centre, the union industry ministry and the FIPB for approval for increasing the foreign equity.
The company sources said this would be done as per the loan agreements entered into with the lenders for phase-II. The shareholders, at the insistence of the lenders, had agreed that should it be necessary to achieve completion of the project, they would contribute up to $253 million by way of additional equity support over and above the base equity of $452.70 million, totalling to $685.7 million.
DPC sources said that Enron, which holds 50 per cent equity in phase-I and phase-II, has proposed to take up 30 per cent of phase-II paid-up equity capital of the DPC through its new affiliate to be established in Mauritius. Enron's move to increase its equity deserves importance as the Maharashtra State Electricity Board (MSEB) had conveyed to the DPC that it would pick up 30 per cent stake after commissioning of the phase-II by the December-end next year.
The MSEB had picked up 30 per cent equity in the phase-I (740 mw) by contributing over Rs 750 crore to the DPC. MSEB sources told The Financial Express that of the $452.7 million, it would have to share 30 per cent of the same, which comes to $136 million. The MSEB has pointed out that it did not want to be the equity participant from the development phase and take developmental risk on it. The developmental works consisted of finalisation of equipment suppliers, EPC contractors, identification of lenders, preparation of various legal documents, "which involves tremendous manpower and expenditure. MSEB did not want to participate in all these works and spend for it," the sources said.
The DPC has said that FIPB had approved foreign equity holding of $434.2 million for phase-I. This approval had also noted that Enron Mauritius Company would offer 30 per cent of its equity holding to the MSEB or its nominees.
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