Dabhol LNG-Fired Power Plant - Phase II

Cancelled

The Dahbol LNG-fired power plant was a two phase project to construct a liquefied natural gas-fired power plant in Maharashtra. After overcoming a difficult beginning, the project finally took off at the end of 1996. Phase I was completed in April 1999. Phase II of the Dahbol LNG-fired power plant project commenced in 1999. The second phase involves the construction of a 1,444 MW natural gas fired power plant. The power from the plant is purchased by MSEB under the terms of a 20 year power purchasing agreement. Ownership for Phase II included Enron (80%), Bechtel (10%), and GE (10%). The MSEB had the option to acquire 30% of the second phase of the project from Enron. Dabhol Phase I and II will require about 2 million tonnes per year of LNG which has been secured by long term supplies from Oman LNG (1.6 million tonnes) and Abu Dhabi Gas Liquefaction Co Ltd (480 tonnes). Enron is also involved in arranging the transportation of the fuel from Oman in a LNG carrier project for a cost of US$220 million. The sponsors of the LNG carrier project were Mitsui OSK Lines, Enron International, and the Shipping Corporation on India. Financing for the second phase reached closure in May 1999. Total financing for Phase II was US$1.9 billion. Jexim provided export credit of US$258 million; commercial banks, led by Fuji Bank, provided US$175 million insured by Japan's Ministry of International Trade and industry; commercial banks led by ABN Amro provided US$90.8 million, 16 year export credit with a 75% margin backed by Belgium's Office National du Ducroire; four Indian banks, Industrial Development Bank of India, the State Bank of India, Industrial Finance Corp and ICICI provided guarantees for the export credit facilities and a US$333 million rupee equivalent loan; OPIC provided US$60 million with a 15 year tenor and margin of 400%; and finally a US$497 million syndicated loan through ABN Amro, ANZ, Citibank, Credit Suisse First Boston, and State Bank of India. Completion was expected in 2001. In April 2001, Enron authorized Dabhol Power Co.'s management to proceed with a preliminary move toward abandoning the project. In June 2001, the main contractors, General Electric and Bechtel ceased working on the plant because Enron had stopped paying them for 2 months. The project was 97% complete. In October, the Dabhol Power Company defaulted on its interest payments. In December 2001, Enron filed a bankruptcy protection suit in the U.S. Indian and foreign lenders responded by releasing more than US$20 million to save DPC. In January 2002, the Industrial Development Bank of India said it would sell shares held by foreign shareholders in the project. In April 2002, an Indian court appointed receiver, the Mumbai high court, took control of the plant. No bids were being accepted. None None

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