BSES to complete due diligence of Dabhol project by Jan.

NEW DELHI, NOV. 19. The Mumbai-based power utility, BSES, is likely to complete due diligence of the 2,184 MW Dabhol power project by January end next year.

``The due diligence process will take six to eight weeks after signing of the confidentiality agreement with the Enron promoted Dabhol Power Company (DPC)," the BSES Chairman and Managing Director, Mr. R. V. Shahi, told reporters here.

Mr. Shahi said BSES has returned the draft of confidentiality agreement with comments to DPC. The confidentiality agreement, a pre-requisite for beginning due diligence of DPC to assess the value of its assets, investments needed to complete the 1,444 MW phase-II and its liabilities, would in all probability be signed by the end of this month.

BSES would appoint three separate consultants for doing technical, financial and legal due diligence of the $2.9 billion project, he said, adding that simultaneously an internal taskforce would also be appointed to do parallel ground work.

Mr. Shahi said the company had shown interest in acquiring 85 per cent stake of Enron, Bechtel and GE in the Dabhol project at the recently concluded Singapore meeting convened by the Indian financial institutions. After signing the confidentiality agreement, BSES will formally look into the financial books of DPC, its loans, sponsors and other assets and legal wrangles before taking any decision on the acquisition price of the distressed company.

Mr. Shahi said until completion of due diligence, BSES expected concrete formulations of various types of incentives and concessions by the Central Government, the Maharashtra Government and lenders which would help in finacial re-engineerig of the project.

``Financial re-engineering and re-arranging of fuel supply will be prerequisites for taking over the project," he said.

The total cost of power generation has to be brought down to Rs. 2.60-2.70 per unit. For this, fuel cost and capital cost had to be brought down, Mr. Shahi said.

``Due diligence will be an attempt to evaluate the opportunity cost. It would also encompass the ways to make the project viable again. Due diligence would decide how much does each of the stake holder has to take a beating for," he added.

- PTI

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