Lenders given two weeks to resolve Enron dispute

Lenders given two weeks to resolve Enron dispute

NEW DELHI (AP): The Indian government has given financial institutions two weeks to develop a plan to resolve the dispute with Enron Corp. over India's largest foreign investment project, newspapers reported Friday.

Houston-based Enron has said it wants to sell its 65 percent stake in the 90 percent complete Dabhol Power Co. project for a minimum of US$1 billion.

The $2.9 billion project has been idle since May 29, when its only customer, the Maharashtra State Electricity Board, stopped drawing power and paying bills because of what it said were exorbitant prices established in a seven-year-old contract.

Finance Secretary Ajit Kumar met with executives of the Industrial Development Bank of India and other banks on Thursday and gave the deadline for a plan to avoid the case ending up in an international arbitration court, The Financial Express and Business Standard reported.

The Express said the plan is to include an out-of-court settlement with lenders and promoters, rescheduling of loans to make the project attractive to new investors, and lower prices for electricity produced by the plant.

The Express quoted the development bank's executive director, V.P. Singh, as saying the lenders would act as intermediaries between the seller and prospective electricity buyers, to get the production restarted.

Enron has said the sellout deal must involve no loss to the Houston company, or to it's two co-investors, General Electric Co. and Bechtel Corp., which each have a 10 percent stake in the 740-megawatt plant that produces electricity from naphtha.

The project was designed to generate 2,184 megawatts as the world's largest natural gas-fired power plant.