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.