Dabhol Power Project

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Stakeholders: Identify all the major stakeholders in the DABHOL power project. What are the intended benefits and costs of this project for the stake holders? Analyze the roles, responsibilities and reward structure of the stake holders. Based on the case study do you foresee a need to change the reward structure?

Enron, Bechtel Enterprises, and General Electric—through offshore subsidiaries—formed Dabhol Power Company to build the first phase of a major power plant in Maharastra state in India. Later, part of the equity was sold to the Maharastra State Electricity Board. Enron is also a stakeholder as fuel supplier and as the operator of the plant. Bechtel’s construction arm has engineering, procurement, and construction stakes; General Electric is a major equipment supplier; and the Maharastra State Electricity Board is the electricity purchaser. There are also other major sponsors of IPPs, such as AES Corporation, whose sole business is developing, owning, and operating electric power facilities. Moreover, the Asian Develop-

In India’s Dabhol project, for example, the owners are Enron, Bechtel, and GE Capital.

Shareholding Pattern


Investment by Stake Holders

| | | |Foreign lenders (ABN AMRO, Standard Chartered, BNP Paribas, Calyon, CSFB, etc.) |USD 325 million | |Domestic lenders (the largest being IDBI, ICICI, SBI, Canara Bank and IFCI) |Rs. 62 billion | |Export Credit Agencies (JBIC, US EXIM, Belgium OND) |USD 480 million | |Overseas Private Investment Company (OPIC), USA |USD 250 million |

Counter guarantee by Govt. of INDIA

Ownership stake

|Stake Holder |% stake | |Enron (indirectly through a series of shell companies) |65% | |GE (indirectly through a series of shell companies) |10% | |Bechtel (indirectly through a series of shell companies) |10% | |Maharashtra State Electricity Board (MSEB) |15% |

Responsibilities & Rewards


❖ Phase 1

• Construction of a 695MW gas-fired power station to generate electricity constantly at Dabhol, Guhagar taluka, Ratnagiri district, Maharashtra scheduled to commence production in December 1997.

• Capital cost- $920 million.

❖ Phase 2

• Expand the capacity of the plant to 2015MW and involved in the construction of a 1320MW gas-fired plant, re-gasification facility, and an LG carrier as well as corresponding port facilities including a fuel jetty, navigation channel, and breakwater. It was scheduled for commissioning at the end of 2001.

• Switch the entire plant to LNG for fuel upon the completion of Phase II.

• Capital Cost - $1.9 billion

❖ Renegotiated deal

• Enron cut the price of the power by over 20 percent, cut total capital costs to $2.5 billion and increased output to 2184MW.

• Enron suggested switching from distillate fuel to naphtha or LNG from domestic suppliers.

• Devolving of the re-gasification plant into a separate venture.

• Enron offered MSEB a 30% share in DPC. This would reduce the project’s annual cash outflow by US$ 150-170 million.

❖ Annual return promised to investors in the Qatar facility was 15%.

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