Chapter 5

Dabhol Power Company, India

Type of project

Power station, port facilities for the importing of liquefied natural gas (LNG), and an

LNG regasification facility.

Country

India.

Distinctive features

• Largest foreign investment in India.


• Largest energy infrastructure project financing in India.


• First financing to close after foreign companies allowed into Indian power sector.


• First Indian government guarantee of a foreign corporation’s liabilities.
  •Wilful default by main offtaker.


• Defaults by both federal and state governments on guarantees.


• Bankruptcy of principal project developer.
  •Limited effectiveness of international arbitration process.

Description of financing

The financing for Phase I (June 1995) comprised:

• US$270 million equity from the three sponsors;


• US$100 million in loans from the Overseas Private Investment Corporation
  (OPIC);


• US$300 million in US Eximbank-guaranteed loans from Indian banks;


• US$100 million in rupee-denominated Indian bank loans; and


• US$150 million in a 10-year syndicated commercial bank loan, lead-managed by
  Bank of America and ABN AMRO, and priced at 300 basis points (bps) over the
  London interbank offered rate (Libor), with commitment fees of 100 bps and par-
  ticipation fees ranging from 75 bps for a US$10 million participation to 87.5 bps for
  a US$15 million participation.
  The last-mentioned loan, which carried a counter-guarantee from the central govern-
  ment, was 64 per cent oversubscribed.