The drama surrounding the revival of the 2,200 MW Dabhol Power Company has taken a new turn.

The Indian lenders are planning to buy Enron's 65 per cent stake in the beleaguered company.

The lenders recently forwarded this proposal to the Overseas Private Investment Corporation, the US government body.

• The Enron Saga

The corporation has a dual role to play. It is a lender to DPC as well as Enron's political risk insurer.

Earlier, General Electric and Bechtel, which hold 10 per cent each in the project, were planning to buy Enron's stake.

The consortium of Indian lenders consists of ICICI Bank, Industrial Development Bank of India, State Bank of India, IFCI and Canara Bank.

An institutional source said if the lenders were able to buy the Enron stake at a discount, they could push for an asset sale aggressively.

"The Indian lenders discussed the issue with OPIC in London. No decision has yet been taken on this," the source said.

OPIC has been in discussions with the foreign lenders in London. Rothschild, the financial adviser appointed by the lenders, too, has been in talks with the government for an early resolution of the stand-off.

Even though the total equity component of the project is $1 billion, Enron's 65 per cent stake could be sold for a song because the company is in bankruptcy proceedings in the US.

Moreover, the DPC equity is not directly held by Enron. It is held through an offshore vehicle. General Electric and Bechtel  hold a 10 per cent stake each while the Maharashtra State Electricity Board holds a 15 per cent stake.

The success of the lenders' attempt to buy the equity is, however, subject to a host of conditions. First, the foreign lenders to DPC -- who are at loggerheads with the domestic lenders -- will have to agree.

Without their consent, such a stake transfer will not be possible. Further, the Centre, too, has to give its sanction because under the terms of the counter-guarantee given to DPC, Enron has to hold its stake for a specified time.

The foreign lenders will not give their consent unless the government agrees to continue with the counter-guarantee after the stake sale.

The hurdles

• Without the consent of foreign lenders, Enron's stake in Dabhol cannot be transferred to local lenders.
• The Centre, too, has to give its sanction because under the counter-guarantee terms given to Dabhol, Enron has to hold its stake for a specified time.
• The foreign lenders will not give their consent unless the government agrees to continue with the counter-guarantee after the stake sale.