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Foreign banks pull the plug on Dabhol

Mumbai, March 16 (PTI): Upset with the delay in restarting the jinxed Dabhol Power Company, foreign lenders led by ABN Amro Bank have decided to pull the plug and exit from the project seeking repayment of loans of more than $ 339 million.

“Given the lack of progress over last 18 months and extensive costs already incurred by us, we are no longer able to support a restructuring of the project. We are seeking repayment of our loans. The amount involved exceeded $ 339 million as on 30 September 2002 and is increasing daily,” ABN Amro said in a recent letter to the union finance secretary S. Narayan.

Stating that offshore banks were major stakeholders in the project, the bank said they had the right to approve any restructuring of Dabhol Power due to substantial outstandings and through their inter-creditor agreement and security rights.

“Failure to involve us in any meaningful way seriously prejudices the prospects of resolving the difficulties affecting the project,” the bank’s vice president Flavia Mistry said.

The strong-worded letter states though offshore banks welcomed the Centre’s initiative to resolve the problem, “the history of the project prevents us from reviewing our decision to pursue our legal rights at this stage”.

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