Dabhol

Abstract

This article presents some the issues that arise in the context of restructuring a project finance transaction. The Dabhol Power Project, one of the largest independent power projects being implemented in India, is used for illustration. The issues faced by this project are a reflection of what ails the Indian electricity sector: low tariff collection, high subsidies, high transmission losses, poor transmission and distribution infrastructure, and political unwillingness to undertake measures necessary to reform the electricity distribution regime. The article concludes by outlining a possible option for restructuring the project.