Dabhol won't restart till Bechtel and GE get paid

Vol 6, PW 20 (04 Dec 02) Midstream & Downstream
     

EFFORTS TO restart the stricken Dabhol power project have become entangled in a payment dispute between contractors General Electric and Bechtel on one side and Indian lenders led by state-owned Industrial Development Bank of India on the other.

Neither is willing to budge, raising the prospect that the project might never restart. GE and Bechtel walked out of the project on 17th June, 2001 - some three weeks after the power station shut down when its sole client, Maharashtra State Electricity Board, refused to pay for "costly" electricity.

But GE and Bechtel say they have not yet been fully paid for putting up the project and are claiming a total $120m in outstanding payments. "This is not some extra expense incurred by us," reveals a GE-Bechtel source, "but the total of unpaid bills due to us." Both are refusing to touch the mothballed power station until they get their money.

What is preventing IDBI from paying us our legitimate and hard earned money" Simple cussedness, it seems. IDBI says it has no money, but neither GE or Bechtel are convinced.

"What have they done with the 'Trust and Retention Account' in which they kept Dabhol Power Company's (cash) reserves for safety" he adds. It's believed DPC had about $20m in the 'Trust and Retention Account', while loans worth $250m were held back by financial institutions, when MSEB stopped buying power from DPC in May 2001.

GE and Bechtel have been lobbying for over a year and have even asked the US government agency Overseas Private Investment Corporation to intervene on its behalf with IDBI and finance secretary Subbaram Narayan.