Dabhol promoters give Indian team frosty welcome

Vol 8, PW 22 (09 Feb 05) People & Policy

New Year 2005 has brought no luck to the jinxed Dabhol Power Company.

Last month, a high-powered Indian government delegation led by finance ministry officials returned empty handed after a visit to New York and Washington. The delegation included everyone interested in either selling or buying the defunct power plant: Indian bankers, Maharashtra government officials, NTPC, GAIL and consultants Rothschild.

On the agenda were a series of meetings with DPCs owners: General Electric and Bechtel and separate meetings with US government insurer Overseas Private Investment Corporation. On 11th January, the delegation met GE and Bechtel with an offer to exit DPC.

They offered us the same old formula, reveals a source from GE and Bechtel. The Indian government wants us to take a 40% hit on our investment.

GE and Bechtel are engineers and contractors of the 2,184-MW power plant and have been demanding $380m to exit the project since 2002. On the first day of our meeting we refused their offer, he said.

Indian officials tried hard to explain why they are offering us this magic formula. GE and Bechtel hold a combined 85% stake in DPC and told Indian officials that if they are not paid their equity and contractual payments in full, the next meeting would take place in the International Court of Arbitration! India has effectively nationalised our asset! adds our source.

We cant even enter our own power plant. OPIC gave the Indian delegation a similarly frosty response when it suggested that international arbitration against India be dropped and an out of court settlement reached.

They offered the same 60-40 nonsense to OPIC as well, we learn. Last November, OPIC launched legal proceedings against India in the Permanent Court of International Arbitration at The Hague.