Scathing response to GE and Bechtel Dabhol offer

Vol 7, PW 16 (22 Oct 03) People & Policy

Indian lenders to the blighted Dabhol Power Companyhave reacted scathingly to an offer by General Electric and Bechtel to restart Phase-I and complete Phase-II of the 2,184-MW power project.

On 11th October, GE and Bechtel reversed their uncompromising stand by offering to re-start the power plant without first demanding payment of outstanding dues. ButIndian banking sources - led by IDBI and ICICI Bank are incredulous that GE and Bechtel are now projecting themselves as Good Samaritans intent on resolving the DPC mess after refusing to co-operate with Indian lenders for almost two years.

Has anybody read the fine print of this letter asks an Indian lender. There is no change in their stand.

This is old wine in a new bottle. GE and Bechtels letter - seen by this report - does not mention any reversal of their determination to recover $80m each, plus past payment for construction work at Dabhol worth $120m.

The only new element is a proposal for a separate commercial relationship with lenders for payment towards re-starting and completion of the power plant. Menacingly, the letter also promises to continue the legal fight against the government of India, Maharashtra and the Maharashtra State Electricity Board for the return of their money.

This is absurd, adds another Indian lender. On one hand they say they want to co-operate and on the other they want to pursue their legal fight! He adds: For one and half years they refused to co-operate with us.

Now that Rothschild sees a breakthrough they want us to welcome them with open arms! Indian lenders say they want GE and Bechtel to complete the plant without any pre-conditions. We want more sacrifices from them, said the official.

They cant bully Indian entities like they do weak Latin American companies. In July, GE and Bechtel rejected Rothschilds offer to pay them $30m each as full and final payment for their 10% equity stake in DPC.

Many point to the growing warmth between Delhi and the US administration of George W. Bush as the main reason behind GE and Bechtels decision to soften their stance.

Bechtel is a close Republican confidant and GE is planning to set up it largest out sourcing base in India, adds a source. $80m is not much to save your international reputation.