GE settles Dabhol issue

A major hurdle in the path of re-starting the Dabhol power project has been cleared. US conglomerate General Electric (GE) on Saturday annou...

A major hurdle in the path of re-starting the Dabhol power project has been cleared. US conglomerate General Electric (GE) on Saturday announced that it has reached a comprehensive settlement of its Dabhol related disputes with the Centre, Maharashtra government and the Indian lenders to Dabhol Power Company (DPC).

The settlement includes financial consideration in partial payment of various contractor claims for work completed but not paid and in exchange for the transfer of GE’s ownership interest in Dabhol, Scott Bayman, President and CEO, GE India, said here on Saturday.

The government on Thursday secured the requisite approvals to pay off $110 million to GE — a main shareholder in the Dabhol power project — and arrive at a settlement with the American company.

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With the approvals in place, the amount would be paid to GE in a cheque after it signs the settlement. It would then give the government rights to restart the power project. Signing the deal has already begun late on Friday night in London.

In a parallel development, with barely a fortnight to go before the legal wrangle begins in London, Bechtel — the other majority shareholder — too has indicated its willingness to come on board and reach a settlement with the Centre and Maharashtra government.

Bechtel’s spokesman Jonathan Marshall told The Indian Express: “…time is getting short, but we are still trying to negotiate a settlement with the Indian government.’’

The settlement with GE was to be signed on June 30 but got delayed as two essential approvals were not in place for the transfer of the initial $110 million from Maharashtra Power Development Corp to the company (MPDCL).

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The balance $35 million would be paid later. Purely on the technical difficulties arising out of banking transactions, MPDCL is expected to pay the amount to GE by July 6.

“Bechtel will be on board and it may not press for the arbitration to recover claims of Rs 26,000 crore which it has made with GE at the London arbitration tribunal. The tribunal is to commence its proceedings from July 15,” sources said.

The $3 billion Dabhol project was shut down in June 2001 after its sole customer MSEB halted payments following a dispute over tariffs for power. The collapse of its main promoter Enron Corporation added to its woes. The project, located at Guhaghar in Maharashtra, has a total capacity of 2,184 MW.