GE threatens to walk away from Dabhol talks table

GE and Bechtel have initiated offshore arbitration proceedings in London against India, claiming upto $ 6 bn for lost profits plus an indemnity for any third party liabilities under the Mauritius-India Bilateral Investment Treaty.

They have also initiated an ICC arbitration in New York against the Maharashtra government for upto $ 6 bn, claiming willful breaches of the DPC shareholder agreement and other misconduct.

The veiled threat is a result of the firms’ impatience with the lack of any progress in parallel negotiations with the Centre on Dabhol.

‘‘The general feeling is (that) the previous government was never serious about settling and this government has not sent any positive indications that it is,’’ wrote Bayman in the e-mail.

It’s not the first warning of this kind from GE which, along with Bechtel, effectively control 85 per cent of DPC, shut down in May 2001 following a dispute between the Maharashtra State Electricity Board and project promoter Enron over the power purchase agreement.

In July, Bayman wrote to Principal Secretary T K A Nair that ‘‘given the lack of progress over this (three year) period, it unfortunately appears that we may be left with no real prospect of settlement and will have to rely solely on the legal actions to recover our property… quite frankly, we feel that we are negotiating with ourselves.’’

GE had suggested in July that the National Thermal Power Corporation (NTPC) be appointed prime contractor for re-start of the 740-MW first phase, with GAIL (India) as contractor for the LNG facility at Dabhol to provide gas for the 1,444-MW second phase.

It also offered to separate its shareholder position from the project contractor’s role. ‘‘We are prepared to consider restarting and completing the plant at the earliest. As an act of good faith, the companies will not make a prior resolution of equity claims a requirement for their support as contractors of the restart and completion,’’ Bayman wrote to Nair.

In 2001, the two firms had shot down a Power Ministry initiative to get the state-run NTPC to restart the project, saying their cooperation would be conditional upon a satisfactory resolution of their equity claims.

This time, it wants the government to settle its $ 137-mn claim for unpaid contractual dues.

It does not want to be paid immediately, provided the amount is authorised and guaranteed by the Centre.

Enron Corporation is now under liquidation but GE and Bechtel recently bought 49 per cent of Enron’s shares in a shell company and directly hold 59 per cent equity now in the DPC.