In a crucial breakthrough in the Dabhol negotiations, one of the shareholders in the Dabhol Power Corporation (DPC), General Electric, has agreed, “in-principle,” to the Centre’s stand of contesting any third-party claims.Sources confirmed that while ‘‘GE is on board, a final word from Bechtel is still awaited”. Between them, GE and Bechtel hold 85 per cent equity in DPC, which owns the 2184 MW power-cum-LNG venture in Maharashtra.Bechtel has informed the Indian side that it would revert back on this issue. A final word is expected within four days after which the process of finalising the term sheet would begin.An agreement on how to address third-party claims was one of the critical outstanding issues between the Government and GE-Bechtel in the buyout process.While GE-Bechtel wanted the government and Indian financial institutions to indemnify the duo against any future claims, the government took the position that it would contest such third-party claims.Despite having agreed on the figure of $305 million for the buyout, negotiations virtually reached a dead end when India and GE-Bechtel failed to reach an understanding over how to settle future claims raised by unsecured creditors. The issue of third-party claims hinges upon claims being raised by DPC’s LNG suppliers and shipping companies. Sources said that these companies—mainly Oman Gas and Ad Gas—because of their take-or-pay arrangement with DPC have been sending invoices for payments. This is despite the fact that no LNG has been delivered to the project site to date.While these companies have not yet staked claim in the buy out, GE-Bechtel do not want any liabilities to fall upon them as DPC is an unlimited liability company.As LNG prices had increased since these deals were signed, government of India had taken the stand that the LNG suppliers would have been compensated for any potential loss. As a result, it was decided to contest such claims under the Bilateral Investment Treaty.In fact, the Indian side indicated to GE-Bechtel that in the event of claims being raised against GE and Bechtel as shareholders of DPC, government of India’s entities would join GE-Bechtel in opposing and defending such a claim.Alternatively, if the claim falls on the new company after GE-Bechtel’s stake has been bought out, such claims would fall only upon the new company and not on GE-Becthel. The government of India, sources said, had offered to put in place the necessary clauses that would isolate GE-Bechtel.Meanwhile, in a bid to find a lasting solution for the DPC project, GE said today it was joining hands with NTPC and BHEL to restart it. ‘‘GE Energy is joining a team from NTPC and BHEL to determine a course of action for restarting and completing the Dabhol power project,’’ GE president and CEO Scott Bayman said in a statement.
