The Hindu : DPC: IDBI, others to fight offshore lenders' arbitration move

Online edition of India's National Newspaper
Saturday, Apr 19, 2003

Business

Business

DPC: IDBI, others to fight offshore lenders' arbitration move

MUMBAI APRIL 18. The Industrial Development Bank of India (IDBI) Chairman, P. P. Vora, today said that Indian lenders to the controversial Dabhol Power Company (DPC) would chalk out a strategy to counter the offshore lenders' decision to initiate arbitration proceedings against them in London.

Mr. Vora told UNI that all the parties concerned such as the ICICI Bank, SBI and other domestic lenders would meet here on Monday to formulate a strategy to counter the foreign lenders' decision to issue notice against the domestic lenders for an international arbitration in London.

According to the offshore bankers' statement yesterday in New Delhi, the arbitration relates to a dispute under the Dabhol Intercreditor Agreement "resulting from actions by the Indian lenders who blocked the offshore lenders from pursuing rights embodied in the Dabhol financing documents". Mr. Vora, assured that the domestic lenders led by IDBI would indeed fight it out.

When asked when the strategy will be finalised, he said there was enough time to take a decision as the Indian lenders have 30 days' time to appoint an arbitrator to fight the case in London.

According to Indian lenders, they will assess whether the foreign lenders' notice will withstand in the London court as the Bombay High Court had already issued an interim order in April last year against the DPC, stating that it cannot issue a Preliminary Termination Notice (PTN) without the consent of the secured creditors of the project (both foreign and domestic lenders) in the event of the payment default by the Maharashtra State Electricity Board (MSEB). In the backdrop of the Mumbai High Court order, the foreign lenders in Singapore on April 3 this year had voted to instruct DPC to issue a termination of the PPA with the MSEB. — UNI

Resolve financial matters — GE

NEW DELHI, APRIL 18. GE, an equity partner in troubled Dabhol Power project, today said resolution of financial matters would hold the key in restarting the plant and hoped that an amicable solution would be in sight in six months.

"Technical and engineering solutions are easy. It is mainly the financial issue that needs to be resolved,'' Acott Bayman, President and CEO of GE India, told reporters here.

GE holds 10 per cent stake in Dabhol Power Company (DPC), promoted by Enron, valued at $120 million.

Mr. Bayman said though the company had requested the stakeholders including the Finance and Power ministries for settling their financial dues, at the same time GE was having negotiations with the National Thermal Power Corporation (NTPC) on modalities to restart the plant at the earliest.

Asked whether the plant, lying idle for more than 20 months, would be started again, Mr. Bayman said, "It is a complex issue and it cannot be restarted overnight. But we are hopeful of a solution in six months.''

The two ministries are working too hard to find a solution. Besides, all the stakeholders including domestic and foreign lenders are holding intense discussions on the project.

Meanwhile, the foreign lenders have commenced arbitration proceedings in London against their Indian counterparts, led by the Industrial Development Bank of India, for having "blocked them from pursuing rights embodied in the financing documents.''

The DPC's offshore lenders filed a notice of arbitration under rules of the United Nations Commission on International Trade Law (UNICTRAL).

The other Indian lenders involved are erstwhile ICICI, State Bank of India and IFCI.

Mr. Bayman said all the stakeholders were engaged in negotiations preserving their legal rights. — PTI

Printer friendly page
Send this article to Friends by E-Mail

Business