BUSINESS

GE, Bechtel offer to restart DPC

MUMBAI OCT. 13. GE and Bechtel has recently informed the Dabhol Power Company Indian Financial Institutions (IFIs) Committee in a letter that they are willing to restart Phase I and complete Phase II of the Dabhol power project. They have also offered a proposal to resolve many of the issues delaying the process.

However, GE and Bechtel made it clear in a press release issued here today that they "will prevail in the arbitration hearing filed against the Government of Maharashtra and its affiliates in a shareholder suit filed in September and against the Government of India in the arbitration hearing filed under a bilateral treaty investment (BIT) treaty, also filed in September.''

In a letter responding to offers made by Rothschild's, the firm advising the IFI's on settling claims to clear the way for a restart, GE and Bechtel proposed three steps to break a stalemate in negotiations. These are separating the outstanding unpaid contractor claims relating to the project from the equity claims to expedite negotiations and the restart of the plant; settling the outstanding contractor claims on an equitable commercial basis as part of the actual restart of the Dabhol facilities and; resolving the two companies' (GE's and Bechtel's) equity claims through the agreed upon contractual remedies of independent binding arbitration without judicial or other interference.

GE and Bechtel asserted that, separating the commercial relationship and the equity claims is the best way to expedite the efforts necessary to restart the plant. The letter continued, "As an act of good faith, the companies will not make a prior resolution of equity claims a requirement for their support of the restart and completion of a `New Dabhol.''' Assuming a commercial agreement can be reached, lenders or new sponsor(s) will be provided with information and assurances of GE's and Bechtel's participation as suppliers and contractors in restarting Phase I and in completing Phase II. Upon signing and fulfilment of contractual items, GE and Bechtel will begin work.''

The companies also indicated that the disputes related to equity would be pursued separately and in parallel with commercial efforts to restart the plant. The equity issues would be resolved between GE and Bechtel, the Government of Maharashtra and the Union Government in arbitration, as originally intended by the parties and as provided by the project agreements or by negotiated settlement. The letter states, "GE and Bechtel strongly assert that expropriation, as confirmed by the independent tribunal in the recent OPIC political risk insurance arbitration decision, has occurred. And, both companies are confident they will prevail in the arbitration hearing filed against the Government of Maharashtra and its affiliates in a shareholder suit filed in September and against the Government of India in the arbitration hearing filed under a bilateral treaty investment (BIT) treaty, also filed in September.''

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