The Hindu Business Line : Bechtel attaches Maharashtra Govt shares in Dabhol

EFFORTS to re-start the $2.9-billion Dabhol power plant in Maharashtra suffered a setback on Wednesday with Bechtel Corporation announcing that it has attached all shares held by the Maharashtra Government in the project, after winning a court order in the US.

The Maharashtra Government holds a 14.6 per cent stake in Dabhol Power Company through Maharashtra Power Development Corporation (MPDC), an SPV of the Maharashtra State Electricity Board. Bechtel and General Electric hold the remaining equity.

Even while announcing that it was attaching MPDC's stake in Dabhol, Bechtel, however, said it was "ready to help restart the much-needed Dabhol facility, once India upholds our legal rights and abides by its international obligations."

Bechtel claimed that it took the action when the company failed to meet the deadline set by an international arbitration panel last month to pay Bechtel $123 million for "violations of its shareholders rights in the power project."

When asked for his comments at a press conference after the weekly cabinet meeting, the Chief Minister, Mr Vilasrao Deshmukh, said: "We are seeking more information on the matter."

US District Judge Mr Lewis Kaplan, sitting in the Southern District of New York, signed the order, directing the attachment of assets held by MPDC, Bechtel said in a press release today.

"We are disappointed that the Indian authorities have given us no choice but to begin proceedings to seize their assets. Their refusal to acknowledge valid legal orders also sends a troubling message to foreign investors whose capital and technical expertise could help modernise India's infrastructure," Mr Tim Statton, Bechtel's executive Vice-President, said in a release.

Bechtel's affiliates in the Mauritius and the Netherlands have filed two additional arbitration claims against the Government of India to recover the value of their "lost investments" in DPC, which could total to more than $6 billion. The Mauritius arbitration proceeding is scheduled to be heard by an independent tribunal in London in July 2005, while the Netherlands proceeding is expected to be heard in mid-2006.

The Dabhol power plant, which remains India's largest foreign-investment project, was designed to provide 2,184 megawatts of power. It was shut down in 2001 in the wake of a tariff dispute between its main promoters and its customer, the Maharashtra State Electricity Board.

Since then, the project was dogged by legal disputes between the foreign stakeholders and the Maharashtra Government.

In fact, the US court ruling has come close on the heels of General Electric saying that it was willing to tie-up with National Thermal Power Corporation and Bharat Heavy Electricals Ltd to study the viability of restarting the power project.

Plans to restart the Dabhol plant have gained urgency in the light of Maharashtra facing a shortage in power supply.

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