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| General Electric and Bechtel, which hold a 10 cent stake each in the troubled Dabhol Power Company (DPC) have held out an olive branch to the Union government.
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| In a letter to the domestic lenders, the two transnationals have offered to help in re-starting the the first phase of the project and in completing the second phase.
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| The two companies have also offered a three-pronged formula for resolving the stalemate in the negotiations between the two companies on the one hand and the Union government and the domestic lenders on the other hand.
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| The offer comes barely about a month after the two companies commenced arbitration proceedings for recovering their entire investment in DPC--which they valued at $1.2 billion.
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| "As an act of good faith, the companies will not make a prior resolution of equity claims a requirement for their support of the re-start and completion of a "New Dabhol," the two companies have said in a letter to the DPC's lenders committee which is attempting to resolve the issues preventing a restart of the power project, now idle for more than 28 months. The letter was signed by Scott Bayman, President and CEO of GE India and Richard Smith, executive senior vice president and managing director, Bechtel Enterprises Holdings Inc, a joint media statement issued by GE Structured Finance and Bechtel said.
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| The support of Bechtel (the EPC contractor to the project) and GE which supplied the turbines to the power plant is considered crucial for the re-start of the power plant due to their technical expertise.
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| In the past, they have demanded a fee for their help in re-starting the power plant. It is not clear whether this demand has now been dropped.
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| The three pronged formula mooted by the two companies envisages 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 DPC facilities; resolving the two companies' equity claims through the agreed upon contractual remedies of independent binding arbitration without judicial or other interference.
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| "This is hardly the way to go about things. They have taken the Union government to court and in the same breath talk of offering help in reviving the project. Further, any project restructuring first entails the equity holders making compromises and the lenders following suit. In this case, GE and Bechtel want to do it just the opposite way," sources familiar with the development said.
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| GE and Bechtel asserted have made it clear that arbitration will continue. "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 GoM and its affiliates in the shareholder suit filed in September and against the GoI in the arbitration hearing filed under a bilateral treaty investment (BIT) treaty, also filed in September."
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| The two companies which appeared to be on the backfoot till recently on the issue of their equity claims in DPC being settled received a shot on the arm when an arbitration panel in Washington ordered the US-based OPIC to pay $28.75 million each as political risk cover to the two companies.
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| The panel held that ex-propriation of the two companies investments had taken place. The plant has been in the custody of a court receiver for over a year after Enron which holds 65 per cent stake in DPC went bankrupt. |
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