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23 September 2003 - Bechtel Enterprises and GE Structured Finance, the two US firms that hold stakes in India's Dabhol Power Company [DPC], have filed an arbitration action against the Government of India, seeking about $600m each as against their investment of $120m each in DPC.
The two firms, through affiliates, hold 10 per cent each in a $2.9bn power plant run by DPC. The bankrupt Enron Corp held the majority 65 per cent stake and state-run utility Maharashtra State Electricity Board the rest.
The Indian government had guaranteed the power purchase agreement that the utility had signed with Dabhol Power Company. The plant has been idle since June 2001 after the state utility, the sole buyer of electricity, fell $240m behind in payments.
"We have attempted to resolve our legal and contractual claims but have been blocked at every turn," Bechtel Enterprises Executive Vice President and Managing Director Rick Smith said in a statement here on Monday. "Regrettably, this international arbitration demand must be made," he said.
The claim was made under the arbitration rules of the UN Commission on International Trade Law and Indo-Mauritian investment trade treaty, the statement said.
"We will continue to pursue a full recovery of these investments through all available means," GE India president Scott Bayman said. The total value of the claim represents direct investments of approximately $120m each by the two firms and their shares in the market value of the company specified in the power purchase agreement, the statement said.
Foreign lenders to the project had launched arbitration proceedings in a London court in April, to recover their loans and exit from the project.
"At the same time, we remain committed to helping to restart this much needed power generation facility. It is incumbent upon all responsible parties to make sure this happens in a fair and reasonable way," he added.
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