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14 July 2005 - Bechtel Corp. signed a deal on Tuesday to extricate itself from a four-year fight over a defunct power plant in India, accepting $160m to settle its $6bn suit against the government of Maharashtra.
Bechtel, which agreed Monday to pay a small fine of $286 000 for polluting the water around the Dabhol plant, will be paid $160m by the Indian government for its losses in that project, an ambitious, $2.9bn plant 100 miles south of Bombay designed to generate 2184 MW.
"We have signed release and settlement agreements with Bechtel following which the US company has agreed to transfer its shares in Dabhol Power Company to us," said a senior Maharashtra State Electricity Board official.
The project, once owned by Enron Corp., was mothballed in 2001 after a disagreement between Enron and the government over electricity payments.
Bechtel and General Electric Co. together held 85 per cent of the Dabhol plant and both fought to recover their lost money. GE has already accepted $145m to settle its own claims earlier this month. The money will be paid by the Maharashtra Power Development Co., which owns the other 15 per cent of Dabhol.
Bechtel will drop its $6bn suit against the Indian government, which was set to go before the International Court of Arbitration in London on July 18, subject to payment of the $160m being made. The legal documents are being completed in Mumbai as well as in London
The Indian government hopes to restart the plant under a new name - Ratnagiri Gas and Power - in 2006. A group of domestic investors are looking to take over the project, which includes a LNG terminal alongside the power plant.
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