The Hindu, India
G.E., Bechtel file $1.2 b claim against Govt
23 September 2003
(Mumbai, Sept. 22)
BECHTEL Enterprises Holdings Inc and GE Structured Finance on Monday said that they have filed an international arbitration claim against the Government to recover their investments in Dabhol Power Company (DPC).
The total value of the claim may touch $1,200 million ($600 million each), the companies said in a joint statement.
The claim represents GE and Bechtel’s "direct investments" worth $120 million each and reflects their share of the market value of DPC specified in the "original power purchase agreement" signed by Maharashtra State Electricity Board and guaranteed by the Government of India, the companies said.
Both companies hold 10 per cent equity each in the $3-billion power project through subsidiaries, Energy Enterprises (Mauritius) Company and Capital India Power Mauritius.
The arbitration claims have been filed by these subsidiaries under the Arbitration Rules of the United Nations Commission on International Trade Law, the release said.
"We have attempted to resolve our legal and contractual claims but have been blocked by the Governments of India and Maharashtra on every turn. Regrettably, this international arbitration demand must be made," Mr Rick Smith, Executive Vice-President and Managing Director, Bechtel Enterprises said in the statement.
As per the India Mauritius Bilateral Investments Treaty, the Government and GE-Bechtel will have to each appoint an arbitrator within two months of filing of claim. The two will then appoint a third arbitrator.
GE and Bechtel submitted the name of their arbitrator to the Centre on September 5, the release said.
Both companies have accused the Central and State Governments of denying DPC’s fundamental rights for operating the power plant, which has been lying shut for "more than 24 months", by "denying the company the ability to operate Phase I, complete Phase II, reimburse its contractors, service debts and pay dividends to project sponsors".
The two accused MSEB of actions which effected in destroying the PPA by "unilateral and improper" rescission and refusing to make payments.
The statement quoted Mr Scot Bayman, President, GE India, as saying that while the companies are "committed to help restart this much-needed power generation facility", they will "continue to pursue full recovery of investments through all available means".
The Government may also face political risk insurance claims of $28.5 million on behalf of GE and Bechtel by the US Government agency, OPIC, under another arbitration ruling.