Govt, Bechtel ink Dabhol deal
July 13, 2005
NEW DELHI, JULY 12: The Indian government and Bechtel have reached an agreement on ‘‘all issues’’ related to the Dabhol project. The settlement agreement between the two was signed on Tuesday thereby completing the entire settlement process with both stakeholders - GE and Bechtel - in the Dabhol power venture.
After this agreement, the threat of international arbitration proceedings due to begin next week have also been dropped.
Under the settlement, the Indian side has paid their settlement amount of $160 million upfront. Sources said the Reserve Bank of India’s nod for this payment is in place.
In return, under the settlement, Bechtel has agreed to contest any future claims falling upon them only in the Indian courts or strictly under bilateral investment treaty only. In addition, Bechtel has also pruned their list of third parties and is now not including claims made by sub-contractors involved in the construction of the Dabhol project - a major issue on which the talks almost broke down last month.
These agreements were reached after negotiations between the two sides in London that concluded on Monday. Under the negotiations, Bechtel was given a positive and a negative list of who can claim to be third parties, which sources said, Bechtel agreed to.
After the agreement, Bechtel would also be transferring 65 per cent equity that they along with GE hold in the Dabhol Power Company after the former withdraws their claims in the New York bankruptcy court.
Shareholders of DPC - Bechtel, GE and Maharashtra Power Development Corp Ltd - would be paying the Maharashtra Pollution Control Board $2,85,000 for a case filed against them in 2002 for polluting some of the water sources close to the power venture in Ratnagiri district of Maharashtra. This was one pending issue that had to be sorted out for a comprehensive settlement.
Alongside this, a settlement with OPIC was also reached whereby the Indian financial institutions, through GIPCL, paid OPIC their settlement amount of $228 million. The Indian side has already signed a settlement deal with GE and foreign lenders.