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Mumbai , Oct 13

GE and Bechtel have made an offer to restart phase-I of the $3-billion Dabhol Power plant and complete its phase-II work.

In a proposal sent to the Indian financial institutions (IFIs) led by IDBI, the two companies have said that their contractor claims and equity dues can be settled separately in order to expedite negotiations and restart the work.

Though the decision of the foreign equity holders is being seen as climb down from their earlier stance, industry observes believe this is a positive development for the project, which is lying idle for the past 28 months.

However, GE and Bechtel have certain conditions: They want their outstanding contractor claims from the 2184-MW power project to be settled "on an equitable commercial basis" as part of the condition for actual restart of the plant.

Equity claims will be negotiated separately through the ongoing international arbitrations, said a statement quoting a letter to the Indian FIs signed by Mr Scott Bayman, President and CEO, GE India and Mr Richard Smith, Vice-President and Managing Director, Bechtel Enterprises Holdings Inc.

Indian FIs reacted with caution to the GE and Bechtel offer.

"We will have to look at it from our interests. The offer is only part of the long drawn negotiation process initiated to restart the project. The only positive aspect is that GE and Bechtel are willing to discuss, are willing to talk and are willing to listen to us and our advisors Rothschild," said a senior FI official who did not want to be named.

GE and Bechtel in their statement said, "As an act of good faith, the companies will not make a prior resolution of equity claims a requirement for their support of the restart and completion of a `New Dabhol'. Assuming a commercial agreement can be reached, lenders or new sponsors will be provided with information and assurances of GE's and Bechtel's participation as suppliers and contractors in restarting phase-I and completing phase-II," the letter said.

GE and Bechtel, which hold 10 per cent each in the Enron-promoted project, had last year refused to sign a co-operation pact with the lead lender IDBI, which has been trying to sell the project.

The two have initiated international arbitrations against the Maharashtra State Electricity Board, the Maharashtra Government and Union Government in London and New York to recover their claimed dues worth $1.2 billion.

The companies are also involved in a number of court cases against financial institutions for the last couple of years ever since the plant closed down following a payment dispute between MSEB and DPC's original promoters, Enron.

The decision by the two offshore stakeholders has raised expectations of a revival of the project for which GE and Bechtel's expertise is reportedly needed.

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