Resolve Dabhol

Updated: Nov 11 2003, 05:30am hrs
The Union finance ministrys move to appoint a committee under former US Ambassador Naresh Chandra to resolve the impasse over the Dabhol power project in Maharashtra is indeed welcome. For far too long the governments at the state and central levels have sought to resolve the Dabhol mess since the project was shut down in 2001. All of this has been in vain as the assets amounting to over $ 2 billion are now lying unutilised, gathering dust in some remote corner of Maharashtra. After the project was shut down, there have been several committees and reports that have pointed out the problems with the project. And thus, it is well known that based on its terms and conditions, the project was unviable for the state government. But like the assets of the project, these reports are also gathering dust. The multi-billion dollar project was financed by a clutch of foreign banks, domestic banks and financial institutions. Given the manner in which the project was financed (the debt part), it is the domestic lenders who have a greater exposure in the project in the form of fund and non-fund based guarantees given to foreign banks for their lending.

Indeed it is true that Enron, the main promoter of the project, is no longer interested in running the project after the companys operations were exposed in the US in 2001-02. But who has a greater stake in reviving the project With the kind of exposure Indian banks and FIs have in the project, it should have been the domestic banks and FIs which should have taken the lead role in working out a viable strategy to restart the project quickly. But ironically, it is the foreign lenders who are taking more interest in resolving the impasse and have thus taken recourse to bilateral agreements between India and the country where these banks are registered. There is no denying that every time trade and investments are discussed with countries, the Dabhol impasse appears to be a bitter experience that investors want to avoid. Facts are facts both the state and central governments had made a big mistake in allowing a project with such ridiculous terms and conditions to be set up in the first place. But all of this is history and we need to move on. Dabhol should be swallowed like a bitter pill and shouldnt come in the way of future investments to the country. It is here that the Naresh Chandra committee should be given full support to work out an amicable solution to the Dabhol impasse at the earliest.