settlement on Dabhol with local lenders likely by May

March 24 | Updated: Mar 25 2005, 05:30am hrs
General Electric Co and Bechtel Group, the foreign stakeholders in an Indian power plant formerly owned by Enron Corp, may reach an out-of-court settlement by May with local lenders, said Scott Bayman, who heads GEs Indian unit.

The two companies are demanding $380 million from Indian lenders, which are restructuring the project, Bayman said. The money includes contractor claims and equity investment they made in the Dabhol power plant, which was shut down in May 2001.

Im hopeful that we would have a resolution by the beginning of May, Mr Bayman said in a phone interview in New Delhi. We can hopefully reach a fair settlement thats acceptable to all. A settlement would end a four-year-old dispute and end arbitration proceedings. Bechtel and General Electric have approached the International Court of Arbitration in London, which is due to hear the case in July, seeking damages of $6 billion from the Indian government, a guarantor to Dabhol. Indian lenders, which include Industrial Development Bank of India, State Bank of India and ICICI Bank Ltd., and the foreign equity holders are in the final stages of negotiations, the Hindustan Times reported earlier on Thursday.

Bechtel and General Electric each had a 10% stake in Dabhol and jointly acquired another 65% by taking over the entire stake of Enron and its associates in the company. Enron was the worlds largest electricity trader before filing for bankruptcy in December 2001. The two companies bought Enrons stake in Dabhol for $22 million through a US bankruptcy court in New York to recoup part of the $1.2 billion they invested in the failed $3 billion venture.

Dabhol was shut down in May 2001 after its only customer, the Maharashtra State Electricity Board, stopped paying for its power, saying it was too expensive.

Bloomberg