Talks in India to resolve Dabhol Power dispute adjourned

Talks aimed at resolving the dispute between Enron’s Dabhol Power Corporation (DPC) and the Maharashtra State Electricity Board broke up on Sunday with no agreement. The talks were due to last until Tuesday but were suspended with the intention of resuming at a future date, yet to be agreed by the parties.

“We had a free and frank exchange of views but because of the complex nature of the matter, the conciliation proceedings had to be adjourned,” said India’s Attorney General Soli J Sorabjee, according to a Press Trust of India report.

The talks to try to end the long-running dispute between Enron’s Indian unit and a state-run local power utility began on Saturday.

The dispute follows the decision by the Maharashtra State Electricity Board (MSEB), to cancel the PPA signed with the DPC in which they found themselves committed to buying more power than was required, at above-market prices. DPC argue that there is no provision for termination of the seven year old contract, but following MSEB’s refusal to draw power from the plant, Enron elected to give notice to withdraw from the $2.9bn project.

In March, Enron invoked a counter-guarantee of the federal government after the state utility failed to clear a bill of 1.02bn rupees ($22m) for December.

Enron also notified the government it was applying to an arbitration court in London to consider its claim.

Enron holds a controlling 65 per cent stake in the 740 MW Dabhol power project – the largest foreign investment in India. The MSEB holds 15 per cent and General Electric Co. and Bechtel Corp. Ten per cent each.

The two-phase project was to be the world’s biggest natural gas-fired power plant, able to generate 2184 MW once completed at Dabhol, 210 miles south of Bombay.

Former Supreme Court of India judge B.P. Jeevan Reddy is representing the federal government in the reconciliation panel, while the DPC has appointed Lawrence Street, former Chief Justice of New South Wales, as it representative. Former New Zealand High Court Judge David A.R. Williams is the third conciliator, jointly chosen by both sides.

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