Enron Corp.’s Indian Dabhol Power unit Monday said it served an asset transfer notice with the Maharashtra State Electricity Board, its sole customer, the first formal step in the company’s exit from the disputed $2.3 billion project.
The notice formally sets in motion the valuation process of Dabholà¯¿½s assets in connection with the termination of the power purchase agreement, Enron said in a statement. The Houston company’s decision action comes after a 2-year dispute with the MSEB over power payments.
The government-owned power utility must buy power from the Dabhol project. The ongoing dispute forced Enron, which own 65% of the plant and serves as operator, to discontinue operations at the plant in May. General Electric Co. and Bechtel Group Inc. hold a 10% stake each in the company.
The “transfer notice … is necessary to protect the interests of Dabholà¯¿½s sponsors, lenders and other stakeholders.” Enron said. The company predicted a final termination notice is likely to be served in the near future to continue the legal process against MSEB.
Enron previously went to a London court for international arbitration, but said it would still prefer to resolve the dispute amicably through a negotiated purchase of the foreign sponsors’ equity, including offshore lendersà¯¿½ debt, by the government of India and Indian financial institutions.
Many steps remain, a spokesman said. Bhe asset transfer and final termination of the power purchase agreement brings the company closer to the ultimate recovery of damages allowed under the project documents, Enron said