July 2 2002 – India’s government may ask state-owned National Thermal Power Corp. to restart the 740 MW phase 1 of the controversial Dabhol power project and complete construction on the second phase of the project on a commercial basis.

Sources say Principal Secretary to the Indian Prime Minister, Brajesh Mishra, has called a meeting Wednesday to explore ways of restarting the idle plant, located in the western Indian state of Maharashtra.

Officials have said lenders to the Dabhol project want it restarted because they think an operational power plant may bring a higher price when the project is sold.

Dabhol, India’s largest foreign investment at $2.9bn, has been mired in conflict due to payment disputes with its sole customer, the Maharashtra State Electricity Board. In May 2001, MSEB stopped buying power from the first phase plant, saying its rates were too high. Construction stopped on the second phase of the project last year, and in June 2001 the plant shut down. The Dabhol-MSEB dispute is being fought in the courts.

Beleaguered US-based energy firm Enron has a controlling 65 per cent stake in Dabhol. Bechtel Corp. and General Electric Co. each own ten per cent while MSEB holds the remaining 15 per cent.