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DPC slaps arbitration notice on Centre

US energy major Enron's troubled Dabhol Power Company has slapped arbitration notice on the Centre seeing no solution in sight for its multi-billion dispute with loss-making Maharashtra State Electricity Board and said it was not ready to offer any discount over the $1 billion 'at cost' selling price of its 2,184 MW power project.

"The two-day conciliation process with the Centre had failed to resolve their Rs 1.02 billion December bill payment dispute. Hence, we sent the arbitration notice on September four to the government of India," DPC spokesman Jimmy Mogal said in Bombay on Thursday.

Another reason for slapping the arbitration notice, which would take place in London, was the widespread speculation over the multinational's partners General Electric and Bechtel taking a hit in their equity for selling the project at a lesser amount than the above mentioned $1 billion.

"Enron, GE and Bechtel need to recover 100 per cent of their cost incurred in developing and operating this project," Mogal said.

He said DPC was willing to take a step forward and forgo significant profits on its investments, if the dispute could be resolved amicably with full recovery of 'our costs' in the near term.

Mogal said the construction of the phase II would not be restarted in the absence of a quick and amicable agreement on the conditions mentioned earlier.

In addition, DPC has also commenced fresh conciliation with the Centre with respect to Rs 1.10 billion January 2001 bill due to the union government's failure to honour its counter guarantee towards the same.

"The current arbitration notice includes a separate Rs 50 million amount towards unpaid accounts with interest and is in addition to the ongoing international arbitration with the Maharashtra government," he explained.

The conciliation proceedings, which began on August 18 were adjourned the next day without either party arriving at any preliminary over resolving the dispute relating to invocation of the Union government's bank guarantee by DPC.

The centre was represented by Attorney General Soli Sorabjee while former Union Finance Minister and senior advocate P Chidambaram appeared on behalf of DPC.

The three-member panel included Law Commission chairman and former Supreme Court Judge B P Jeevan Reddy as Centre's representative, former Chief Justice of New South Wales Sir Lawrence Street as DPC's representative and former New Zealand high court Judge David A R Williams, who was jointly chosen by the two parties as the neutral member.

The Centre had refused to honour its counter-guarantee upon advise by the Maharashtra government which claimed that DPC owed over Rs 4 billion as rebate to it for not achieving the peak supply levels and outstanding bills be adjusted against it.

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