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Global Reach
ever commercial dispute, involving 40 separate litigations across
five countries that would not be finally settled until 2005.
Robert Nelson, then a partner with Thelen Reid Brown Raysman &
Steiner LLP in San Francisco, served as lead counsel for two operating
equity investors in the power project, General Electric Co.
(GE) and Bechtel Corp. He took part in a complex workout that involved
a gradual transfer from private to public ownership within
India’s complex investment rules; finding compromise among the
competing claims of Indian banks, foreign banks, foreign credit
agencies, and equity investors including Bechtel and GE; negotiating
with multiple levels of government in political transition; and
the first commercial arbitration ever brought on behalf of the
Overseas Private Investment Corporation (OPIC) against a foreign
host government by the U.S. government.
“On its own commercial terms, this was the single most complex project
workout in history,” Nelson maintains, “and when you add in the
political dimension, it became even more complex.” Nelson says that
over a period of years, he participated in a 90-minute call five days a
week, usually anywhere between 2:30 and 8:00 in the morning, eventually
prompting him to move to Hawaii to manage the time differences
between Europe, Asia, and the U.S. East and West Coasts.
A Promising Start
In 1992 the Indian government unveiled a “fast-track” program to
spur private sector investment—including foreign investment—in
India’s power generation infrastructure. To promote the program, a
senior Indian government investment mission visited the U.S. in late
May 1992 and met with officials of Enron Corp. By June 20, a
memorandum of understanding (MoU) had been signed with the
Maharashtra State Electricity Board (MESB) for a project at Dabhol.
The Dabhol Power Corp. (DPC) was established as an Indian limited
liability company held by Enron (80%), Bechtel and GE (10%
each) through offshore holding companies based in Mauritius. The
initial 740-megawatt combined-cycle naphtha plant was to be completed
in 1997. For Maharashtra, it was a mega-project bringing
power to a state plagued by shortages; for Enron it was an early
foothold in the Indian power generation market.
Project Cost Versus Electricity Prices
Critics who reviewed the MoU, among them the World Bank and
India’s Central Electricity Authority (CEA), were skeptical: the project
had been awarded without a bid process or an environmental
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