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Global Reach
yond the 15% it held. The operating Phase I plant and the Phase II
construction were shut down, triggering a wave of litigation in 2002.
Unwinding the Deal
Robert Nelson, who had earlier spent time in India and had written
his senior college thesis on Indian history, says the keys to resolving
the case were: (1) patience and an understanding of India’s
civil service (“In India a lot of things are won by stalling,” he says.
“People are penalized for failures more than they’re rewarded for
successes.”); (2) pressing his clients’ overall case firmly, while
seeking specific solutions that served all parties’ economic interests;
and (3) showing respect throughout for India’s governmental
processes and business customs.
Bechtel and GE also needed to deploy a consistent, dual strategy
seeking compensation from the Indian government under the bilateral
treaty with Mauritius, and from OPIC in the form of risk insurance
compensation. All of this took place in the context of a post-
9/11 geopolitical environment that saw not only the U.S. forming
closer ties to Pakistan, but also the collapse of Enron.
By 2005, time had worked in Bechtel’s and GE’s favor: Maharashtra
was experiencing ongoing power outages; the Indian government
faced difficult arbitrations that incurred mounting legal and administrative
costs; India’s economy was growing more rapidly—as was
electricity demand—making the Dabhol project more feasible; and
resolution had become an ancillary issue in the U.S.-India civilian
nuclear deal by then under negotiation. Ending the arbitrations and
getting the plant up and running had become a top priority.
Three years of litigation and negotiation eventually led to: a steeply
discounted buyout of Enron’s interest ($16 million, a refund of its
OPIC premium payments); phased transfer of ownership to state
government entities through the Indian banks, who would in turn
buy out the offshore lenders; and settlements with Bechtel and
GE shared by OPIC and the Indian government. A comprehensive
deal was reached and signed in July 2005.
Dabhol Today
The Dabhol plant was restarted in May 2006 under a joint venture of
the Gas Authority of India Ltd. (GAIL) and the National Thermal
Power Corp. A consortium of Indian banks committed to assume
85% of completion cost as debt. The project has since been plagued
by problems: interrupted fuel and water supplies, court challenges
over electricity prices, turbine failures, and work stoppage on the
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