India, Enron began talks on electricity dispute

India, Enron began talks on electricity dispute

NEW DELHI (Dow Jones): India's federal government Saturday began the first round of conciliatory talks with the U.S. energy major Enron Corp.'s Indian unit, the Dabhol Power Co., in a bid to resolve a long- standing payment dispute between DPC and Maharashtra State Electricity Board (MSEB), the Press Trust of India reports.

Both the federal government and DPC representatives declined to comment on the closed-door conciliation talks that would continue over the next three days, the PTI said.

The government is represented by former Supreme Court of India Judge B.P. Jeevan Reddy while DPC has appointed former Chief Justice of New South Wales Lawrence Street as its conciliator on a three-member panel. Former New Zealand High Court Judge David A.R. Williams is the third conciliator, jointly chosen by both the government and DPC.

Enron holds a controlling 65 percent stake in the US$2.9 billion, 740 megawatt Dabhol power project located in the western Indian state of Maharashtra. MSEB holds a 15 percent stake in Dabhol while General Electric Co. and Bechtel Corp. hold 10 percent each of the remaining DPC equity.

The Dabhol power plant has been inoperative since May 29 after MSEB, its sole customer, stopped drawing electricity saying the DPC tariffs were "exorbitant and unaffordable." MSEB also refused to pay DPC several of its electricity bills.

The Dabhol project has the federal government's counter- guarantee. In April, DPC issued notices of conciliation and arbitration to the Indian government to try to recover $21.88 million it said was owed for supplying power to MSEB. MSEB wanted the power bills offset against a four billion rupee (about $84.88 million) fine it levied on Dabhol Power Co. for what it said was the non-supply of power for intermittent periods between October 2000 and the end of January.