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.