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Dabhol move for international arbitration

Our Bureau

MUMBAI, April 4

DABHOL Power Company has taken the first step towards international arbitration in its dispute with Maharashtra State Electricity Board (MSEB) over payment of the Rs 102-crore December 2000 bill.

The company today issued the `Notice of Conciliation' and `Notice of Arbitration' to the Union Finance Ministry. A press release issued by Dabhol Power said: ``The Government of India communicated to us that, until the declaration issue is resolved, it d oes not intend to pay the December bill under the counter-guarantee. We strongly believe that their position is in direct conflict with the PPA, as was explained to the GoI in the legal opinions that were requested by them.

``Therefore DPC, in consultation with our partners, has decided to commence the dispute resolution process under the privisions of the GoI counter-guarantee. We have issued a Notice of Conciliation and a Notice of Arbitration for the overdue amount of Rs . 102-crore of the December bill. This step was necessary in order to preserve our rights in the project, and to ensure that all parties honour their existing contractual obligations.''

As per the Notice of Conciliation, MSEB and DPC will have to sit across the table and appoint conciliators who are third party technical and financial experts. If the conciliation efforts in India fail, then the issue will be taken for international arbi tration.

It may be recalled that MSEB had asked DPC to pay up Rs 400 crore as penalty after it was allegedly unable to provide power at 90 per cent plant load factor in the last week of January 2001. MSEB, on the other hand, owes DPC a total Rs 229 core as Decemb er 2000 and January 2001 bills. The Government of India had on April 3 written to DPC saying that it would not honour its counter-guarantee as the money due was adjustable against the rebate of Rs. 400 crore.