Mumbai, Nov. 6: Overseas lenders to Dabhol Power Company (DPC) have initiated claims of over $ 171 million, in addition to costs and expenses, against the government. The banks in Austria, France, the Netherlands, Switzerland and UK said this had been done under the bilateral investment treaties between these countries and India.
“The basis of the claims is that the Government of India has failed to comply with its obligations under the investment treaties to protect the claimants’ loans to Dabhol power project following its closure in 2001,” they said.
The notice comes close on the heels of the decision by GE and Bechtel, contractors to the stalled power project, to invoke the sovereign guarantee to recoup dues.
“If the claims are upheld, the government will be liable to pay compensation equal to the outstanding loans, plus interest, default interest and expenses,” said a statement from Dua Associates, the lawyers for the lenders.
Today’s move, the lenders’ counsel said, follows troubles in the project, and is a response to the lack of progress by the government over the last two years to agree a solution that recognises both the political nature of these problems and the rights of offshore lenders.
The investment treaties India signed with the lenders’ countries protects loans to $ 3-billion power project, which has been mothballed for over two years now. The banks want the government to open talks aimed at finding a settlement to their claims, failing which the dispute will head for global arbitration. Overseas Private Investment Corporation and five international banks have backed the move.