Bechtel May Have Settled With India

San Francisco-based Bechtel Corp. will be paid $160 million to settle a long-running legal dispute over a mothballed power plant in India, a government source involved in the deal said Tuesday.

The private engineering and construction company has been fighting to recoup its investment in the Dabhol power plant, which was shut down in 2001 in a disagreement over electricity payments.

This month, General Electric Co., which together with Bechtel held 86% of Dabhol, also settled its claims, reportedly for $145 million. The power plant, located about 100 miles south of Bombay, was once owned by Enron Corp.

Under the settlement, Bechtel would be paid $160 million by an arm of the Maharashtra state utility, which owns 14% of the power project, the government source said.

A Bechtel source confirmed to Reuters from London that legal documents regarding the settlement were signed over the last four to five days. “We will consider the settlement complete only after the money has been transferred to us,” the source said.

The settlement brings the parties one step closer to ending a clash that has embarrassed the Indian government, given that the $2.9-billion plant was once a record foreign investment in India and the fast-growing country is perpetually short of power.

Dabhol was designed to produce 2,184 megawatts of power but was shut down in May 2001 after a dispute between Enron and the Maharashtra State Electricity Board, its sole customer. The Indian government plans to revive the Dabhol plant and expects to begin producing power next year.

Reuters was used in compiling this report.