New body set up for Dabhol solution

The United Progressive Alliance government is trying to speed up the restart of the Dabhol Power Company and has constituted an inter-ministerial group to take stock of litigation and arbitration.

Besides, the finance ministry will soon approach the Cabinet to seek directions on the designated minister for the issue since Finance Minister P Chidambaram has sought to excuse himself from being the reporting minister.

The Dabhol Saga: Complete Coverage

"The Cabinet's direction is being sought on whether the financial sops and other licences granted originally to Dabhol Power Company should be extended to the prospective owners," an official said.

Officials said the newly formed inter-ministerial group would comprise officials from the finance, power and law ministries and would work out the possible course of action for tackling the numerous arbitration and legal proceedings. The committee might include a representative from the petroleum ministry also, the officials said.

The negotiations with the lenders would, however, continue to be monitored by the committee headed by Naresh Chandra, which also has Vijay Kelkar, adviser to the finance minister, as a member.

Indian banks and financial institutions would seek directions from the committee and keep it appraised of the developments, while they negotiated with the foreign lenders for the restart of the project, the officials said.

According to officials, Chidambaram wished to be a "recluse" on the Dabhol Power issue, since he was the lawyer for the majority stakeholders, Enron, GE and Bechtel, in their legal battle with the Maharashtra government. "He is privy to a lot of information and wishes to avoid allegations of bias," an official said.

Under the previous National Democratic Alliance regime, former Finance Minister Jaswant Singh was addressing the Dabhol issues. He had set up an informal advisory group under former Indian Ambassador to the US Naresh Chandra.

The group was facilitating a dialogue between the Indian and foreign lenders on the issue. Indian financial institutions and banks have an exposure of almost Rs 7,000 crore to the project.

Indian financial institutions are currently negotiating with the foreign lenders to take over the latter's $300 million debt to Dabhol Power Company.