A payout under an OPIC insurance policy in these circumstances could trigger the
Hickenlooper Amendment, which prevents the United States from giving development aid
to countries that have nationalised the property of its citizens and have not taken appropri-
ate steps to pay for it. The amendment, named after Senator Bourke Hickenlooper, a con-
servative Republican from Iowa, had been passed in 1962 in response to the nationalisation
of US property in Brazil.^23
Bechtel and General Electric (GE), joint EPC contractors and both 10 per cent share-
holders in DPC, were in a different position than Enron was on the issue of fair compensa-
tion. They held smaller amounts of shares than Enron did, but, more importantly, Enron had
been required to pledge its DPC shares as security for the commercial bank loans, whereas
Bechtel and GE had not. Therefore Bechtel and GE thought that they had a stronger argument
for receiving fair compensation for their investments up front, not after all the debt holders’
claims were settled. Both companies indicated that they were willing to negotiate with the
creditors to try to meet them halfway, but they would not be willing to help restart the plant
if they were not treated fairly. A consortium of Indian engineering and power companies con-
ceivably could have restored and operated the plant, but clearly they would not have had
Bechtel’s and GE’s expertise. GE had designed the plant and Bechtel had built it.
Like the foreign shareholders, OPIC preferred an equity sale to an asset sale. OPIC’s
US$400 million burden under the political risk cover that it had provided would be reduced
to the extent that those shareholders received part of the sale proceeds.
Despite disputes with the shareholders, the MSEB and the lenders looked for ways to
restart the plant because they thought that an operating plant would be more appealing to a
buyer. Once again the parties could not agree on a price. In July the MSEB offered to buy
power for 2.25 rupees per unit, but the lenders were not willing to sell it for less than 2.85
rupees per unit.
In September 2002 the Indian federal power ministry convened a meeting of all stake-
holders, and encouraged the Maharastra state government and the IDBI to continue their
efforts to reach a compromise. At a subsequent meeting convened by the ministry, GE agreed
to support NTPC in assessing the condition of the power plant and restarting generation. By
this time the plant had been exposed to two monsoon seasons without major maintenance. GE
and Bechtel estimated that 8 to 12 months of repair and maintenance work would be required
before Phase I of the project could be restarted. In October a Maharastra state government
committee approved the purchase of power at 2.80 rupees, essentially meeting the bank
lenders’ offer and raising hopes that steps to restart the idle plant could begin soon. Yet even
restarting Phase I was just a short-term measure, and a comprehensive, long-term solution for
Phases I and II was nowhere in sight.
Roots of the crisis
Piyush Joshi (in his article cited above) believes that the roots of the crisis lie in the legal
framework that governs the project. As an IPP, DPC has been allowed to sell power only to the
MSEB so long as it lacks permission to do otherwise, permission that it has not been success-
ful in obtaining. In Joshi’s opinion the issues that DPC has faced are partly a reflection of what
ails the Indian electricity sector: low levels of tariff collection, high subsidies, high transmis-
sion losses, poor transmission and distribution infrastructure, and political unwillingness to
make necessary reforms in the electricity distribution system. The MSEB currently does not
DABHOL POWER COMPANY, INDIA