nomic interest to do so. By not honouring their guarantee and counter-guarantee obligations,
the Government of Maharastra and the Government of India undermined the foundations of
the project. Such political decisions could be considered forms of ‘creeping’ expropriation.^25
The unwillingness of the two governments to make policy changes that would allow
DPC to sell electricity to other entities illustrates a painful principle of project restructuring:
preventive restructuring is rare. Contract parties usually do not make concessions until there
is a crisis.^26
The international arbitration process does not shield project participants from unpre-
dictable local courts, as shown in this case and, to take another example, the Paiton case in
Indonesia (discussed in the following chapter).
(^1) This case study is based on articles in the financial press, as well as reviews by Barry P. Gold, Managing Director,
Citigroup, and Piyush Joshi, formerly an attorney with Enron/Dabhol Power Company and now Deputy Legal
Counsel, British Gas India.
(^2) Gupta, Jyoti P., and Anil I. Sravat, ‘Development and Project Financing of Private Power Projects in Developing
3 Countries: A Case Study of India’, International Journal of Project Management,16:2, 1998.
Edwards, Ben, and Mulul Shukla, ‘The Mugging of Enron’, Euromoney,October 1995, p. 30.
(^4) Ibid.
(^5) Gupta and Sravat, op. cit., p. 103.
(^6) ‘India Inks Guarantee for First Phase of Enron’s 2,015 MW Dabhol Project’, Independent Power Report, 23
September 1994, p. 12.
(^7) Joshi, Piyush, ‘Dabhol: A Case Study of Restructuring Infrastructure Projects’, Journal of Structured and Project
Finance, Spring 2002, p. 28.
(^8) McWilliams, Gary, and Sharon Moshavi, ‘More Power to India: Why Enron Renegotiated Its Deal – on
9 Maharastra’s Terms’, Business Week,22 January 1996, p. 62.
Hattangadi, Shekhar, ‘Lenders Applying New Terms to Dabhol; Concern Over Court Cases Linked to India
Project’, Platt’s Oilgram News,21 August 1996, p. 3.
(^10) ‘Supreme Court of India Rejects Suit Against 2,450 MW Dabhol Power Project’, Independent Power Report, 16
May 1997.
(^11) ‘Dabhol Power Issues Notice of Termination for 2,184 MW Project’, Global Power Report, 25 May 2001.
(^12) Pearl, Daniel, ‘Dabhol Project Vexes Foreign Firms’, Asian Wall Street Journal,6 July 2001, p. 3.
(^13) ‘India Industry – The Dabhol Power Company Saga’, EIR Viewswire, 27 December 2001.
(^14) Kantor, Mark, ‘The Limits of Arbibration’, Journal of Structured and Project Finance, Fall 2002, p. 50.
(^15) Ibid.
(^16) Elsham, Robin, ‘Dabhol – Enron’s US$2.9 Billion White Elephant in India’, Reuters News, 23 December 2001.
(^17) Ibid.
(^18) Ibid.
(^19) ‘Insurer Sets Terms of Sale to Bidders for India’s 2,184 MW Dabhol Power Co.’, Global Power Report, 1 February
2002.
(^20) ‘Payment Dispute May Jeopardize Sale of 2,184 MW Dabhol Project in India’, Global Power Report, 7 March
2002.
(^21) ‘Enron, Partners Demand Advance from Sale of Dabhol Power in India,’ Global Power Report, 21 March 2002.
(^22) Jegarajah, Sri, and Himendra Kumar, ‘India Dabhol Sale Stalls; Row Erupts over Equity Proceeds’, Dow Jones
Energy Service, 8 March 2002.
(^23) Lane, Ed, ‘US Could Stop India Aid Due to Dabhol Problems’, Dow Jones International News, 8 April 2002.
(^24) Joshi, op. cit., p. 31.
(^25) Ibid., p. 31.
(^26) Ibid., p. 30.
DABHOL POWER COMPANY, INDIA