General Electric is expected to forge an alliance with Indian state-run utility the National Thermal Power Corp (NTCP) and local power equipment maker Bharat Heavy Electricals Ltd (BHEL) in a new effort to restart the mothballed Dabhol Power Project.

GE and Bechtel Group collectively own 86% of the $2.9 billion plant, which has been mothballed since May 2001 over a power tariff dispute with the Maharashtra State Electricity Board (MSEB), holder of the remaining equity. GE and Bechtel are understood to want to sell their stakes for some $300 million to Indian financial institutions. The institutions are then expected to transfer the plant to a special purpose vehicle to be managed by NTPC and state-run Gas Authority of India Ltd.

Scot Bayman, president of GE India, said GE was joining a team of officials from NTCP and BHEL to determine a course of action for restarting and completing the Dabhol Power Project, a move which follows a recent visit to India by GE Chief Executive Jeff Immelt and which signals a possible end to the legal issues that have prevented the plant’s revival for the past four years. More than 20 foreign lenders to the project are thought to be close to reaching an accord that will see their loans repaid, but at an undisclosed discount.

Dabhol remains India’s largest foreign investment project and is located in India’s most industrialised region. It was generating 744 MW of power when it was shutdown and work on the nearly complete 1,444 MW expansion suspended, along with an LNG import terminal.