The San Francisco-based engineering company is preparing to go ahead with the arbitration proceedings against the government in the London Court of Arbitration (LCA) on July 18 for recovery of its claims.

According to a statement attributed to a Bechtel spokesman, the company has said that the Indian government had so far rejected its most conciliatory proposals for a settlement. Consequently, it said that while the company''s door were not closed to a settlement it would be taking all necessary steps to argue its case before the LCA on July 18.

Bechtel Corporation, along with GE, holds close to 85 per cent stake in the beleaguered Dabhol Power Company (DPC), which ran the 2,184mw power project in Maharashtra. GE had, on July 2, announced that it had reached a settlement with the Indian lenders, the union government and the Maharashtra state government on the dispute.

According to sources, beyond the financial settlement, Bechtel had asked for certain issues to be settled before arriving on a final agreement with the Indian lenders and the Union Government.

Among the issues, Bechtel Corporation had sought the right to argue in a court of law that the liability to compensate DPC''s creditors should fall on the government of India for the period that the plant has been shut since 2001, sources said.

The government had been hopeful that the Indian lenders to the project would reach an out-of-court settlement on the pending cases with both GE and Bechtel. While GE has played along with the government on the issue, Bechtel''s stand could delay the restart process.

The government, on its part, has worked out the broad contours of a special purpose vehicle, involving NTPC, GAIL, the Indian-lenders led by IDBI and SBI and MSEB, to restart the power plant and the adjoining LNG terminal.