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TMA Raman
Chennai, Oct 16: Many independent power producers (IPPs), who were hoping to get an escrow cover from the Tamil Nadu Electricity Board, face uncertainty, as the Industrial Development Bank of India (IDBI) is yet to clear the escrow draft agreement sent to it recently by TNEB.
Apart from the standoff between TNEB and IDBI on the issue, several IPPs are concerned that the state government's recent move to provide escrow cover to the 1,000mw lignite-based Jayamkondam power project being promoted by the Reliance Industries-led consortium will affect their prospects to get the cover.
The row between the board and the bank was on the issue of TNEB's ability to provide the escrow cover. While TNEB claimed it had the capacity to provide the cover for generation of 4,000mw, IDBI has challenged this saying the board's capacity is only around 2,500mw.
TNEB has gone on record saying that it has guaranteed escrow cover for projects worth 2,172mw, including Videcon (1,050mw), ST-CMS (250mw), Pillaipermualnallur(330mw), Balaji Power (106mw at Samayanallur) and SIV Industries (106mw at Samalpatti), besides the five short-gestation projects of Tidco for 448mw.
TNEB had also promised to provide escrow cover for the 525mw project of Tri-Sakthi and the 500mw plan of Spic Electric Power Corporation at Tuticorin. There are at least six more IPPs of short-gestation power projects promoted by Tidco waiting for fuel linkage and escrow cover.
The decision to provide escrow cover for the Reliance project means that TNEB would have crossed the 2,500mw capacity limit suggested by IDBI. This will block others' chances to get escrow facility, IPP sources say.
If this is so, IPP sources say that barring Videocon, Jayamkondam, ST-CMS and a few other projects, none of the other IPPs stand a chance of getting escrow cover and taking off. A TNEB source agreed that the escrow scenario was dismal and IPPs would have to wait, as this business of providing escrow cover could "evolve only slowly". TNEB had also committed to provideescrow cover for the Jayamkondam project, it is said.
Since the escrow issue is based on revenue receipts, IDBI questions TNEB's ability to provide the cover unless the realisations from the revenue-band are deployed in the escrow-account mechanism. TNEB is loathe to do this, as it has payment commitments for several other things including fuel supplies, coal handling, equipment procurement, salaries, etc.
The TNEB source said that the revenue this year was expected to be Rs 5,600-5,700 crore, while the deficit by the year-end could be around Rs 600 crore. It is also supplying free power to the agricultural sector, and this year, this would amount to over Rs 1,900 crore.
Asked about encouraging captive-power generation, the source said that while the board welcomed the industry's initiative towards setting up such units, there is a policy decision "not to allow third-party sale". It is said that revenues are not enough to meet the expenditure. The industry can use such power generated for its own use orsell it to TNEB.
With lenders fighting shy of funding power projects without escrow cover and TNEB facing a huge deficit and a Rs 1,900-crore free supply of power to farmers, many state power projects are unlikely to be commissioned, unless the IPPs take entrepreneurial risk and go ahead with the projects wihout escrow as some have chosen to do. TNEB wants IPPs to put pressure on IDBI to relent from its stand and clear the escrow draft agreement and allow it to sign the same with IPPs. But even this has been held up and delays are certain to push up cost of funds for IPPs.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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