Group sources said the assurance was given at a meeting on Saturday between officials of the Tamil Nadu State Electricity Board (TNEB) and independent power producers (IPPS) who had been awarded contracts to put up 20 short-gestation liquid fuel-based projects in the state.

The group would now take steps to initiate a power purchase agreement (PPA) with the state board and soon after approach the Foreign Investment Promotion Board (FIPB) for approval to bring in direct investment, they said. P T Wismekaria, Polysindo's power arm, had given up the project after a 19-month long wait for fuel linkage, but had decided to revive it since TNEB had agreed to allocate naphtha, the sources said.

Things took a good turn for the foreign investor after the union government announced aliberalised liquid fuel policy, under which it removed the 12,000 MW cap on fuel linkage for certain fuels other than naphtha.

This released as much as 170 MW of restricted fuel linkage for TNEB from the allocations already made to five short-gestation projects, besides enabling it revive stalled projects worth 695 MW.

Polysindo sources said that the group had withdrawn its earnest deposits made to the state board when it decided to call the project off, but would now rebid as TNEB had extended the deadline to December 31 this year.

The revival of the Manali project is a consolation for P T Wismekaria, as it recently lost out in the race for putting up an integrated venture to mine three million tonnes per annum of lignite and put up a 500 MW generation plant at Jayamkondam in Perambalur district.

The company lost the project mainly due to the presence of a Chinese partner in its consortium, sources said. The group is also planning to put up small hydro electric projects in India through its flagshipventure, Best and Crompton Engg Co Ltd.