THIRUVANANTHAPURAM, February 4: The Kerala government's proposed Rs 1,400-crore 513mw combined cycle power project with the Kannur Power Project Ltd (KPPL) is facing fresh legal hurdles. Enron International is expected to pick up an equity stake in the project.A writ petition has been filed in the Kerala high court by a local panchayat against naphtha-based power projects. Another writ petition is being filed by an independent power producer (IPP), Western India Estates & Services (WISE), against the government for contempt of court.
The legal hurdles coupled with the political controversy, have cast a shadow over the project. Significantly, while the political bosses have developed cold feet in going ahead with the proposal to rope in Enron, bureaucrats in power sector seem enthusiastic about the company's entry.
State principal secretary (power) K Mohanachandran said, "We have no reservation whatsoever in regard to the entry of Enron. Given the constraints of banks, foreign funding for power projectshas become inevitable."
This is in wide contrast to the statements by chief minister EK Nayanar and power minister Pinarayi Vijayan that the state government was totally in the dark about the proposal to include Enron.
CPM general secretary Harkishan Singh Surjeet had said the Enron project was not on the state government's agenda. A CPM source said, "Things would have been smooth for Enron and Kannur Power, had KPP Nambiar, KPPL's promoter, not gone in for premature publicity."
Following the writ petition by the Thiruvankulam panchayat against naphtha-based power projects, the court has sent notices to all concerned. As per the original proposal, Enron-KPPL project is to be initially naphtha-based. There is already a directive by the centre to discourage naphtha-based projects. WISE, which is filing a contempt of court case against the government, was the only IPP to propose a furnace oil-based power project.
This is the second time that WISE had taken up the matter in court. In December, 1997, theKerala high court had directed the state government and the Kerala State Electricity Board to consider the whole matter of fuel allocation afresh, in the wake of a complaint by WISE which was denied fuel allocation. The court order left the state government with two options -- either to go in appeal to the Supreme Court or review the entire process of selection of IPPs for fuel allocation. The state government opted for the first. But till this date, no appeal has been filed before the apex court.
This has prompted WISE to approach the court again. Power secretary Mohanachandran said the government had decided to go in appeal to the apex court. However, he was not sure whether the appeal had been filed or not.
His contention was that the high court order did not amount to a stay. "The court's directive to look afresh does not nullify the fuel allocation. Moreover, fuel allocation is done by the centre. The state can only recommend," he said.
Sources pointed out that KPPL's reported claim that itproposed to achieve financial closure by March, 1998, had to be taken with a pinch of salt. For financial closure, the techno-economic clearance by the Central Electricity Authority is also required in addition to completion of other formalities like entering into power purchase agreement and fuel supply arrangement.
The site proposed for locating the project has also come in for controversy with environmentalists taking up cudgels against the project, the source added.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
