When will the fast -track power projects start their financial closure?From our point of view, they should begin the process in about three months. During this time, all the power purchase agreements and fuel supply agreements should be finalised, counter guarantees and state guarantees would be in place and the projects through with all clearances.

If these projects have the equity component in place, they should be able to achieve financial closure in another three months and begin construction.

How have project costs been affected by the sliding rupee?

Cost escalation will depend on the import component of the project.In the worst situation, where import component is around 60 per cent, the increase will be around Rs 1 crore per mw. In most of these projects, the per mw cost was based at about Rs 4 crore. The delay is largely the fault of the previous government which did not take decisions.

What has been the response of the new diluted counter guarantee guidelines announced for three power projects?

First, let me reiterate that these are neither new nor diluted. The two projects which have been given counter guarantees, including Enron and GVK Industries, have different guarantee terms. Enron's is inclusive of foreign debt and revenue stream while in GVK, it is limited to one-third of the foreign debt. The government had become wiser by then and further tightening of norms was expected.

Could you quantify the extent to which support from the World Bank, Asian Development Bank, US Exim and Japan Exim which will be affected if the sanctions continue?

All put together, this commitment for the current years is lessthan 22 per cent of the power sector budget.

What is the fate of the 200-and-odd power projects which haven't progressed beyond the MoU stage?

No project is considered cleared until two criteria are met. These are fuel linkage and escrow facility. Just because somebody has given you a letter or signed a memorandum of understanding does not mean the project will get going. Other variables need to be fixed too.

This would then mean that state government clearances mean nothing.

The state governments cleared projects when their electricity boards did not have the capacity to provide escrow accounts and fuel linkage. As estimated by financial institutions, the maximum escrow any SEB can offer is around 1,500 mw.

But we have had precedents where SEBs have committed beyond their escrowable capacity. True, but every state has been asked to set its priorities and tell us which projects it needs first. An example is Madhya Pradesh, which had an escrowable capacity of 2000 mw, had given escrow of up to 6000mw but now has to select a few projects up to 2000 mw. The same goes for fuel linkage where we are now increasing allocation. This will be seen in the new fuel policy which should be announced in a month. Some projects then may opt for alternative fuel which is available outside the limitation set by the power ministry.

What went wrong in the power sector reforms process?

The first major mistake was that the country put a stop to additional capacity generation by the public sector. We could add only 16,500 mw in the eighth plan against the target of 30,500 mw, a 48 per cent fall from the actual target. Two, any privatisation process must have an independent regulatory body as is being done now on the lines of the telecom sector. The third mistake was not standardising power purchase agreements, fuel supply agreements and fuel transport agreements. Besides, the transition from a controlled to a mixed economy takes time.

In the last year, the rupee has fallen around 14 per cent and things look grim. Couldyou comment?

This is understandable as the dollar has got stronger following the sanctions. The last four years also saw the market drying up completely. There is no money in circulation. We had a near recession situation - the economic survey reveals this. The need of the hour is asset creation and commercial activity.