While, the CII has already expressed its views on the revised counter-guarantee norms to the power and finance ministries, it is now gearing up on having one-to-one discussions with the top brass in these ministries.

Sources in the power ministry confirmed having received representations from CII against the new counter-guarantee norms and disclosed that a meeting of the CII officials with the new secretary, Power, VK Pandit has been scheduled for Wednesday. Another meeting with the power minister, PR Kumaramangalam will take place shortly, they added.

In its representations to the power and the finance ministries, the CII has conveyed thatthe revision in the counter-guarantee norms will have adverse implications on the fast track projects and will also cause unnecessary delays.

Calling these revisions as "policy reversals" to the decisions of the previous government, CII has cautioned the ministries that, "these reversals will have a direct impact on returns and form the basis of evaluation of lenders, could throw open the entire project for re-negotiation thus resulting in undue delays".

The major issues under the new counter-guarantee norms that the CII plans to take up with the government relate to the monthly energy charges not being covered under the revised terms, income tax on bonus generation being made mandatory, decision to seek fresh bids for the EPC contract along with the tariff heat rate issue.

According to CII, the revised norms proposed to be made mandatory regarding Income Tax on bonus generation and tariff heat rate could grievously erode the project economics and alter the financials of the project based on which theFIs and banks have loaned the money and would thus affect the projected returns.

Moreover, the decision on inviting fresh bids for the EPC contract would further complicate matters and result in interminable delays, as it would reopen the techno economic clearance (TEC) accorded by the Central Electricity Authority (CEA).

Other issues to be taken up by the CII relates to structuring of the escrow cover, investment limit being restricted to 40 per cent exposure and the fuel supply agreement (FSA).

On FSA, CII feels that the FSA as entered into between the IPPs and the fuel supplier must be a binding contract and provide for buyer and suppliers performance liability.

As per CII, considering the involvement of a number of players besides just the buyer and seller, there is also a need to have the responsibility fixed on a specific party and the ownership needs to be clearly defined and some sort of arrangements needs to be drawn between the buyer and seller in these circumstances.

In view of this, theSEBs are trying to develop too many projects and many of these may not meet the stipulations of the Indian FIs and therefore, as per CII, it becomes imperative to identify and focus on specific pipeline projects, which are in the advanced stages of financing and approval of clearances including the FSA.