Reliance Power, which was denied an escrow account facility, has now been given a right to sell power to third parties in case MSEB and the state government default on payment. The project has the guarantee from the state for payment though there was no escrow facility.

As per the new arrangement, the company will be given certain areas or consumers to whom it can sell power and collect revenue directly if MSEB is unable to pay. Talks are at an advanced stage between the board and Reliance Power to finalise the agreement. MSEB will not include these specified areas while committing escrow facility to other projects.

Lenders were not willing to fund the project withoutguaranteed payment from the electricity board. On the other hand, MSEB which has already committed this facility to the Dabhol Power company (DPC) for its 1,444 mw phase two, as well as the Ispat group's 1082 mw Bhadravati power project, was reluctant to extend this commitment to other projects.

The new arrangement, however, is agreeable to all, including MSEB, Reliance Power and lenders, Basak said. The liquid fuel-based power plant already has in-principle approval for fuel supply from the state. If financial closure is achieved in time, the project will go on stream within three years.

Among the three private power projects cleared by the state in the early nineties through the MoU route, the Reliance plan required clearance from the Central Electricity Authority (CEA).