Meanwhile, the Karnataka government has decided to constitute an expert committee to look into several aspects of the 1,000mw power project, including the escrow account cover demanded by the Mangalore Power Company.The state cabinet, which held lengthy discussion on the project, however, failed to discuss the controversial power purchase agreement, a rider set by MPC for reconsidering the project. MPC managing director Ron Sommers had asked the state government to stand by the PPA signed in November 1997.

The officials of Cogentrix company of US, promoters, along with China Light and Power has met the minister after the Supreme Court had set aside the Karnataka High Court judgment for a CBI probe into contract, and he had requested them to reconsider their decision to pull out of the 1013.2mw power project. The officials, he said, had assured him that they would revert to the government after consulting the board of directors of the two promoting companies.

The minister was replying to a calling attention notice by S Bangarappa and others regarding the situation arising out of loss to Karnataka due to withdrawal by Cogentrix from the project.

The minister said the project was one of the original eight counter guarantee projects being developed on the memorandum of understanding (MoU) route.

While three fast track projects had already been given counter-guarantee under the revised programme, the government had decided to consider the issue of counter-guarantee for the Mangalore project after the Supreme Court verdict.

It may be mentioned that Cogentrix managing director Ron Somers had said on Wednesday that the Supreme Court had cleared only one of the three hurdles by absolving the promoters of allegations of kickbacks and the issue of PPA and counter-guarantee remained to be resolved.

Under the revised procedure for issue of counter-guarantee, the minister said the scope of counter-guarantee had been limited to cover only the foreign debt in the event of termination of power purchase agreement (PPA).Under the procedure, he said there would no further examination of PPA by the Government of India and it would be the responsibility of the state government to satisfy themselves about the reasonableness of the tariff before financial closure.

However, state government would be required to send copies of the final, revised PPA to ministries of finance and power for information and record before financial closure, along with a statement from SEB/state government about having considered the comments of the Central Electricity Authority and consultants of Finance Ministry along with certification that PPA was in line with the government of India notifications and law.