The project life is being extended by three months up to March 31, 2000 to enable negotiations on the capital cost reduction, chief minister N Chandrababu Naidu said on Monday. "The state government has already written to CEA about the project", he told newspersons.

Most of the permissions like the pollution clearances from the AP Pollution Control Board, PPA with the state government and other permissions were scheduled to expire by the stroke of midnight on Monday. Failing the renewal, it would have meant that technically speaking the project was dead, a senior official told The Financial Express.

The beleaguered project that has been hanging fire for the past almost six years, once again ran into trouble last month with the state government demanding a reduction in the capital cost of the project. The subject was reopened in the light of the falling international prices of power plant and equipment and the state government recently contracting with the Chinese for a cheaper power project at just Rs 3 crore per mw compared to upwards of Rs 4 crore per mw for the Hinduja project.

Negotiations caught momentum earlier this month on the cost reduction with the state government insisting that the IPP reconsider its costing in the light of the new developments in the power sector.