A host of projects vying for an escrow cover from the State Government includes the Rs 2,385-crore BPL-promoted 520 mw Ramagundam Extension TPP, Rs 1,680-crore Ispat-promoted 492mw Vemagiri power project, Rs 1,028-crore Eastern Generation-promoted 350mw Kondapali power project, Rs 2,221-crore 520mw Krishnapatnam project, besides the much-touted Rs 5,896 crore, Hindujas-promoted 1,040mw Vizag thermal power project.

Out of these projects, construction has already begun in case of Vemagiri and Kondapali whereas in case of others, construction is yet to start. Senior power ministry sources said that the main issue with all these projects is the allocation of the escrow cover by the State Government and the list of projects that would be covered within the escrowable capacity of approximately 2,400 mw of Andhra Pradesh.

ICICI has given its final report for the escrowable capacity of the state. Besides, the issue of draft escrow agreement between AP Transco and the FIs is yet to be resolved.

Sources said that the state has initiated the process of finalising the list of projects which will be given escrow cover.

Giving details, sources informed that in case of Ramagundam, letters of intent from ICICI, the lead arranger for Rs 600 crore, and IFCI, for Rs 200 crore, have already been received. Besides, in-principle approval from the Power Finance Corporation (PFC) as well as from IDBI have also been taken.

However, the promoters have indicated a steep rise in the project cost and a firm financial package has been sent to the Central Electricity Authority (CEA) for clearance. Escrow facility is yet to be finalised and the power purchase agreement (PPA) addendum based on lenders due diligence review and to reflect coal supply and transport interface issues requested by BPL Power projects is under review at AP Transco.

The equity participation in Ramagundam stands at BPL holding a 40 per cent equity stake followed by Marubeni Corporation and Electric Power Japan at 25 per cent and 10 per cent respectively. Marubeni has also been selected as the EPC contractor for the project. The signing in this respect is expected soon.

In case of Kondapali, the project promoters have tied up the total equity, achieved financial closure and already started construction. Out of the Rs 724 crore tied up from the FIs, Rs 153 crore has already been received but the circles for escrow cover have yet to be identified by the State Government in this project as a result of which the project is experiencing undue delays. The total investments made by the investors till date stands at Rs 391 crore.

Hanjung of South Korea, which holds 11 per cent equity in the project has been appointed as the EPC contractor for the project. Eastern Generation Ltd of the UK, which holds around 30 per cent stake is also the O&M contractor for the project.

Even in case of Vemagiri, despite starting the construction on the project way back in 1998, the main constraint in the competition of the project is a mutually acceptable escrow mechanism between the State Government and the FIs. The project promoters have already tied up for funds amounting to Rs 1,160 crore.