In a related development, the Tamil Nadu Electricity Board has extended the time given to the promoters of Videocon Power to achieve financial closure till July-end. The company, which is setting up the 1,050 MW coal-based power project at Ennore in Tamil Nadu, was earlier given a deadline to achieve the financial closure by June, 2000.

The Videocon group is currently in negotiations with lenders, both domestic and overseas, for its Rs 4,500 crore power project. The IDBI guarantee may help the company tie up the debt component of Rs 3,150 crore. The project has a debt-equity ratio of 70:30.

Company officials said that about 35 per cent of the debt component will be arranged by foreign lenders, including ABN Amro, Credit Suisse First Boston and ABB Structured, while the balance will be secured from domestic agencies. The Videocon group has a 38 per cent stake in the power project, while National Power of the UK holds 36 per cent. The balance equity is held by ABB. Videocon sources said that they have not yet been able to achieve financial closure and the time extension given by the Tamil Nadu Electricity Board (TNEB) government will enable them to tie up the necessary funds.

Videocon Power is one of the six independent power projects (IPP) that have been granted escrow facility by TNEB. The escrow agreement was signed early last year. Under the facility, TNEB will make available an escrow cover of 1.25 times the payment due to the IPP for the anticipated supply of electricity for every billing period. It also provides for a six-monthly review of the operations of the escrow facility.

TNEB's escrowable capacity has been estimated by financial institutions to be around 2000 mw. This is already covered by an agreement with Videocon (1050 mw) and other private sector projects (950 mw). Videocon Power had earlier claimed that it had tied up all loans for the project. But TNEB asked the company for a revised financial package as there were sharp differences between the two over cost sharing of common facilities at Ennore and on the escrow issue.

TNEB wanted Videocon to share a part of the expenses incurred on establishing facilities for ash disposal, conveyor handling, and cooling water systems, among others. The electricity board and Videocon have now agreed to share the cost on common facilities.