MUMBAI, DEC 12: "Those who are close to power are the first to receive its fruits". The adage was proved right today when Pravara Co-operative Sugar factory signed an agreement with American companies to set up a captive power unit, just two days after the Government announced major sops in its captive power policy.

Pravara, headed by Balasaheb Vikhe-Patil, father of State Agriculture Minister Radhakrishna Vikhe-Patil, today signed an agreement with two US companies, Nucon Energy Corporation and Union Investment International to set up a 25 MW captive power unit at Pravaranagar.

The agreement was signed in the presence of the Chief Minister, Manohar Joshi, his deputy, Gopinath Munde, Co-operation minister Jai Prakash Mundada and agriculture minister Radhakrishna Vikhe-Patil and others.

The Rs 100-crore project would be fully financed by a US consortium led by Union Investment International. It would be the first captive power project in the country to have received its full finance from abroad.

Pravara's role would be confined to providing free land in the factory premises and and free supply of sugarcane pulp, which would be used as fuel. In return the captive power plant would take care of the factory requirement of power at no cost.

The US companies for their return on investments would sell the surplus power to Maharashtra State Electricity Board. A power purchase agreement between the MSEB and Nucon was also signed today.

The State Government had announced a major policy change liberalising its captive power policy. Earlier captive power units were not allowed to sell surplus power or to float subsidiaries for setting up a captive power plant.

These are now allowed to sell maximum 25 percent of generated power to a third party, and in case of floating a subsidiary the stipulation for the company's stake is put at a minimum of 51 per cent.

Explaining the shift, Joshi had said that the amendment was necessary since the previous policy did not offer any incentives for private investment in the sector. According to official sources, major industrial units like Reliance, Ispat, Mukund and Century had shown keen interest in setting up captive power units.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.