CHENNAI, July 26: Power utility Enron has dropped its plan to put up a power project in Tamil Nadu, as the state electricity board refused to give escrow account facility to the project. The multinational had conveyed to the Tamil Nadu Electricity Board (TNEB) that it was no more interested in setting up a 242 MW liquid fuel-based generation project in Ranipet in the state, a TNEB official told PTI here.Enron had bagged the project under the international competitive bidding (ICB) route in 1997, but could not go ahead with the project as the state did not provide fuel linkage to it. The Ranipet project was part of 20 short-gestation project put up for private sector development by the Tamil Nadu Industrial Development Corporation (TIDCO), a state-owned development institution.
The state government conceived the projects to meet the interim demand, expected to surge due to rapid industrial development, as mega projects coming up in Tamil Nadu were to go on stream only by the turn of the century. However,with a restrictive liquid fuel policy of the central government, the state government could not provide fuel linkage for more than five projects. Enron was told by the board last week that it would not be able to extend the escrow facility to the Ranipet project, as its capacity to provide such facility was restricted to projects worth a total of 4,000 MW and some other projects had already been given the comfort.
Enron felt that the absence of an escrow backing would make raising of debt resources more difficult and the project would not be attractive in such a situation. The official said Enron and 14 other independent power producers (IPPs) were given time till July 25 to convey to the board whether they were interested in going ahead with the project without escrow.
While Enron backed out, a consortium including Ashok Leyland Power and Fiat SPA had confirmed their plans to put up four short-gestation projects in the state, in the range of 220-230 MW each. The four projects would come up atGummidipoondi (one), Chengalpattu (one), Cuddalore and Pallipalayam, but would not have the benefit of escrow account guarantee.
Several IPPs were yet to get back to the board with their final decision, the official said, adding that a clearer picture on how many projects were to be shelved, would emerge only next week. Meanwhile, the TNEB had convened a review meeting on June 27 to discuss the issues arising out of the cancellation of some projects and also the progress in the remaining projects, the official said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
