The Madhya Pradesh government has shortlisted three more power projects for escrow cover. These include the Daewoo Power-promoted 1,070 mw Korba project, the Pench Power-promoted 500 mw Pench project and the Birla/PowerGen-promoted 500 mw Bina project.
After the revised bids were submitted, the state government rated the three projects as: Korba L1, Pench L2 and Bina L3.
These projects along with S Kumar's project at Maheshwar, which was shortlisted sometime back, add up to around 2,500 mw, which is close the to 2,561mw capacity recommended by financial institutions as the states' escrow capacity.
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The names of the projects granted escrow cover have not been officially announced. According to sources, the state government is reluctant to announce a list that does not include liquid fuel projects.
The L3 rating for Bina has put the state government in a quandary. While its inclusion for the cover will leave no escrow capacity for liquid fuel projects, its exclusion will mean that a project with L3 rating gets knocked out of the race.
Moreover, the state's selection is subject to High Court order after Mukands and Madhya Bharat (promoters of the 120 mw Khandwa project) challenged the state government's decision to reopen power purchase agreements (PPAs).
The Mukand's, the proposed promoters of the 420 mw ITPL project, have now moved the Supreme Court as the High Court did not issue a stay order on the selection process for the escrow cover.
According to sources, the state government has been trying to fit in liquid fuel projects. One of the options before it is to use hydel and liquid fuel projects as `peak-load' stations, whereby the state government would be using only 20-40 per cent of plant capacity.
This would require the state government to set aside a much smaller escrow cover as compared to the amount it would have had to if it were to draw upon the entire project's capacity.
In case the state government treats the 400 mw Maheshwar hydel project as a peaking station, using only 20 per cent capacity, then escrow cover will be given for 80 mw, leaving the state with 320 mw of additional escrow to be allocated to liquid fuel projects. The state, on the other hand, is assessing 1,000mw of liquid fuel projects.
By extending the same to liquid fuel projects, sources said the state government could fit in all the projects for the escrow cover. Even if the state government adopts this measure, it will face problems from FIs who are reluctant to accept an escrow cover which does not abide by the PPA conditions.