The private power projects' pipe dream is fizzling out. Of the 40 independent power projects (IPPs) expected to come up in the country, the ministry of power has narrowed down its focus on nine projects with a generation capacity of 4,287 mw, which have "reasonable chances" of achieving financial closure over the next one year.
A total of 31 projects, with a cumulative capacity of 18,715 mw, are stuck with no hope of achieving financial closure in the near future, power ministry officials said.
The non-availability of escrow cover has emerged as the most important stumbling block in financial closure of the projects. "A majority of these projects are in the doldrums on account of non-availability of escrow cover and inability of the states to extend guarantees.
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There is a big question mark over the capacity of states to purchase power from new projects," an official said.
On the brighter side, of the 58 projects cleared for execution by the Central Electricity Authority (CEA), 18 projects totalling 6,542mw, are already on stream or are in the process of being commissioned.
Of these, 10 projects have been commissioned, while eight are in various stages of construction, power ministry officials said.
The ministry is actively pursuing with state governments to expedite these nine projects, which have a chance of tying up funds, power ministry officials said.
These projects are spread across Madhya Pradesh, Andhra Pradesh, Uttar Pradesh, Gujarat and West Bengal.
"The ministry is holding meetings with state government representatives, institutions and promoters of the projects to expedite the process of financial closure," an official said.
Following the Dabhol imbroglio, the Centre has decided against extending counter-guarantees to projects coming up in the private sector.
Consequently, state governments have also backtracked on providing guarantees and counter-guarantees, resulting in projects being stuck, officials said. Some projects based on fuels like naptha, are stuck on account of the high tariffs in the initial years following commissioning.
"State Electricity Boards do not have the funds to purchase expensive power, so the projects where tariffs are likely to be high, are likely to be stuck. Problems in the supply of fuel (coal and gas) have also held up some projects," an official said.
The government had earlier projected a capacity addition of 26,732 mw and 22,181 mw from private sector projects for the Tenth and Eleventh Plan periods, respectively.
However, in light of the slow progress on the IPPs front, the capacity addition targets have been scaled down to between 7,255 mw and 10,500 mw for the Tenth Plan period, by the ministry.
The realisation of capacity addition targets from private projects is expected at 7,035 mw, as against a target of 17,588 mw for the current Plan period (1997-2002).