The Madhya Pradesh government has cut its escrow capacity from 2,500 megawatt (mw) to 900 mw, adding a fresh twist to the controversial escrow allocation process.
The new figure has been arrived at on the basis of a study conducted by Crisil for the state government. As a result, it will no longer be possible to support projects like the 1,000 mw Korba project being promoted by Daewoo.
Officials said the 900 mw capacity would only be enough to support a 400 mw hydel project and a 500 mw thermal project. This casts a shadow over the projects which have already been shortlisted for escrow, which have a total capacity of 2,561 mw. Financial institutions (FIs) are studying the new situation.
More From This Section
The Crisil study has taken into account the fall in demand in the state as well as the rise in the state's own generation and the increase in generation from Central stations.
The state government had earlier shortlisted four independent power producers for escrow cover. However, the escrow agreement could not be finalised as the process of awarding the escrow was challenged in the Supreme Court.
The four shortlisted projects include the 1,000 mw Daewoo project, the 500 mw Bina power project, the 500 mw Pench project and the 400 mw Maheshwar hydel project.
In addition, five liquid power projects, with a total capacity of around 1,000 mw, were in contention for escrow cover. This capacity had arisen as the Maheshwar project is considered a peaking power project, whereby only 20 per cent capacity is allotted escrow cover.
The escrow allocation controversy began in 1997 with the FIs telling the state government they would support power projects with a total capacity of 2,000 to 3000 mw, against the 7,000 mw originally planned. The state government shortlisted six projects totalling 3,000 mw for escrow cover, but this was not accepted by the FIs.
In 1998, the state government and the FIs arrived at an escrowable capacity of 2,561 mw. However, no methodology was worked out for allocating the cover.
This forced the state government to re-open the power purchase agreements of 13 projects which were staking a claim to escrow cover and set conditions for awarding the cover.
The state eventually shortlisted four projects, but could not award the cover as the other promoters challenged the re-opening process in the High Court.
After the High Court cleared the escrow allocation process, one of the IPPs filed an appeal in the Supreme Court. The case is pending there, with the hearings having been completed last week.
Shortlisted Projects