Tneb Tells Videocon To Tie Up Funds By April 30

The Tamil Nadu Electricity Board (TNEB) has told the 1,050 mw Videocon power project to attain financial closure by April 30 . The project is coming up at Ponneri in Chengalput district near Chennai.

Confirming this, a TNEB official said, "The power purchase agreement (PPA) had lapsed on February 1. The promoters had requested for an extension, but we have given them time till April 30. We hope the project comes through."

However, chairman of Videocon International, the group flagship, V N Dhoot said, "We have already attained financial closure. We will communicate our decision much before the deadline." But the TNEB official retorted, "we are unaware of the project attaining financial closure".

TNEB was considering scrapping of the PPA if the earlier deadline of February 1 was not met. But now, TNEB officials indicate that an extension beyond April 30 may be allowed in the interest of the project.

The project was originally slated to attain financial closure by April 30, 1999, but was stuck due to various problems. Later, the February 1, 2000 deadline could not be met due to certain disputes over the fuel supply agreement. Besides, lenders were keen on entering into certain agreements, superseding the PPA.

The power project is being implemented as a joint venture between the Videocon group, ABB and National Power of the UK. Videocon is the largest shareholder with 38 per cent stake, while ABB and National Power are committed to bringing in 26 per cent and 36 per cent respectively.

However, ABB is now reconsidering its decision to invest in the project and may eventually pull out although the Zurich-based parent is supposed to take a final decision in this regard.

The ABB stand is that there are certain critical issues related to the returns the project offers to the investing companies that need to be resolved. Even if the company decides against taking an equity stake in the project, it will continue to be the engineering, procurement and construction contractor for the project.