The Madhya Pradesh government has selected the S Kumar-promoted 400 mw hydel project for an escrow cover. The Jindal's, Mukunds and Madhya Bharat Energy have dropped out of the race for the limited escrow cover that the state electricity board can offer.
The state government, which is currently shortlisting projects for the escrow capacity of 2,561 mw, had asked 13 independent power producers (IPPs) to rework their costs and tariffs, after which the escrow cover was to be auctioned to projects with the lowest costs. All these IPPs, totaling some 4,000 mw, had to get back to the state government with the reworked models early this week.
Of the 13 IPPs, only nine were able to submit their revised estimates, as both the Jindal's, promoters of the 1,000 mw Raigargh power project and Madhya Bharat Energy, promoters of a 120 mw liquid fuel project, lost interest, while the Mukund's, promoters of the 420 mw ITPL coal project, challenged the state government's move to re-open the power purchase agreements (PPAs).
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The Mukund's wanted the High Court to issue a stay order on the state government's process of re-opening PPAs and thereon auctioning the escrow cover to IPPs. The High court, however, has refrained from doing so.
The state government, which is selecting projects on the basis of the fuel, decided to distribute the escrow to hydel, liquid fuel and coal-based projects. As S Kumar was the only hydel power producer in the list, it was approved for the cover, leaving the state with five liquid fuel projects and four coal-fired projects.
The state government has now decided to allot 500 mw of the escrow cover to liquid fuel projects and the rest for coal based projects.
The coal projects which have given their revised estimates to the state include, Daewoo Power-promoted $1.4 billion 1,000 mw Korba project, the Birla-PowerGen-promoted 500 mw Bina project, Soros-promoted 500 mw Pench project and the 500 mw Bhilai Steel project. These projects, with a total capacity of about 2,500 mw, will be gunning for the escrow capacity of 1,600 mw.
The liquid fuel projects in the race for the 500 mw escrow cover include, STI Power's 350 mw Guna project, Essar/Hanjung's 350 mw Bhander project and two small projects adding to around 250 mw.
The state government was forced to re-evaluate the project costs of the IPPs as the financial institutions and the SEB differed on the escrow capacity. The board initially shortlisted 6 projects totaling 3,000 mw which was opposed by the FIs as they calculated an escrow capacity of 2,561 mw. The state then decided to resolve this deadlock to by auctioning the escrow to projects with the lowest costs.