The government will issue the counter-guarantee for the 250 mw ST-CMS power project in Tamil Nadu on August 14. The agreement to this effect will be signed between the finance ministry and the promoters, paving the way for the project's financial closure.
The Centre agreed to go ahead with the counter-guarantee after the Tamil Nadu government agreed to set up an electricity regulatory commission.
According to conditions laid down in the agreement, the counter-guarantee for any fast-track project will be effective only if the state government sets up a regulatory commission.
The state government was resisting setting up a regulatory body ever since the Centre had cleared the ordinance for creation of regulatory bodies at the Centre and states.
The Tamil Nadu government did not want the Centre to enforce a policy that permits levy of agricultural power tariff as the ordinance did in its true form.
Faced with opposition in the Lok Sabha, the Centre modified the policy before tabling it as a Bill in Parliament. The Bill did not require state governments to levy mandatory agricultural power tariff.
The state government, after this change, agreed to set up a regulatory body in the state.
The ST-CMS project, which is using lignite as fuel, will be setting up the project at an estimated cost of Rs 1,250 crore, of which debt will be to the tune of Rs 875 crore, while the balance will be promoters' equity brought in by ABB, US-based utility company CMS and an NRI Sharad Tak.
