The Madhya Pradesh government has scaled down the capacity of the S Kumar's Maheshwar hydel project from 400 mw to 82 mw to accommodate liquid fuel power projects for escrow cover.
This 80 per cent cut in capacity will enable the state to accommodate liquid fuel projects totalling a capacity of 330 mw.
The state government has shortlisted four projects for escrow cover. However, the shortlisting left no escrow capacity for liquid power projects.
The shortlisted projects include Daewoo Power's 1,070 mw Korba project, Pench Power's 500 mw Pench project, Birla-Power Gen's 500 mw Bina project and the Maheshwar project.
By reducing the capacity of the hydel project and treating it as a peaking station, the government can extend escrow cover to liquid fuel projects.
The government will be required to set aside a much smaller escrow account. Peaking projects are required to operate for a short time during the day.
Sources said the government may apply the same logic to liquid fuel projects: only a fraction of their capacity will be used to meet power requirements. Liquid fuel projects are traditionally not base-load projects and are used only as peaking projects.
The state is awaiting the High Court's decision on petitions filed by the liquid fuel promoters on reopening contracts. There are five liquid fuel projects in the state totalling 900 mw in the race for escrow cover.
