Three states, Gujarat, Tamil Nadu and Kerala, are planning to reopen power purchase agreements signed with private project developers. The move, aimed at renegotiating the assured rate of return on the projects and restructuring the debt, might set a precedent for other states, power ministry officials said.
Among the independent power projects that have been set up in these states over the last decade are the 250-MW Neyveli Thermal Power Station of ST-CMS Electric Company, the 330.5-MW Pillaiperumalnallur project of PPN Power Generating Co, the 200-MW Basin Bridge project of GMR Vasavi Power (all in Tamil Nadu), the 250-MW Paguthan project of Gujarat Powergen Energy and the 515-MW Hazira project of Essar Power.
According to government officials, the loans for funding these projects were raised at interest rates as high as 19 per cent. With the softening of interest rates in the last four years, these states want the project developers to swap their costly old debt with fresh loans. This will reduce project costs and power tariffs.
