The Centre has decided to put on hold the counter-guarantee for the 250 mw Neyveli fast-track power project in Tamil Nadu.
Union power minister R Kumaramagalam said the government will not offer counter-guarantee for the project until the promoters of the power company have been identified.
Currently, the company is in the throes of a restructuring, with the original promoters US-based utility giant CMS Energy and a non resident Indian (NRI) Sharad Tak (hence the name ST-CMS) planning to dilute 26 per cent of the stakes in favour of the Swedish equipment conglomerate, Asea Brown Boverie (ABB).
CMS Energy holds 74 per cent stake, and the balance is held by the NRI. The entire equity for the project has been valued at around Rs 340 crore.
Even though the extent of dilution of stake has not been firmed up by the power company, sources said both ABB and the project promoters are meeting shortly to decide about the selloff.
ABB plans to pick up the stake through its investing arm, ABB Energy Ventures. ABB is also the erection, procurement and construction (EPC) contractor for the lignite-based power project which has been valued at Rs 750 crore. The entire project has been evaluated to cost around Rs 1,120 crore.
The ST-CMS project is one of the seven fast-track power projects that will have a counter-guarantee from the Centre.
It was given a nod for the counter-guarantee by the I K Gujral government in January. However, it is yet to receive the counter-guarantee from the finance ministry as the promoters are finalising their fuel supply pact with Neyveli Lignite Corporation.
In the last days of the Gujrals United Front government, the cabinet also cleared a proposal whereby the price of lignite from mine I, mine II and the new mine IA will be pooled to arrive at the final price of coal that would be sold to the power company from NLCs mines.
The United Front government had waived the minimum agricultural tariff condition for the project before approving the counter-guarantee for the project.
While the ST-CMS project was able to get most of the approvals from the Central and state level, the remaining projects are still at various stages of negotiations.
For instance, the Ispat-promoted Bhadrawati power project is yet to get approval from the defence ministry over the location of the captive mine, while the Hindujas who are promoting the Vishakapatnam project are yet to finalise their coal supply agreement with the Coal India Ltd. The Cogentrix project on the other hand has been able to attain most of the required approvals but has been put on hold by the government on account of the court enquiry into the deal with the state government.
