Union power minister P R Kumaramangalam said he was considering limiting the escrow account cover to only the debt portion of a power project. He stated in an informal chat with newsmen at a power seminar in Mumbai that it was understandable that lenders wanted their money to be secure. "However, there is no reason why businessmen should not risk their equity. That is what they are in business for," he added. Kumaramangalam said he had summoned Industrial Development Bank of India chairman G P Gupta to a meeting today to discuss the issue.
The limitation of escrow account to the debt part is in line with the recent counter-guarantee regime announced by the Centre. The counter-guarantees for the 1,000 mw Vizag project, the 1,082 Bhadravati project and the 250 mw ST-CMS project covers only the outstanding portion of foreign debt in case of termination of contract.
