The Madhya Pradesh government has extended an escrow cover of about Rs 800 crore to six private power projects in the state. This is the first time a state government is giving escrow cover for such a huge amount.
The escrow cover can be invoked by the promoters in case of any payment default on the part of the state electricity board. The cover is equivalent to 125-150 per cent of the monthly receivables towards the projects.
These projects, with a total capacity of about 2000 megawatts, include Daewoos 1,000 mw Korba power project, Birlas 500 mw Bina project, Global Boards 125 mw Nasinghpur project, Soross Pench power project with a capacity of 500 mw and the 400 mw Maheshwar hydro project promoted by S Kumar.
All the projects are expected to achieve financial closure before mid-98. The projects involve an investment of about Rs 10,000 crore.
The actual escrow cover to each project will depend on the type of fuel and the operating parameters agreed upon between the board and the promoters.
For instance, some promoters are comfortable with 1.25 times the monthly receivables while others want a level of around 1.5 times the receivables.
FIs had earlier refused to finance these projects, which have already got techno-economic clearance from the Central Electricity Authority. They insisted on escrow arrangements between the board and the developer before financing the projects.
Madhya Pradesh has private power projects with a total capacity of about 6,000 mw in the pipeline.
The financial institutions and the state government are planning escrow cover to other projects on a staggered basis, which means that the cover would go up when these projects are commissioned.
The Union power ministry and the state government are planning to export power to other states after the power trading corporation comes into existence.
The decision to give escrow cover was taken after a meeting held recently in Mumbai, attended by the state Chief Minister, members of electricity boards, executives from financial institutions and officials from the Union power ministry.
