Ipps, Fis Okay Tn Escrow Scheme

The Tamilnadu Electricity Board has tied up the mechanics of the escrow account and this has been approved by the independent power producers (IPPs) and more importantly by the financial institutions.

According to the informal agreement arrived between the utility and the private power producers, revenue collecting branches of nationalised banks will be identified first.

Totally there are 720 revenue collecting branches in the state.

The utility's distribution is divided into 8 distribution zones and 35 circles.

The trend in revenue collection of these branches will be scrutinised and the power producers will be assigned to specific branches.

The revenue collected from subscribers _ who will ideally comprise of a combination of high and low value customer base _ by the designated branches will then be available for power producers to access should there by a default in payments for power supplied to the electricity board.

For specific escrow account, specified revenue circles will be identified and tied up.

The biggest advantage of working an escrow through the revenue-collecting bank branch network is that revenues can be tied up according to requirements.

The smaller plants, for instance, need small escrow accounts and could meet its requirement from say four branches or so.

Larger plants by definition need a larger cover and, therefore,would necessarily have to be tied to a larger number of branches.

However, the trick, according to an independent power producer is to get in there first which will enable the generating company to "cherry pick" the branches.

Those coming in late will have little choice. They will have to settle for not-so-remunerative branches.

For the independent power producers as a whole, the sought-after branches are those that have a large chunk of high-tension consumers as besides paying highest per unit tariff, risks of non-payment of power charges is perceived to be minimal in this class of consumer.

On the other hand, designated branches that have a higher concentration of domestic consumers, especially urban housing board dwellings that get subsidised power and a poor payment track record are considered to have poor "escrowability."