Karnataka Seeks Immediate Cover For Cogentrix

The Karnataka government has demanded that the Centre should immediately issue a counter-guarantee for the proposed 1,000 mw Cogentrix power project coming up in Mangalore.

In a meeting with Prime Minister Atal Bihari Vajpayee on Friday, Karnataka Chief Minister J H Patel is reported to have stressed that the Centre should not wait for a Supreme Court ruling on a public interest litigation filed against the project. The legal view taken by the state government is that the apex court will not hinder the project's progress.

Neither the Supreme Court nor the Karnataka High Court, where the public interest litigation was originally filed, has ruled that work on the project should not continue.

The counter-guarantee is pending since November 1997 when all other clearances have been obtained. All preparations for the project have been completed and only a final nod by the Centre is awaited.

Sources said Patel told Vajpayee that any contrary view on the counter-guarantee would only strengthen the viewpoint that by approaching courts one could place hurdles in the implementation of development projects.

He requested Vajpayee to examine the matter and issue the counter-guarantee at the earliest.

The Centre has so far issued counter-guarantees to five of eight fast-track power projects. The promoters have already signed the power purchase agreement with the state government and have worked out a level tariff of Rs 2.29 per kwh. The promoters will, however, have to change the power purchase agreement because the Centre recently issued a tariff notification redefining income streams of independent power producers.

The Mangalore Power Company that is promoting the power project is a joint venture between Cogentrix Inc of US and China Light & Power of Honk Kong.

The $1 billion project is being financed on a 70:30 debt-equity ratio. Sixty per cent of the equity, or $300 million, is being brought in by Cogentrix while the balance is being brought in by China Light & Power.