Us Power Firm To Relocate Karnataka Unit

US-based Smith Cogeneration, which is promoting a Rs 800-crore barge-mounted power project in Karnataka, has decided to relocate it after encountering environmental problems.

According to a state government official, a committee has been formed for identifying a suitable site for relocating the project.

Smith Cogeneration has submitted a detailed project report to the state government. The 170 mw project will be based on naphtha and the promoters are expected to make their own arrangement for fuel linkage.

Parsons Power Group has been given the EPC contract. Talks are on with foreign financial institutions for funding project.

The other barge-mounted projects in the state are the 156 mw Malpe project promoted by Eurokapital of Germany, the 200 mw naphtha-based Tannirbhavi project promoted by Chicago Power, and the 110 mw Kumta project promoted by the Canadian Universal Water and Power.

The Malpe project, too, has run into problems with two subsidiaries of the parent company, Eurokapital, claiming their right to implement it.

In an attempt to settle the issue, the state government is sending letters to both subsidiaries, Euro India Energy and Euro India Power Canara, informing them that the project will be handed over to the firm that pays the security deposit of Rs 10 crore as per the terms of agreement.

Eurokapital, the original promoter of the project, has been declared bankrupt by a Hamburg court.

This had led to the suspension of negotiations. But the government decided to review its stand after the two firms separately wrote to it stating they were technically and financially capable of implementing the project.

A spokesperson of Euro India Power Canara claimed his company had enough financial muscle to fund the project on its own. "We are talking to financial institutions for funding. We might even bring in more partners," he said.

The naphtha-based project to be set up near Malpe in South Kanara district is among four barge-mounted projects allotted through competitive bids.

It has not received many of the necessary clearances, including those from the environment ministry. The promoters have not acquired land for the project either. They have also not submitted the detailed project report although the agreement was signed on March 10, 1997.